A SIMPLE OVERVIEW OF BLOCKCHAIN AND CRYPTOCURRENCIES

Blockchain is a type of ledger spread across many computers where consensus from a majority of computers is required to make changes, meaning that it can’t be tampered with or hacked.

Cryptocurrencies are digital currencies built on blockchains. They are either bitcoin or other alternatives to conventional currencies (altcoins), or they service specific blockchain utility applications (tokens).

Fiat is a commonly used term to refer to traditional currencies such as the USD, GBP or EUR which are controlled by a central authority.

Major altcoins can be bought on primary exchanges with FIAT. Tokens and minor altcoins can be bought on secondary exchanges but must usually be bought with altcoins as opposed to fiat.

Cryptocurrencies can be stored in various types of electronic wallets but if access to a wallet is lost then so is the cryptocurrency.

There are over 2,000 cryptocurrencies in existence, the majority of which are utility tokens.

Owning cryptocurrency does not mean that you own shares in a company or have any rights. They do not pay any dividends, although occasionally a company may gift additional tokens if there is a good reason.

Prices are generally driven by adoption when the currency is being used for a specific purpose, or by speculation that this will happen at some point in the future.

Anyone with a computer can buy and sell cryptocurrency. There is a lot of risk involved but amounts invested can be small. Unlike conventional currencies which have two decimal places, cryptocurrencies have up to 18 which allows small fractions to be traded.