Cryptocurrency a name which creates an illusion that this name is of an alien technology or something which is created out of this word, which makes normal people believe that Cryptocurrency is something which is very hard to understand and it is a complex technology
But it’s not the reality Cryptocurrency is not that tough to understand it also works like any other currency but without a central controlling authority, unlike other currency which works under the control of a central authority the central bank Cryptocurrency is a decentralized digital currency which can be transferred between parties without any interface of central bank and every transfer of Cryptocurrency got recorded on a public ledger which can be accessed by anyone anywhere which makes it nearly impossible to duplicate or hack the system as every entry, every transaction is tested and checked by thousands of people who are managing the public ledger as it is not managed by a single person or group but anyone can volunteer to manage the ledger which makes it very transparent and safe.
To understand the working of Cryptocurrency closely we need to understand few basic terminologies and concepts which we have explained below.
The most important thing a currency should have above everything is Value. Every currency should have some value which makes it precious like US dollar which represents the value of actual gold and to get the gold out of the land it requires work and mining which give gold the value it has. This, in turn, give USD the value it has.
Just the same way Cryptocurrency works, in terms of value. Programmers called “Miners” who run specially designed programs on very capable hardware which is designed to solve “proof-of-work” puzzle to generate “Coins” gives the Cryptocurrency coin its value.
Where “proof-of-work” is an idea which facilitates the transition of work into value. As Cryptocurrency coins are nothing but an entity of Cryptocurrency which is accepted by the public ledger via adding transaction block in the blockchain where the process of adding every transaction into the ledger is called “transaction block” which is done by the volunteer programmers which also requires work. And the work behind the mining and transaction block making and adding process gives the Cryptocurrency “Coins” its value.
A when two digitally healed wallets transfer of funds in order to buy or sell Cryptocurrency that transfer of funds is called transaction. A transaction is secured by two keys where one key belongs to the owner of the wallet which acts as an electronic signature of the owner of the wallet and the other one is a public key accessible by everyone. When a transaction initiated it get submitted to public ledger which needs to be confirmed my miners who add the transaction in the public ledger which have the details of all the confirmed transactions from the starting of the Cryptocurrency.
From the start of a Cryptocurrency creation, all the completed transactions got recorded in a public ledger which is managed by a large number of a volunteer from all over the world and available publicly. In public ledger the identity of the Cryptocurrency owners kept encrypted. This process of ledger making works under the cryptographic techniques which control the creation of coins and validation of transactions. The ledger which is managed by the public ensures the transparency and security of every transaction which in turn eliminates the duplicacy of transaction entry or any other fraud.
We had explained the basics of the concepts Mining, Transaction validation and Public ledger which an investor should know before start investing in Cryptocurrency which helps them to understand the basics of Cryptocurrency without getting into the complexity of it. However, there are many other important but complex procedures which take place in mining and managing pubic ledger but we had given our investors brief information about the concepts to help them understand Cryptocurrency in an easy way. In one line we can say that Cryptocurrency is a digital decentralized currency which is created, managed and used by the public.
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