What is Cryptocurrency?
- Understand what cryptocurrencies are and how they function as a digital form of money.
1. Definition of Cryptocurrency:
- Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. Unlike traditional currencies, it is decentralized and typically based on blockchain technology.
2. The Role of Cryptography:
- Cryptography ensures secure transactions and controls the creation of new units. It also secures the transactions making them hard to counterfeit or double-spend.
3. Decentralization:
- Most cryptocurrencies operate on a technology called blockchain, which is a decentralized technology spread across many computers that manage and record transactions.
- The first real-world transaction using Bitcoin was for two pizzas in May 2010.
- Unlike traditional banking systems, the Bitcoin network is operational 24/7, meaning transactions can be done at any time.
Mini-Quiz with Options
1. What is the primary technology behind most cryptocurrencies?
- A) Artificial Intelligence
- B) Quantum Computing
- C) Blockchain Technology
- D) Cloud Storage
2. Name at least two characteristics that differentiate cryptocurrency from traditional money.
- A) Centralized and government-issued
- B) Decentralized and uses cryptography
- C) Physical and easy to counterfeit
- D) Regulated by a single institution
3. What was purchased in the first known Bitcoin transaction?
- A) A car
- B) A computer
- C) Two pizzas
- D) A house
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