The Abc Of Cryptocurrency

By Author: George Philip
Total Articles: 5
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The ABC of Cryptocurrency actually begins at D which stands for digitalization. In an era of technological advances, going from analog to digital was arguably the largest leap of faith. Music was not on a cassette, photographs were not on paper, a collection of data-keeping was on cloud and money was a matter of minutes away. This digitalization of money was at the epicenter of the concept of cryptocurrency.

Cryptocurrencies refer to digital money that does not exist in physical form such as coins or notes. These are virtual assets with a sum of value attached to them. These can be stored on a digital wallet which may be accessed from a computer or a smartphone device. These devices are also used for transferring this currency in exchange for goods and services.

A technology called Blockchain is what enables the functioning of these transactions. Blockchain is a decentralized system that organizes and records transactions across multiple computers, making it a secure network.

Cryptocurrency is maintained using a distributed ledger, which unlike regular money makes it decentralized in nature. This ensures ...
... a great degree of transparency, along with anonymity through the use of encryption. Cryptocurrency exists beyond the control of a central authority and any government.

When an exchange is made using cryptocurrency, there isn’t involvement of a third party, making it a peer-to-peer transaction. These transactions are recorded on a massive database known as Blockchain. Single transactions are represented by a block that is added to a chain of transactions, where it is logged forever. The prime benefit of this is that blockchain is not stored in a central location but scattered on a large network of computers, thus making it impossible to be tampered with.

Blockchain transactions are kept protected by a complex system. Transactions are protected by the use of public and private keys. A user's wallet or account address in a Cryptocurrency system has a public key, meanwhile the owner of the wallet can authorize transactions with the use of a private key. The lack of an involvement of a third party ensures minimum processing expenses.

The process of holding cryptocurrencies is also termed mining, much like how traditional currency is mined. Cryptocurrency such as Bitcoin can be mined through high power computer machines that can work on incredibly tough equations. These machines can also add transactions to the blockchain to check its validity and ensure authenticity. Mining is an incredibly complex procedure as it controls the number of coins up for grabs.

The other way to hold a stake in cryptocurrency is by buying some. Much like traditional shares, cryptocurrency can also be bought and sold. To purchase cryptocurrency, one needs a wallet on an internet software program that stores your funds. Traditional money can be used to purchase cryptocurrency. The value of these currencies is determined by its supply and demand, hence making it an instrument for investments.

Cryptocurrency and the wide possibilities it presents with itself is surely one of the most exciting stages of the evolution of the concept of money. From coins to bitcoins to beyond, the road is endless.