Overview of Digital Currencies
Digital currencies are virtual currencies that use encryption for security and operate on decentralized networks based on *blockchain*. They differ from traditional currencies because they are *decentralized* and not subject to a single authority.
Key Features
- *Decentralization*: Operates without a central authority.
- *Blockchain Technology*: Records transactions securely and transparently.
- *Digital Nature*: Exists only in digital form.
Most Popular Currencies
1. *Bitcoin (BTC)*: The first and most famous digital currency.
2. *Ethereum (ETH)*: Known for smart contracts and decentralized applications.
Uses
- *Transactions*: Sending money globally with low fees.
- *Investments*: Viewed as investment assets (with significant volatility).
- *Decentralized Finance (DeFi)*: Financial services without traditional intermediaries.
Important Considerations
- *Volatility*: Prices change rapidly.
- *Security*: Blockchain is secure, but exchanges and wallets may be vulnerable to hacks.
- *Regulation*: Varies by country.
Getting Started
- *Exchanges*: Such as Binance and Coinbase for buying and selling currencies.
- *Wallets*: Safely storing digital currencies.