Basics of cryptocurrency and how it works

In our time, technology has developed incredibly well compared to any time in the past. This evolution redefined human life in almost every way. In fact, this evolution is a continuous process, and therefore human life on earth is improving day by day. One of the latest developments in this regard is cryptocurrencies.

Cryptocurrency is nothing more than a digital currency designed to enforce security and anonymity in online money transactions. It uses cryptographic encryption to create both currencies and verify transactions. The new coins are created by a process called mining, and the transactions are recorded in a public book called Transaction Block Chain.

A little backwards

The evolution of cryptocurrency is mainly related to the virtual world of the Internet and involves the procedure of converting readable information into almost unopened code. This makes it easier to track purchases and transfers in foreign currency. Cryptography has evolved in the digital age from the day it was introduced to ensure the security of World War II by mixing mathematical theories and computer science. So now it is used not only for communication and information, but also to provide money transfers on the virtual Internet.

How to use cryptocurrency

It is very easy for ordinary people to use this digital currency. Just follow the steps below:

  • You need a digital wallet (open to store currency)
  • Use your wallet to create unique public addresses (this allows you to buy currency)
  • Use common addresses to transfer money to your wallet or wallet

Cryptocurrency wallets

A cryptocurrency wallet is nothing more than a software program that can store both private and public keys. In addition, it can interact with various blockchains so that users can send and receive digital currency, as well as track their balances.

How digital wallets work

Unlike ordinary wallets that we carry in our pockets, digital wallets do not store currency. In fact, the concept of blockchain is so cleverly mixed with cryptocurrency that currencies are never kept in one place. They are nowhere to be found in cash or in physical form. Blockchain only stores records of your transactions, nothing else.

Real life example

Suppose a friend sends you a digital currency, for example, in the form of bitcoin. What this friend is doing is transferring the ownership of the coins to the address of your wallet. Now when you want to use that money, you unlock the fund.

To unlock the fund, you must match the private key in your wallet to the common address where the coins are assigned. Only when these personal and public addresses coincide will funds be credited to your account and the balance in your wallet swell. At the same time, the balance of the sender of digital currency will decrease. In the case of digital currency transactions, there is no actual exchange of physical coins.

Understand the address of a cryptocurrency

By its nature, it is a public address with a unique series of characters. This allows the user or digital wallet owner to buy cryptocurrency from others. Each created public address has a corresponding personal address. This automatic matching proves or identifies the ownership of a shared address. As a more practical analogy, you can consider a public cryptocurrency address as your email address where others can send it. Emails are the currency people send you.

It is not difficult to understand the latest version of the technology in the form of cryptocurrency. You need to spend a little interest and time online to clarify the basics.