Page 219 - A Canuck's Guide to Financial Literacy 2020

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4. Validated transactions are stored into a block and are locked with a hash. Hashing is
the process that confirms its state and almost impossible to guess.
5. The block becomes part of the blockchain network when other computers in the
network validate if the hash on the block is correct.

6. The transaction is part of the blockchain and can not be altered in any way.

Types of Crypto-Currency

There are hundreds of types of cryptocurrency but below we’ve listed the three main ones.

▪ Bitcoin

Bitcoin was the first cryptocurrency created in 2009 by Satoshi Nakamoto. It’s
the world’s leading cryptocurrency and largest by market capitalization. Bitcoin
is a peer-to-peer electronic payment system which allows individual to
exchange with each other via cryptographic keys that act as wallets. Bitcoin is
often seen as an alternative to gold as it can be saved in a similar way to
traditional funds and is scarce.

▪ Ethereum

▪ Ethereum is the second largest crypto-currency by market capitalization. It was
created in 2015 by Vitalik Buterin and is an open source platform using
blockchain technology. Similar to Bitcoin, it is not controlled by a single entity or
central bank. It is also decentralized and scarce. Unlike other
blockchains, Ethereum allows developers to build various kind of applications
such as digital assets, web apps or decentralized organizations.
▪ Ripple

Ripple is the third largest crypto-currency. It was created in 2012 and acts both
as a crypto-currency and a digital payment network for financial transactions. It
uses an open source, permission-less and decentralized blockchain technology
that can settle transaction in less than 5 seconds.

Purchasing Crypto-Currency

Crypto-currency Wallets

Before you decide to purchase crypto-currency, make sure that you have a “cryptocurrency
wallet”. Think of the wallet as your bank account. In the same way that you deposit funds
into your bank account, you will store cryptocurrencies in your crypto wallet. There are a lot
choices that you can choose from and it’s important that you choose a highly secure wallet
because if the cryptocurrency gets stolen, you can never get it back.