Cryptocurrency is a digital currency that operates independently of a central bank or administrator, such as the Bank of England. The transactions are encrypted in a blockchain and can be tracked by everyone in the network. The cryptocurrency system works without a central repository or single administrator.
The first cryptocurrency was Bitcoin, which was created in 2009. Since then, numerous cryptocurrencies have been created including Ethereum, Cardano, Litecoin, EOS, Dogecoin and many more. There are over hundreds of cryptocurrencies all with different benefits to different people.
How it works
The creator(s) designed technology to work this way, meaning no one person can fully control it. They created it so that the network is decentralized and every computer owned by someone in the network has a copy of all cryptocurrency transactions ever made.
All cryptocurrencies are maintained by a community of cryptocurrency miners who are processing transactions and creating new coins. The process requires both physical effort, in the form of mining equipment and electricity; and intellectual effort, in the form of meticulous computer programming. The miners expend electricity to verify transactions & solve maths problems that maintain the block chain (a shared public ledger) on which all coins are stored /transferred. They also get rewarded with coins for doing this.
How secure is cryptocurrency?
The safety of cryptocurrency is attributed to the blockchain technology, which drives each transaction. A single transaction can only be initiated by the person who holds the cryptographic keys. Therefore, no one else can make a valid transaction on another person’s behalf or spend tokens without their permission and knowledge.
Cryptocurrency is sent over the internet in encrypted form. This encryption prevents anyone other than the intended recipient from accessing or altering the transaction. As a result, all transactions are kept secure and cannot be intercepted or reversed.
How bitcoin is created?
Unlike traditional currency, which is printed by banks or regulated by central banks, Bitcoin is created through a digital process referred to as ‘mining’. It’s similar to the way more traditional money is made – people invest their time and resources into it and are rewarded with coins. This means that new Bitcoins enter the market when the miners successfully create a block. It also means the supply is limited, and only 21 million Bitcoins will ever be created (the amount that exists today is already around 80% of that figure) – this appeals to those who are concerned about inflation.
What is cryptocurrency used for?
You can use cryptocurrencies to buy items such as clothes, food, cars, houses, etc. The most popular type of cryptocurrency is Bitcoin because it was the first cryptocurrency created. You can even go to websites like binance.com, coinbase.co and crypto.com where you can buy or sell bitcoins for cash or trade them for other alternative currencies (altcoins).
Cryptocurrency is a relatively new form of currency that’s not controlled by banks or governments. It uses cryptography to secure and verify transactions as well as creating new currency units. People use cryptocurrencies for many different reasons such as as an investment, to pay for goods and services, and more. There are some benefits to businesses associated with cryptocurrency such as low fees and fast transactions. Cryptocurrencies are still a new concept that’s growing as more people begin to use them.