Many of you had a question about cryptocurrency, what is a cryptocurrency and what was the purpose of creating a digital currency? How does cryptocurrency work? Here it is,
Cryptocurrency is a digital currency that cannot hold physically. Cryptocurrency can be used to make transitions, trade, pay bills, and every particular thing which can be done with physical money. A Cryptocurrency is a decentralized currency that uses a secure and encrypted process of transaction, there is a secured process of blockchain which can admire that the transaction is legit or not giving power to the public without involving the government or any central bank, although the government can monitor the transitions whether someone is not indulging in illegal activity. The purpose of creating a digital currency is to give control to the person over his own money. He can make transitions on his own whenever he wants, he can withdraw, whatever amount of money he wants to, and also make transitions without assuring anyone.
The reason why Cryptocurrency makes a place on the ground is, that a person has to use banks for transitions and to secure his money, as he gives his money to the banks. he lost his control over his money like there are several banks and each one of them allows to make a withdrawal of a particular amount, while withdrawal we have to answer their several questions, also there is a history that many people’s cash had been seized by banks for reasons. By using Cryptocurrency a person has full control over his own money he can make transactions, he could do trade with it, transfers whatever amount of money he wants, and also withdraw how much money amount he wants that has to be present in his digital Cryptocurrency wallet, without any hindrance.
Cryptocurrency can make transitions but how? There is a secured and encrypted process of usage;
The first step of the transaction is Signing, a person has to enter details like TX message, sender recipient, amount of money being transferred. After a transaction, the wallet produces a unique digital signature mathematically mixing by private key( basically a long string letters and numbers) as well as digital signatures are different at each transaction to make it more secure
The step of broadcasting the wallet starts sending out the file to the other computer that holds a copy of the blockchain. These computers are known as nodes that verify that the file is legit or not, and then check out the amount that I can spend and verify signatures.
Once the transaction is passed from the broadcasting process then it comes to the process of verification. The transaction has to be verified then a node receives a file it holds in the area called Mempool(short for memory pool) space for validation but still has to be confirmed.
Once the transaction is on the Mempool, then the miners pick up the transactions.
CRYPTOCURRENCY AND ITS TYPES
● Bitcoin (BTC) …
● Litecoin (LTC) …
● Ethereum (ETH) …
● Bitcoin Cash. …
● Ethereum Classic. …
● Zcash (ZEC) …
● Stellar Lumen (XLM) …
● Bitcoin Satoshi’s Vision (Bitcoin SV)
These cryptocurrencies are decentralized digital money using the blockchain system. Blockchain is most simply defined as a decentralized, distributed ledger technology that records the provenance of a digital asset.
The cryptocurrency was placed on the ground to give people control over their own money and to solve some severe problems faced by the people like people’s money in the banks seized for some reasons and some problems due to transactions and withdrawal. Although cryptocurrency transactions made digitally so there is a record
of each one’s transactions and simultaneously there would not be any illegal usage of money like money laundering and corruption moreover, this digital currency has solved a problem like, there are fake currency paper notes are used to manipulate the market so there is an alternative of that while making transactions you have to proceed through 4 steps as above mentioned.