The Basics of Cryptocurrency and How It Works

In the times in which we live, technology has become an incredible advancement compared to any time in the past. This evolution changes human life in almost every aspect. In fact, this evolution is an ongoing process and therefore, human life in the world is increasingly evolving on a daily basis. One of the most recently included in this aspect is cryptocurrency.

Cryptocurrency is nothing but digital currency, designed to impose security and anonymity in online money transactions. It uses cryptographic encryption to both generate money and authenticate transactions. The new coins were created by a process called mining, while the transactions were recorded by a public ledger, called the Transaction Block Chain.

Little backtrack

The evolution of cryptocurrency is primarily dedicated to the virtual world of the web and incorporates a method of converting information that can be read into a code, which is almost unstoppable. Thus, it is easier to track purchases and transfers that involve money. Cryptography, since the introduction of WWII to ensure communication, has flourished in this digital age, mixing mathematical theories and computer science. As such, it is now used to ensure not only communication and information but also money transfers across the web.

How to use cryptocurrency

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

  • You need a digital wallet (obviously, to save money)
  • Use the wallet to create unique public addresses (this will give you money)
  • Use public addresses to transfer funds to or from the wallet

Cryptocurrency wallets

A cryptocurrency wallet is nothing but a software program, capable of storing private and public keys. In addition, it can also communicate with various blockchains, so that users can send and receive digital currency and also monitor their balance.

How to operate digital wallets

Contrary to the usual wallets we carry in our pockets, digital wallets do not save money. In fact, the concept of blockchain is so cleverly mixed with cryptocurrency that currencies are never stored in a specific location. Neither do they have anything in hard money or physical form. Only records of your transactions are stored in the blockchain and nothing else.

An example of real life

For example, a friend sent you a digital currency, say in bitcoin form. What this friend did was he transferred the owner of the coins to the address of your wallet. Now, if you want to use that money, you can open the fund.

To open the fund, you need to pair the private key in your wallet with the address of the public designated coins. If these private and public addresses match, your account will be credited and your wallet balance will improve. At the same time, the balance of digital currency senders will decrease. In transactions involving digital currency, the actual exchange of physical coins will never occur at any hour.

Understanding the cryptocurrency address

Naturally, this is a public address with a different character. It provides a user or owner of a digital wallet to receive cryptocurrency from others. Each public address, created, has the same private address. This automatic merging confirms or places the owner in a public address. As a more practical analogy, you can consider a public cryptocurrency address as your eMail address where others can send emails. Emails are money that people send to you.

Understanding the latest version of technology, in the form of cryptocurrency is not difficult. One needs little interest and spending time on the net to clarify the basics.