Question of the year
What is Cryptocurrency?

Although the question may seem too Obvious but most of the people around the world who are investing in cryptocurency does not know its meaning. Before proceeding to what is cryptocurrency let me explain what is fiat currency, look at the image bellow and telme what it is.

10 dollars right ! but what if i tell you this 10 dollar note has no value of its own. Would you be surprised, Yes because its just a piece of paper that represents 10 dollar, it presents what the government and free market determine it is worth. The world fiat means that that the value of the currency does not come from the material it is made of, but by the value that it represents according to the economy and issuer. Materials which has vale of its own are such as gold ,diamond silver and etc.

what is cryptography

Cryptography is a method to convert plain text into a format that can not be read by an unauthorized entity. It is designed and used so data can be securely stored and transmitted in a form so that only those for whom it is itended can read and process it.Cryptography was born out of the need for secure communication in the Second World War and now it has found it's way to digital world using mathematical algorithms and computer science to for secure communication and online money transfer.

Digital currency

It is a currency in its pure electronic form, which means unlike fiat currency or coins it has no physical form. It has existed around the world for a long time but was only in restricted to games. You could purchase digital currency within game by using fiat currency through credits cards and thus can buy upgrades for particular character or luxury suits within.

Cryptocurreny

It is the final , most modern form of digital currency ,it is a decentralized virtual form of money that can be used to make purchases or be exchanged for other traditional and digital currencies. It is a currency which uses cryptography to make secure and anonymous transactions online. With the help of cryptography this currency is designed to be uncrackable or hack able from any sort of computer hack.

Cryptocurrencies use decentralised technology to let users make secure payments and store money without the need to use their name or go through a bank. They run on a distributed public ledger called blockchain, which is a record of all transactions updated and held by currency holders.

How does blockchain work?

whenever a transaction is made, which can be buying crypto, selling them, using them to purchase goods ,or transferring them to a friend. The transaction itself is broadcasted(sent to everyone connect to the network)who have full node wallets. Then the transaction is validated by the group of people called miners. Since everyone in the network has a copy of ledger anyone can mine the transaction in hope of a reward which is now 6.25bitcoin per this day.

What is cryptocurrency mining? People who are running software and hardware aimed at confirming transactions to the digital ledger are cryptocurrency miners. Mining uses computation power to solve a puzzle of each transaction and the power of computer hardware is determined by number of hashes it can perform per second. In reality computer uses mathematical algorithm on each to transaction to guess a particle hash which will then fulfill the requirement of format and validate all the transaction within certain amount of time ,thus a block is found.

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