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Intro.md

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What is Cryptocurrency?

How does it work?

Introduction

A cryptocurrency is a digital currency in which encryption techniques regulate generation of currency and verify the transfer of funds operating independent of a central service.

A cryptocurrency usually consists of three main parts:

  • Blockchain

    • A large immutable linked list that stores all previous transactions, analagous to a bank ledger

  • Wallet

    • Software to allow the storage and sending of cryptocurrency

  • Network

    • Decentralized node graph around the world supporting the cryptocurrency

There are multiple different types of cryptocurrency with different implementations and usages. For example:

  • Functional Currencies

    • Currencies that act like software
      • Etherium, OMG

  • Proof of Work

    • Currencies that require a large amount of work to verify transactions
      • Bitcoin, Monero

  • Proof of Stake

    • Currencies that require a large amount of holding at stake to verify transactions
      • NEO, OMNI

Why was cryptocurrency created?

  • An experiment by Satoshi Nakamoto to put in place a decentralized currency

  • To be a currency with limitless scalability

Next we will cover cryptocurrency networks