It is simply a type of digital or virtual money that uses cryptography (a method of protecting information) to secure transactions. Unlike traditional money issued by governments like dollars, euros, or shillings, cryptocurrency is decentralized, meaning it is not controlled by a single authority like a bank or government.
Cryptocurrency is a type of digital (online) money that uses electronic security techniques (cryptography) to protect transactions.
Unlike regular money like shillings, dollars, or euros that are issued by governments or central banks, cryptocurrency is not controlled by any government institution; it is run by people (computers) around the world in a decentralized system.
These are the main characteristics of Cryptocurrency.
1. It is digital only (Digital only) - you have no physical notes or coins, everything is online.
2. It uses blockchain technology - blockchain is like an online ledger that securely and transparently stores the history of all transactions.
3. It is not controlled by a single person or government (Decentralized) - its system is run by thousands of computers around the world.
4. It has a limited supply - Most crypto coins have a capped amount; for example, Bitcoin cannot exceed 21 million, increasing its value.
5. It is secure and sometimes provides privacy (Secure and anonymous)
It has technology that protects identity and prevents fraud.
Examples of popular crypto coins
- Bitcoin (BTC) - The first and most popular.
- Ethereum (ETH) - Known for smart contracts.
- Binance coin (BNB)
- Solana (SOL)
- Ripple (XRP)
WHAT CAN YOU DO WITH CRYPTOCURRENCY? (USES):
I. BUYING GOODS AND SERVICES (FROM COMPANIES THAT ACCEPT CRYPTO).
II. INVESTING OR TRADING FOR PROFIT.
III. SENDING MONEY TO ANYONE IN THE WORLD QUICKLY.
IV. PARTICIPATING IN DIGITAL FINANCIAL SYSTEMS (DeFi).
V. BUYING OR SELLING NFT (DIGITAL ART OR GOODS)
EXAMPLE: JUST AS YOU USE M-PESA OR A BANK ACCOUNT TO BUY OR SEND MONEY, CRYPTOCURRENCY IS LIKE USING A DIGITAL WALLET THAT ONLY YOU CONTROL, WITHOUT THE NEED FOR A BANK.
