How to explain Northcrypto's cryptocurrencies to a friend?
Cryptocurrencies are a relatively unfamiliar and unknown topic for many people. Because of this, explaining them can often be quite challenging. In this blog post, we provide as simple explanations as possible for each of the cryptocurrencies offered by Northcrypto.
Bitcoin
In simplified terms, Bitcoin can be seen as a decentralized virtual bank that is always open to everyone. Decentralized means that Bitcoin is not controlled by any single entity, such as a government or a bank, but is maintained by thousands of computers. Bitcoin is also open, which means that anyone can join the network as a maintainer and view all Bitcoin transactions since its beginning.
The Bitcoin network has its own digital currency, bitcoin, which is a form of digital money. It can be transferred to the other side of the world in tens of minutes. Additionally, Bitcoin differs from traditional currencies like euros or dollars in that there will never be more than 21 million bitcoins. Many believe that based on the principles of supply and demand, the price of Bitcoin will continue to rise relative to the euro and the dollar because central banks practically constantly create these currencies.
Ethereum
In simplified terms, Ethereum can be seen as a decentralized computer network that enables things that are not possible in traditional computer networks. More specifically in cryptocurrency terms, this means that Ethereum is a decentralized platform on which applications, cryptocurrencies, and smart contracts can be created. A smart contract is a contract that executes certain conditions when predefined criteria are met. Most cryptocurrencies are located on the Ethereum platform.
When discussing Ethereum from an investment perspective, Ethereum has its own digital currency called ether, which resides on the Ethereum platform. Ether, like other cryptocurrencies on the platform, can be transferred around the world in minutes. Ether is used for actions on the Ethereum platform, such as transactions and paying fees related to executing smart contracts. Additionally, ether can be staked, which means locking it for maintenance work, allowing you to earn interest and influence Ethereum's development.
Litecoin
Litecoin can be seen as a virtual bank, much like Bitcoin but with a few technical differences. Litecoin and Bitcoin are technically similar, with a few exceptions. Compared to Bitcoin, Litecoin offers faster transactions. Additionally, Litecoin's digital currency, litecoin, differs from bitcoin with a maximum supply of 84 million litecoins. Many see Litecoin's primary use case as a means of payment, and it is one of the most popular cryptocurrencies for payments.
Chainlink
In simplified terms, Chainlink can be seen as a computer through which it is possible to move data between the real world and the blockchain. More specifically, Chainlink is a decentralized application that resides on the Ethereum platform. Chainlink's purpose is to act as an intermediary between the blockchain and external systems, allowing data to be reliably transferred from outside the blockchain to the blockchain and vice versa. It could even be said that Chainlink is the most central application in the entire cryptocurrency ecosystem, as most cryptocurrencies depend on Chainlink's operation. In recent years, many major companies such as Google, Oracle, and Intel have started utilizing Chainlink.
Chainlink has its own digital currency called LINK, which allows you to vote on Chainlink's development. Additionally, LINK can be staked, which means locking it for maintenance work, enabling you to earn interest and participate in improving Chainlink's security.
Aave
In simplified terms, Aave can be seen as a decentralized virtual credit institution where you can borrow and earn interest. More specifically, Aave is a decentralized peer-to-peer lending service that operates on different platforms, including Ethereum. By using Aave, you can borrow cryptocurrencies from other Aave users and earn interest by offering your cryptocurrencies for lending to other Aave users. Aave's operation is based on smart contracts, so everything, such as interest payments, works automatically. Because Aave is managed in a decentralized manner, all of this can be done without third parties like banks.
Aave also has its own cryptocurrency, AAVE, which allows you to vote on Aave's development. AAVE can also be staked, locking it for maintenance in the Aave service, improving security and enabling you to earn interest.
Polygon
Polygon is a scalability solution that aims to provide platforms similar to Ethereum with faster and more cost-effective transactions. Polygon offers various technical solutions to achieve this goal. Polygon has entered into significant collaborations with several companies in 2022 and 2023, including the world's largest coffee chain Starbucks and one of the world's largest airlines, Lufthansa.
Polygon has its own cryptocurrency, MATIC. MATIC is used for actions on the Polygon platform, such as transactions and paying fees related to executing smart contracts. Additionally, MATIC can be staked, locking it for maintenance work, allowing you to earn interest and influence Polygon's development.
USDC
USDC is a digital currency that tracks the value of the US dollar and exists only in digital form. The primary purpose of USDC is to maintain a price of $1.00, which is why USDC is called a stablecoin. USDC exists on the Ethereum platform as well as several other platforms. Each USDC is backed 100% by dollars and highly liquid cash-equivalent assets. Additionally, USDC can always be redeemed 1:1 for dollars. USDC is used in various applications, including decentralized finance (DeFi), trading, saving, and money transfers.
ApeCoin
ApeCoin is a digital currency that resides on the Ethereum platform and is used for payments within the Ape ecosystem. ApeCoin and the Ape ecosystem are created by Yuga Labs, which focuses on NFTs and the Metaverse. NFTs refer to digital assets, such as digital art, and the Metaverse refers to virtual reality that can be used in collaboration with others. ApeCoin can be used in the Ape ecosystem for purposes like admission fees, purchasing digital art, and playing games.
Is your friend interested in these cryptocurrencies?
If your friend is interested in investing in any of the cryptocurrencies introduced above, it's a good idea to take advantage of our Referral program. This is an incentive program that allows you to receive 0.5% of the trading volume of registered individuals you invite to our service for six months from the date of registration. You can find more information by logging in and visiting the Referral page under the user icon in the browser and mobile versions.
Ville Viitaharju
Cryptocurrency specialist
Last updated: 22.09.2023 15:00
