Definition of Cryptocurrency:
a form of currency that only exists digitally or virtually, that usually has no central issuing or regulating authority. Instead, it uses a decentralized system to record transactions and manage the issuance of new units. The process relies on cryptography to prevent counterfeiting and fraudulent transactions.
When was Cryptocurrency “created”?
Cryptocurrency was created in 2009 and first introduced to the world in 2013.
How does Cryptocurrency work?
Cryptocurrency works on blockchain technology. Blockchain is a set of blocks that record information and transactions. For example, a transaction is a file of who made the transaction and to whom with the amount signed digitally by the sender. Once signed, the transaction is sent to the network by peer to peer technology. After some time, the transaction is confirmed by miners. Once the transaction is confirmed by a miner, every node has to add the transaction to their database to become part of the blockchain.
Interesting fact, the word “crypto” in cryptocurrency stands for cryptography. Cryptography is a method for using encryption to secure the data in the presence of any third party with alternative motives. Only the sender and the intended recipient of the message can view its contents.
What are Miners?
Miners are rewarded with cryptocurrency for confirming transactions on the blockchain. To do this, miners must use some of their computers power to qualify for the task. Miners are competing to solve a piece of the cryptographic puzzle. After finding a solution, a miner can confirm the transaction and add it to the blockchain. As an incentive to do this, miners receive a payment from the network in the form of a cryptocurrency (ex: bitcoin). Miners are incentivized to main legitimacy of the transaction history within the blockchain.
Some Benefits of Cryptocurrency:
Low to no transaction fees (varies per cryptocurrency). No limit for the amount of transactions unlike traditional banks. 24/7 access to your money and no delay or extra charges for making a transactions after-hours/holidays. Anyone can use cryptocurrency without paperwork or physical currency.
Summary
Cryptocurrency is revolutionizing finance and banking around the world. With crpyto, anyone with an internet connection can trade, borrow or spend money around the world. We are still in the early phases of cryptocurrency as it starts to become more popular. People are becoming more familiar with the benefits and also believe in the future of crpyto as different blockchains and use cases develop.