Though the concept came was introduced a few years ago, a common doubt that arises in most of our minds is “What is cryptocurrency”? Cryptocurrency is a type of digital asset, which is a medium of exchange in different types of transactions using cryptography. This medium of exchange also helps in controlling the creation of additional currency units. Though there has been a lot of talks and press releases about cryptocurrency, not many people and businesses are aware of this concept. It is important that more and more people become aware of the impact of cryptocurrency and its uses.
Bitcoin, an electronic coin, was the first cryptocurrency, which was introduced in the year 2009. Since then, several different cryptocurrencies have sprung up and are making rounds in the market. Bitcoin is a part of a decentralized and distributed digital cash system, which is measured using the digital ledger known as the blockchain transaction database. So, if your next questions are “why use cryptocurrencies” or “why use Bitcoin”, then read on to get the answers for these queries.
How Does Cryptocurrency Work?
Cryptocurrency is a highly encrypted decentralized digital exchange, which uses cryptography and serves as a medium of exchange, the transactions of which are recorded in a digital ledger called blockchain. This process of tracking a cryptocurrency’s transactions in a blockchain is known as mining. Bitcoin is a completely self-contained form of digital currency, which does not need any bank to store or make transactions.
It is similar to physical coins, which have value and can be used while trading, such as purchasing services and goods online or as a form of growing investment. Bitcoin can be traded from one person’s wallet to another, which is stored on the mobile phone, computer, or somewhere in the cloud. Bitcoin is forgery-resistant and the process of creating a Bitcoin is so complex that it is almost impossible to manipulate the system.
How are Cryptocurrency Transactions Confirmed?
Cryptocurrency consists of a network of peers, and each of the peers has the list of all the transactions made in the past. Any transfer in the network is signed by the sender’s private key after which a broadcast message is sent to the network, peer to peer. After a specific amount of time, it gets confirmed. Once the transaction is confirmed, it is fixed and cannot be reversed or changed in any case.
The job of the miner in the network is to confirm these transactions. Mining programs receive the notification, stamp it and send it back into the network. Once it is confirmed, every node will add the entry to their database and it becomes a part of the blockchain.
Popular Cryptocurrencies Used Around the World
Cryptocurrencies were created to enable easy transfer of money by eliminating geographical boundaries. Numerous cryptocurrencies were created one after the other over the past few years and now it is reported that over 3000 types of cryptocurrencies are being used around the globe. Some of the most popular cryptocurrencies are listed here – Join crypto Profit Trader To learn in which coin to invest