What is Cryptocurrency?
You have probably heard about some of the most popular types of cryptocurrencies such as Bitcoin, Ethereum, Litecoin etc. Today, there are over 20,000 cryptocurrencies in circulation and the total market cap of all cryptocurrencies is $1.025 trillion. Cryptocurrency (or “crypto”) is an alternative form of currency that does not rely on central monetary authority such as a government or bank to verify transactions, it relies on decentralized system. It’s a peer-to-peer P2P system that can enable anyone anywhere to send and receive payments.” Crypto” refers to the various encryption algorithms and cryptographic techniques that safeguard secure online transactions. Basically, Cryptocurrency is a decentralized digital money that is based on blockchain technology.
Let us break this now.
Table of Contents
What is Decentralization
Decentralization is a process that distributes control among many smaller groups or locations, rather than giving that power to a single, central organization. A centralized model, on the other hand, is when a small handful of individuals make most decisions for a company. Cryptocurrencies do not have a central issuing or regulating authority, but as a substitute use a decentralized system to record transactions.
What is Blockchain
The technology which is at the heart of cryptocurrencies is blockchain technology. Blockchain technology is a decentralized, distributed ledger of transactions that is distributed across the various network of computer systems in blocks that are securely linked together. No one computer or organization can own the chain. Instead, it is a distributed ledger connected to the chain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every member’s ledger. And so sometimes Blockchain is referred to as distributed ledger technology (DLT). Any data stored on blockchain is unable to be hacked or modified, making the technology a revolutionary and promising disruptor not only for industries like payments and cybersecurity, but also for industries covering logistics, education and healthcare. But it is important to understand how are cryptocurrencies created? Cryptocurrencies are created through a process known as mining.
What is Cryptocurrency mining
Mining is a process in which computers solve complex puzzles in order to verify the legitimacy of transactions on the network. As a reward, the owners of those computers receive newly created cryptocurrency. Though anyone with a computer and internet connection can mine cryptocurrency, the process can be energy-intensive. If you’re thinking about getting into cryptocurrency, the easiest way is to buy it from an exchange that is well established and offers secured trading of cryptocurrencies in the market.