Cryptocurrency is nothing but a decentralized digital money, which is based on a special type of technology, known as Block Chain. The most popular types of cryptocurrencies which are used these days are Ethereum and Bitcoin. However, there are more than 50,000 different types of cryptocurrencies which are in circulation. Cryptocurrency can be used for buying regular services and goods. Though this currency is also commonly used in investing different types of assets, like stocks. Cryptocurrency can be exciting and convenient; however, it can be a bit risky for you to purchase them, if you are new to it. A fair amount of research needs to go in, in order to understand the mechanism, the system and other related aspects pertaining to cryptocurrencies.
How does it Work?
Cryptocurrencies are a medium of transaction which is encrypted, digital and decentralized. Unlike some authorized currencies like the Euro or US Dollar, there is no centralized authority which maintains and manages the value of cryptocurrencies. Instead, they are being taken care of by the users of cryptocurrency from all over the world.
Bitcoin was the very first cryptocurrency to be introduced, ever since, thousands of different types of them have evolved. However, Bitcoin still remains to be as one of the most popular types of cryptocurrencies to be used. They are considered to be the safest and the most reliable mediums to carry out online transaction. In the year 2020, the total market value of the all the cryptocurrencies put together, was couple of hundred billion dollars!
What is Block Chain Technology?
As mentioned, Cryptocurrency runs on Block Chain technology. So, what is Block Chain technology? It is nothing but distributed and open ledger which records all the transactions in code. In reality, it is quite similar to that of a checkbook which is being distributed through the countless computers from all over the world. Here “blocks” are used for the purpose of recording transactions. These blocks are then linked to a chain of previous transactions conducted with cryptocurrency.
With the help of Block Chain, every single individual using cryptocurrency has his own copy of this ledger which helps him in creating an unified record for transaction. A software is used to log each and every new transaction which takes place, and every single copy of the Block Chain gets updated with new information
In order to prevent fraud and other types of mishaps, every single transaction gets checked with the help of multiple different techniques of validation; proof of stake or proof of work.
Over the last couple of years, the concept of cryptocurrency has become tremendously popular. The fact that it is not regularized or governed by any country or authority, makes it open and easy to access. Besides, with Block Chain, optimum level of security is provided to the entire mechanism.
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