What Is Cryptocurrency, And How Does It Work?
Did you ever wonder why our currency value decreases as our economy goes down? This is because our local currency is centralised. In other words, owned by the government. Hence, whatever happens in the economy invariably affects our rupee value.
To counter this, a decentralised virtual currency was introduced, known as cryptocurrency. Now, crypto means concealed, and hence cryptocurrency is the decentralised secret currency that you solely own. They are secret as the transactions are encrypted and confidential.
In other words, cryptocurrency is a digital monetary currency that acts as a medium of exchange between people worldwide. You can buy, sell or trade goods and services online exactly like you would do with real money offline. Bitcoin, Ethereum, Binance coin are some of the popular cryptocurrencies around the world.
Let’s understand how these cryptocurrencies function.
Cryptocurrencies work on a technology known as the Blockchain. It is a digital ledger of cryptocurrency. Blockchain technology has two main components: Block and chain. A block is a chunk of different transactions executed. As soon as new transactions are executed, a new block is created. Each block has its unique code known as the Hash. These blocks are stored then in a public database known as the “Chain”. Blocks are added to the network in chronological order. All blocks of information sequentially related are chained together. This whole process makes it very complex for any person to infiltrate the data.
Also, every transaction in a cryptocurrency is secured through the user’s digital signature, making the user data less susceptible to fraud.
Cryptocurrencies Are The Future
To conclude, cryptocurrencies have changed the world of money. However, since it is still quite volatile, it is always better to do proper research before investing in one.
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