WHAT IS CRYPTOCURRENCY?
A Cryptocurrency is a digital or virtual asset secured by cryptography . Cryptocurrency is a digital money created from a code. This makes it nearly impossible to counterfeit or doublespend. It is designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of a computerized database using strong cryptography to secure transaction records, to verify the transaction of coin ownership, and to control the creation of additional coins. Many cryptocurrencies are decentralized networks based on blockchain technologyβa distributed ledger enforced by a disparate network of computers.
Cryptocurrency does not exist in physical form (like paper money) and is not issued by a central authority, since its not issued by central authority it is immune to government interference or tactical gambit. When a cryptocurrency is created preceding to issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction data. Cryptocurrency has no intrinsic value i.e it is not redeemable for another commodity such as gold.
HOW DOES CRYPTOCURRENCY WORK?
When someone requests for transactions , transactions are initiated and requested transactions are broadcasted in peer to peer (P to P)network consisting of computers known as nodes. Nodes are nothing but in simple words it is a point in network, when one node is connected to other nodes it is networking . Cryptocurrency wallet software are used for peer to peer transactions. The peer creating the transaction can be transferred from peer uses the wallet software to transfer balances from one account to another. To transfer funds, knowledge of a password ( a private key) associated with the account is needed.
The network of the node validates the user status using known cryptographic algorithm. After transactions are verified , the transactions are combined with other transactions to create a new block of data for the ledger. The transactions are recorded on data ledger. A verified transactions can involve cryptocurrency, contracts ,records or other information. The new block is then added to existing blockchain in a way that is permanent and unalterable. Then the transactions are completed . All users of a given cryptocurrency have access to the ledger if they choose to access it. They can download present copy of the software. The transaction amounts are public, but who sent the transaction is encrypted (anonymous) . Each transaction leads back to a unique set of keys. Whoever owns a set of keys, owns the amount of cryptocurrency associated with those keys .
HOW MANY TYPES OF CRYPTOCURRENCY ARE THERE ?
There are many types of cryptocurrency . Some of the main cryptocurrency or very well known cryptocurrency are:
Bitcoin
Bitcoin is one of the recognized cryptocurrency. Bitcoin is considered as original cryptocurrency since it is the first cryptocurrency which was founded. Bitcoin is a digital currency which can be sent to any part of the world. Bitcoin is consensus based peer to peer network which enables a new payment system and completely decentralized digital currency, without a central authority or single authority or administrator. Bitcoins does not exist in physical form. Transactions are verified by computer network called nodes on a digital ledger.
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