what is it? how does it work?
Cryptocurrency
What is cryptocurrency?
Cryptocurrency is a digital currency that does not rely on the use of centralized systems like banks to verify transactions. Essentially, cryptocurrency is a P2P (peer-to-peer) system. This means that it allows users to send/receive payments anywhere. Instead of physical money, cryptocurrency payments are purely digital. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger called blockchain. Cryptocurrency is stored in digital wallets.
Cryptocurrency received its name because of its use of cryptography encryption to verify transactions. This means that coding is involved in the storing and transmitting of cryptocurrencies between wallets and on public ledgers. This encryption provides security and safety to crypto transactions.
The first ever cryptocurrency was Bitcoin, which was founded in 2009 and remains the most popular cryptocurrency today.
How does it work?
Cryptocurrencies run on a distributed public ledger called blockchain. This holds a record of all transactions processed by currency holders.
New units of cryptocurrencies are created through a process called mining. The mining process involves using computer power to solve complex mathematical problems that, in turn, generate coins. Users can also buy the cryptocurrencies from brokers. Once a user owns a cryptocurrency, they can then store or spend them using cryptographic wallets.
Cryptocurrencies are not a tangible asset. When a user owns a cryptocurrency, what they actually own is a key that allows them to move a record or a unit of measure from one person to another without a trusted third party.
Although Bitcoin has been around since 2009, cryptocurrencies and blockchain technology continue to develop, and with this, more uses are expected to join the community in the future.
