The word
‘cryptocurrency’ can conjure up an abstract idea of a complex system including blockchain, bitcoins, altcoins and so on. But in reality, the basic working mechanism of cryptocurrency is simpler than most of our day-to-day life activities. Cryptocurrency is the latest buzz in the world and in the era of digitization, it has proved to one of the greatest financial milestones till date. It is nothing but a medium of exchange that uses the radical technique of cryptography and math to secure its transactions. As opposed to the centralised electronic money and central banking system it works on the basis of decentralized control i.e. there is no intermediary present between the sender and the recipient, they transfer funds directly.
‘cryptocurrency’ can conjure up an abstract idea of a complex system including blockchain, bitcoins, altcoins and so on. But in reality, the basic working mechanism of cryptocurrency is simpler than most of our day-to-day life activities. Cryptocurrency is the latest buzz in the world and in the era of digitization, it has proved to one of the greatest financial milestones till date. It is nothing but a medium of exchange that uses the radical technique of cryptography and math to secure its transactions. As opposed to the centralised electronic money and central banking system it works on the basis of decentralized control i.e. there is no intermediary present between the sender and the recipient, they transfer funds directly.
Cryptocurrencies are some database entries that cannot be changed by anyone without accomplishing certain specific conditions and therefore, this attribute evinces its highly-secured policy that is impossible to be breached by any agency.
via GIPHY
MINING
Mining is open source so that anyone can confirm the transaction. The first “miner” to solve the puzzle adds a “block” of transactions to the ledger. The way in which transactions, blocks, and the public blockchain ledger work together ensure that no one individual can easily add or change a block at will. Once a block is added to the ledger, all correlating transactions are permanent, and they add a small transaction fee to the miner’s wallet (along with newly created coins). The mining process is what gives value to the coins and is known as a proof-of-work system.
CRYPTO TRADING PROCESS
In the crypto trading process, all confirmed transactions since the beginning are stored in a public ledger. The identities of the coin owners are encrypted, and the system uses other cryptographic techniques to ensure the legitimacy of record keeping. When the transaction gets submitted to a public ledger and awaits confirmation. Wallets use an encrypted electronic signature when a transaction is made. The signature is an encrypted piece of data called a cryptographic signature and it provides a mathematical proof that the transaction came from the owner of the wallet. The confirmation process takes a bit of time (ten minutes for bitcoin) while “miners” mine. Mining confirms the transactions and adds them to the public ledger.
MINING
Mining is open source so that anyone can confirm the transaction. The first “miner” to solve the puzzle adds a “block” of transactions to the ledger. The way in which transactions, blocks, and the public blockchain ledger work together ensure that no one individual can easily add or change a block at will. Once a block is added to the ledger, all correlating transactions are permanent, and they add a small transaction fee to the miner’s wallet (along with newly created coins). The mining process is what gives value to the coins and is known as a proof-of-work system.
Cryptocurrencies are proved to be the fastest and safest mode of transactions due to its pseudonymous, irreversible, decentralized and permission-less qualities.
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