What is Cryptocurrency and how does it work?

Cryptocurrency

Cryptocurrency is a source of exchange of currency which based on the internet to conduct financial transactions. All transaction history is recorded on the public sources known as Blockchain. Cryptocurrency is a process that is done by cryptography. It is a secure method through which anyone can send or receive transactions from any country in the form of bitcoin or Blockchain. It is connected explicitly with a debit card or bank credit. You can send/receive money electrically and will feel satisfied after the transaction because it is a legit procedure that is 100% secure to manage accounts and its transactions.

Cryptocurrency

The fact which made Cryptocurrency different from debit or bank card is that you can manage your business by computer Algorithm and the central government has not any role in it. There are some Cryptocurrencies through which transaction is made electrically. Bitcoin (substituted under the symbol BTC), Ether (ETH), Ripple (XRP), and Litecoin (LTC).

Working of Cryptocurrency

Cryptocurrency is a peer-to-peer (p2p) network for sharing the file. The Software is used for transactions between peer called Cryptocurrency Wallets. The user uses the wallet software to transfer the balance from one location to another. The user must remind his account number and password for the transaction of funds. When the process of moving balance completely, the records of the transaction are encrypted and then issue to the Cryptocurrency’s network. The record then lined up to be added to the public ledger. The amount of transaction is public, but the person who made the transaction is encrypted.

The detail of transactions is recorded on the public ledger through a process called Mining. Cryptocurrency Mining is a way of unfolding the cryptographic puzzles with the help of Software to add transaction to the Blockchain and also to get free coins as a reward. Every transaction contains a unique set of keys. The person who has these set of keys, he owns the amount of Cryptocurrency linked with those keys. A large number of transactions are computed consecutively by miners. The user who wants to get access to the ledger can get it by downloading and installing the copy of Software called a full node wallet.

Working of Blockchain

The legality of each coin of Cryptocurrency is allowed by Blockchain. All the records of transactions also referred to as blocks, are linked and secured by cryptography. When the cryptocurrency funds are transferred from one place to other, the record of the transaction is sent to all users by organizing the copy of Blockchain. Miners are a specific type of user who attempts to solve the cryptographic complications and allow other users totally a block of a transaction to the ledger. The user who solves the puzzle first collect some newly mined coins. Each block has a hash pointer through which the data of one block is linked to data of the previous block. One-way cryptographic codes help in this way to associate data of blocks.

Blockchains help to secure data and protect it from modification. It is an open distributed ledger which stores the transaction history between two associations. The data is stored in a verifiable and permanent way. Blockchain helps to solve the problem of Double-spending without the need for a central server.

Conclusion

Cryptocurrency has become the safest way for people who want to transfer or receive money in the form of bitcoin via the blockchain method. This process is called Mining, and each miner has this advantage to transact money without having any trouble. This system is indirectly connected with your bank, and each transaction record is saved in your bank account. It seems a complicated method, but it is not.



Write your comments here!