Defining cryptocurrency

In reality, cryptocurrency is essentially just digital cash, even though it sounds a lot more

complicated. In response to the Great Financial Crisis of 2008, a programmer or group of

programmers (no one is 100% sure who invented Bitcoin) decided to create a digital currency that

would do away with banks and financial institutions. The programmer/programmers wanted to come

up with a peer-to-peer method for exchanging money rather than relying on a 3rd party. Thus, Bitcoin

was born. To store cryptocurrency transactions, cryptocurrency relies on blockchain technology,

which is essentially a public Excel spreadsheet. On the blockchain, everyone can see what

transactions are made, and the record of these transactions lasts forever. To put it simply,

cryptocurrency is a way of transacting digitally without the use of a bank.

Cryptocurrency: how it works

An evolving public record called the ledger is accessible to everyone in the network. There is no way

to add a transaction to the ledger until another user or computer in the network can reach a

consensus and solve a complicated cryptographic puzzle, and this takes a lot of computing power.

So much so that the electricity needed to commit fraud by faking transactions makes fraud

uneconomical, so it does not happen at all.

Imagine you want to buy some Bitcoin. By connecting to the network, you would have a network user

solve a cryptographic puzzle to validate your transaction. Upon solving this puzzle, and after it is
verified by a consensus of other users, the transaction is added to a block of data, and that block of

data is added to a chain of previous transactions, which is called a blockchain. Blockchain security

comes from solving complex cryptographic puzzles, gaining the consensus of many

users/computers in the network, and utilizing a great deal of energy.

Blockchain - how it works

A blockchain is a series of interconnected blocks of information. It's helpful to think of these blocks

as containers that store transaction records. On average, 500 cryptocurrency transactions are

stored in each block. All blocks are connected in such a way that the chain is verified. the order is

correct. What does that mean? Before adding the last block of information to the chain, it checks the

information in the previous block, which also applies to the previous block, and so on. The

blockchain is then an uninterrupted series of stored information. The beauty of this is that everything

stored on the blockchain becomes traceable, permanent, and immutable. This makes cryptocurrency

a deeply transparent and credible currency. What is cryptocurrency mining? As the "mining" part of

its name suggests, cryptocurrency mining is the process of carefully processing bitcoins in hopes of

financial reward. Bitcoin relies on mining to confirm new transactions and update the blockchain

ledger. Bitcoin miners use sophisticated computer systems to examine very complex "blocks" of

transactions. If they are the first to process the block of information, bitcoin miners receive a reward

in the form of bitcoin. And then the process starts all over again. Essentially, they are paid to keep

the entire system honest. It is this mining system that decentralizes Bitcoin and keeps it peer-to-peer

and independent of third-party financial institutions. Cryptocurrency mining not only helps certify the

legitimacy of bitcoin transactions, but it is also the only way new bitcoins are circulated. The main
advantages of cryptocurrencies are due to their decentralized structure, cryptocurrencies can offer a

number of solutions: Reduce corruption: Cryptocurrencies try to overcome the problem of absolute

power by sharing them among a large number of network participants. After all, this is the underlying

concept of blockchain technology. Put people in control of their own finances: With cryptocurrencies,

there is no central authority, which means you and only you can access your funds. Cut out the

middlemen: When

transferring traditional money, a middleman like your bank or digital payment service takes a

percentage. With cryptocurrencies, all network participants in the blockchain act as intermediaries;

Their payout is structured differently than fiat brokers, so it pales in comparison. Serving the

bankless: A large part of the world's population has no or only limited access to financial institutions

such as banks. Cryptocurrencies aim to address this issue by bringing decentralized finance to every

corner of the world and allowing anyone with a phone to participate

in the financial system.