How Does Cryptocurrency Work?
Crypto currency as we know is also known as digital money. It is an internet- based medium of exchange which uses cryptographical function to conduct financial transactions.
With the aid of blockchain technology, cryptocurrencies are decentralized and transparent. The most outstanding feature of cryptocurrency is that it is not manned or controlled by any centralized body . Thus it enjoys immunity from any form or government or governmental body or agency control and interference.
Cryptocurrency can be sent from one person to another through the use of private safe key and there is no requirement of a third party in the transfer and receipt of cryptocurrency.
Despite ceaseless and countless researches and publications by scientists, bankers, accounting firms etc, they still know just little about crypto currency.
It should be noted that at the onset, Satoshi Nakamoto never intended to invent currency but platform to serve as a peer to peer cash system. This invention marked an end to the failures recorded in the 90’s by those who tried to create digital money.
Having seen that all efforts to build a centralized digital money failed, Satoshi Nakamoto tried and succeeded in building non-centralized digital money and this marked the nativity/birth of cryptocurrency.
What is Crypto mining?
Crypto mining is a process in which transactions for various forms of crypto currencies are verified and added to the Blockchain digital ledger . Crypto mining involves two acts , namely; adding transactions to the blockchain( securing and verifying) and releasing new currency.
Simply put, crypto mining is when a a computer is used to solve a cryptographic puzzle.
Sice crypto currency has no centralized authority, there is need for some kind of mechanism to prevent any form of abuse by any ruling party.
This lead Satoshi Nakamoto to design a rule that that the minners need to invest some works of their computers to qualify for this task.
Who confirms a cryptocurrency transactions?
The answer is simply Miners. It is strictly the duty of miners to confirm transactions .
What is the reward of a miner?
A miner is rewarded with a token of cryptocurrency for confirming any transaction .
The name cryptocurrency was coined from the fact that they are built on cryptography. They are not secured by people or trust but by maths.
Some notable features of cryptocurrency transactions include but not limited to ;
- They are not reversible: A cryptocurrency transaction once confirmed, cannot be reversed. This means that you need to be extra careful before doing any transaction, because transaction once confirmed, can never be reversed as it is the case with normal bank transactions.
- Pseudonymous: It is not possible to connect the realm world identity of owners of cryptocurrency or those that make transactions. You only send or receive cryptocurrency from or to an address . You can only analyse transactions on flow but never possible to trace the real world owner.
- No permission is needed : To use, by or send cryptocurrency, you do not need the permission or approval of anyone. Just download the software and do what yo want to do.
- Security: Crypto funds are locked in a public key cryptography system. Every owner has a private key and thus only such owner can send or deal with his cryptocurrency.
- It is fast and glabalized: Cryptocurrency transactions are done within a twinkle of an eye and confirmed within very few minutes. It makes use of global network, thus has little or nothing to do with
In conclusion, cryptocurrencies are digital money free from any form of government interference , economic effect or policies. The possibility of cryptocurrency rising in value is very high.
What is the first cryptocurrency:
Bitcoin invented by Satoshi Nakamoto remains the first, most recognized and famous cryptocurrency.