Cryptocurrency is generally described as “digital money.” Cryptocurrencies are a type of digital currency, which are those that do not exist in physical form. The first cryptocurrency was introduced in 2009 which was “Bitcoin”. An engineer named Satoshi Nakamoto of Japan has invented it. Cryptocurrency is a virtual currency based on blockchain technology. Virtual currency means that there is no physical form that you cannot touch that it is a peer-to-peer cash system. Which is made on a computer algorithm, it has no physical existence, neither you can touch nor keep it in the pocket because the cryptocurrency is not printed in physical form. That’s why it is called virtual currency. This currency has become quite popular in the last few years; it has access to everyone globally.
Anyone can buy or sell crypto with the help of their digital wallet.No authority has control over the cryptocurrency. There is no control of any country or government. Usually, all countries have their currency. And its control is in the hands of the country and the government. But the country or the government has no control over Cryptocurrency. Cryptocurrency does not print, yet you can trade it with the help of different trading platforms available.
Cryptocurrency is a currency that is built on a computer algorithm. This digital currency is not under the control of anyone’s authority. Normally, like other physical currencies rupee, dollar, and euro, etc. This currency is not operated by any state, country, institution, or government. It is a digital currency for which cryptography is used. At present, it can be used to purchase products or services. Countries across the globe discussing with their legal advisors regarding the Crypto legality and its regulations.
Many of them are legalized and few are in the process to do so. In starting phase it was not that popular, but gradually its rates started touching the sky as awareness increase, due to which it became successful. If seen, from 2009 to the present, there are about 4000 types of Cryptocurrencies in the market, which work as a peer-to-peer electronic system.
Anyone can gain access to cryptocurrencies. A person would need a cryptocurrency wallet to store a digital key that would allow them to access the address of the cryptocurrency. Wallets are usually web-based or app-based, allowing users to access and view their balances like in an online banking app. The exchange of these digital currencies is known as ‘peer-to-peer transactions, which simply means two persons can share among each other with their digital address, there are no banks or other third parties involved. Instead, each transaction ever made is recorded on a huge database known as a blockchain – think about it as a huge spreadsheet.
Each transaction made by any cryptocurrency is represented by a block that is added to the larger chain, which we called a blockchain. All the made transactions remain there in the blockchain forever. One can check the blockchain ledger to find the detail of desired transactions anytime anywhere. A blockchain isn’t establishing in a central location but is distributed between large networks of computers which are kept secure at all times through complex systems. This makes it virtually unfeasible for anyone to tamper with a blockchain and ensures all transactions and users are protected.
How Cryptocurrency Works
Cryptocurrency runs on blockchain technology, but what is blockchain exactly? The term has become so ordinary, its meaning and significance are often blurred. Blockchain is a technology by which the entries of the transaction are saved, that is, it is a digital ledger. Whenever a transaction takes place its information is saved as a block, the data inside the block is encoded with cryptography technology, which is called a hash. This is a type of high security, by which the data is kept protected, similarly, with increasing transactions, the blocks also increase or all the blocks in one go, are joined with another, a chain of blocks is formed, which is called a blockchain. Here both buyer and seller could transact without any middlemen.
A blockchain is simply a digital huge ledger of transactions. This ledger is allocated across a network of computer systems. No single system mange the ledger or tracks transaction records. Instead, a decentralized network of computers keeps a blockchain running and authenticates its transactions. The promoter of blockchain technology says that it can improve transparency, increase trust and support the security of data being shared across a network. Critics say that blockchain can be unwieldy, inefficient, expensive, and can use too much energy.
Sensible crypto investors buy a digital asset if they trust in the strength and utility of its prime blockchain. All cryptocurrencies run on a blockchain, which means crypto investors are investing (whether they are aware of or not) in the resiliency and attractiveness of that blockchain. Cryptocurrency transactions are recorded in eternity on the underlying blockchain. Multiple transactions of groups are added to the ‘chain’ in the form of ‘blocks,’ which validate the authenticity of the transactions and keep the network up and running. All data batches of transactions are recorded on the shared ledger, which is public. Anyone can go and look at the transactions being made on the major blockchains namely Bitcoin blockchain and Ethereum blockchain.