What are digital currencies?

Digital currencies are money that lives on computers and can be sent from one person to another without using coins or paper money.

Imagine you have a piggy bank full of coins. Now imagine instead of taking out the coins, you just tap your phone, poof, the money moves to your friend’s phone! That’s what digital currencies do. One common type is called Bitcoin, and it's like a special kind of digital coin that people can use to buy things online or even real stuff in stores.

Think of digital currency like electronic play money. When you want to send some to your friend, you tell the computer (or phone) how much you want to send, and it does all the work behind the scenes, just like when you use a vending machine to get candy with coins.

Some people like using digital currencies because they can send money quickly, even if their friend is on the other side of the world. It’s like having a super-fast postcard that carries your money instead of writing a letter.

Just like you might use different kinds of play money in games, people can choose to use different types of digital currencies, each with its own rules and tricks!