A cryptocurrency is a form of currency that is decentralized and also encrypted. The currency gets transferee between the peers and this transaction gets confirmed in a ledger which is public. This process is known as mining.
It is important to first start with knowing how cryptocurrencies work. In simple terms, the cryptocurrency is just like using a debit card or a PayPal account. Just that what you would be sending or receiving will not be in fiat currency but a cryptocurrency. One is allowed to buy, sell or store cryptocurrencies.
Using cryptocurrency does not need lots of understanding. All that you need to know is that it is like your traditional monetary system like using a credit card. Before understanding cryptocurrency one needs to know what digital currency is. Blockchain technology and cryptography are also important to understand cryptocurrency.
Cryptocurrency is a digital currency
When you transact in cryptocurrencies it gets recorded ina digital leger and this is known as Blockchain. Every process that happens is totally secure and is secured by cryptography. There is a lot of connections between these.
How does cryptocurrency works?
The cryptocurrency transactions present between the peers through cryptocurrency wallets. This is done by matching the public codes. All the transactions are recorded in a ledger that is held by the public.Everycryptocurrency user will have access to this ledger.
The transaction amount that happens in public but what one cannot see is who has done the transaction. Each transaction leads toa digital cryptocurrency wallet. Whoever has the password or the key to access the wallet owns the cryptocurrency which gets denoted the ledger.
When someone receives a cryptocurrency or when someone sends a cryptocurrency this can be done using public and private passwords. This transaction gets queued and gets added to the ledger. The blocks get added sequentially. This is the reason why this technology is known blockchain. In simple words, it is a chain or block of transactions.
How does cryptocurrency work?
It would seem very confusing to understand how cryptocurrencies work. Do not give up and understand what the fundamental concepts are in cryptocurrencies. There are many explanations on the web and you can read them to understand how the cryptocurrencies are transacted in.
See videos and read blogs as each article that you read or see will give you some extra information about cryptocurrencies. There are also lots of technical explanations on cryptocurrencies for those interested in the technical aspect of this currency.