What is Cryptocurrency? How it Works.

Montreal, Canada - 28 February 2018: Stacked cryptocurrency coins (Bitcoin, Ethereum, Litecoins)

Cryptocurrency is the virtual or digital currency stored in the ledger in the form of a computerized database. This all computerized database, which includes all transaction records, is highly secure by cryptography, it uses the Hash function, various encryption algorithms, and cryptographic techniques which is impossible to hack. Cryptocurrency is decentralized it oppose to a central authority, it does not control by any third party, all control of the account remains with you that’s why it is decentralized. According to consumer reports, cryptocurrency is a riskier investment but you know that there is always risk in any kind of investment. More than 4,000 cryptocurrencies are now available in the market.

Bitcoin is the First decentralized cryptocurrency developed by Satoshi Nakamoto in the year 2009. After the release of bitcoin, lots of cryptocurrencies have come into the market. The supply limit of Bitcoin is 21 Million bitcoin out of 18 Million bitcoins that have been mined.

keys to remember about Cryptocurrency

Blockchain – All the transaction records are stored in the form of blocks. These blocks are linked and secured by Cryptography. Blockchain is regulated by a peer-to-peer network, once the transactions are recorded in the form of blocks then they can’t be reversible or deletable. Blockchains that are readable by the public and are widely used by cryptocurrencies. The block time is the time it takes for the network to create a new block in the blockchain. Shorter block time means faster transaction. Some blockchains take 4 seconds to create a new block. The use of blockchain is a distributed ledger for cryptocurrencies

Mining – Mining is the process where transactions between users are verified and then added to the blockchain and By solving complex puzzles and verifying 1 MB of transactions miners can get the rewards. This puzzle contains the most difficult mathematical equation by solving this puzzle miners will get rewards.

cryptocurrency exchanges – There are lots of platforms are present for cryptocurrency exchange, here you can exchange your cryptocurrency into physical currency( rupees, dollars, etc), and also you can exchange the physical currency into cryptocurrency. Before investing your money in cryptocurrency please learn about cryptocurrency exchanges.

Wallet – Cryptocurrency wallet is one kind of storage where you can store digital currency. A cryptocurrency wallet has a public key and private key by using these keys you can receive or spend cryptocurrency. Digital wallets use software hosting to store your wallet information and also using hardware wallets you can store wallet information securely.

Altcoin – Altcoin ( Alternative Cryptocurrency) is a type of digital asset other than Bitcoin, it has a standalone independent blockchain. Some altcoin uses a different mechanism to create a blockchain for transaction record. An altcoin is an alternative to Bitcoin. Ethereum and Binance Coin are the largest altcoins by market cap. Bitcoin requires plenty of time to clear the transactions of users also the supply limit is limited. The altcoin was launched into the market to overcome the limitations of Bitcoin. Some altcoins take very little time to clear the transaction of a user, produce a new block in the blockchain, also have more supply limits than bitcoin.

By using crypto coins you can make payments, you cannot use them for another purpose. To create a coin high-level coding is required which takes lots of time and money.  Litecoin, Bitcoin Cash, Namecoin, and Dogecoin are common examples of altcoins.

Token – For saving lots of time and money tokens are created. The token does not have its own blockchain it depends on another coin’s blockchain. Tokens cannot be mined like a coin, it can be created at once. A token can be used for investment or any purpose like trading, store value, to make purchases. Tokens are sold, created, and circulated through the Initial Coin Offering (ICO) process which is similar to stocks. Native tokens and non-native tokens are the forms of tokens, where some non-native tokens are useless. reward tokens, currency tokens, utility tokens, security tokens, and asset tokens are the types of tokens.

Ethereum Tokens are popular tokens in 2021.

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