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Two prong outlets are normally found in older homes where there are no grounding wires present. Homes built between the 1930’s and 60’s normally have these two prong receptacles as those were the standard prior to 1974 when the grounded outlets became code.
Without a grounding wire to an outlet, there is risk of electric shock and/or appliance damage in the event of inclement weather, such as lightening, or power surges from your electrical provider.
It wasn’t until 1969 that the three-prong outlets made an appearance on the market. The difference between the two outlets is simple, one has two prongs and the other has three.
With a three-prong outlet, there are three wires: a hot, a neutral, and a grounding wire. The hot wire sends electricity into the device plugged into the outlet; the neutral wire sends the electricity back to your home's electrical panel. If a power surge occurs and more electricity is sent to this outlet than what it was intended, then this excess electricity flows through the ground wire and safely to the ground.
With a two-prong outlet, this concept doesn’t exist. Therefore, when more electricity is sent to an electronic device than was meant, this excess power can damage the device, cause electric shock of the person using it, or create an electrical fire.