What Is CRYPTOCURRENCY? How Does It Works? What Is CRYPTO Mining?

CRYPTOCURRENCY

We see cryptocurrency has taken the entire world like a flood and every day. More and more people are adopting to make transactions or even make incredible profits. But the question that comes to our mind is, What is cryptocurrency actually is? For the answer to this question or more like this, we are talking about cryptocurrency.

We will talk about everything you want to know about cryptocurrency.

 

What is Cryptocurrency?

Cryptocurrency is known as digital currency or the decentralized form of currency. It can either be used for payments or investments. Digital currency means that it is not as physical money rather, it is a type encoded in digital form, whose record stores in millions of computers. All around the world coming to decentralization what it really means is any authority, bank or government do not control or back that cryptocurrency up. There is not a single authority that can control the price hikes and trends for cryptocurrency. So simply, users all around the world themselves set the price and trends for cryptocurrency.

But why was cryptocurrency created and who created it? Let's talk about the story behind its creation. The first time bitcoin was created and launched was in 2009 by a developer named Satoshi Nakamoto. Who tried to create a way easy for people to send and receive transactions in seconds. The other reason behind its creation was to allow all the users to just be independent to transact money to anyone they want. They have to pick up the phone, send the address, and sent assets in seconds.

It is considered as a special code that is saved in your device and if you want money for anyone, you can simply send it from your own device like a smartphone and it will be easier to send.

 

How does cryptocurrency work?

Imagine you're having a conversation with your friends. Now, in this conversation, someone's going to bring up cryptocurrencies. Now cryptocurrencies are something that everyone wants to talk about, but no one really knows how they work. So today I'm going to fix that I am route from simply learn and this is cryptocurrency explained. Since man world currency has been a very important part of our lives in the caveman era, they use the barter system. Now the barter system involves goods and services being exchanged among each other. So now we have a situation where a caveman is exchanging seven apples and getting oranges in return. Now the barter system fell out of use because it had some glaring flaws. Now, these flaws include having people's requirements coincide.

For example, you have five apples, and your friend has five oranges. You want some of his oranges, now until and unless your friend has a need for the apples that you own, he'll not be ready to make an exchange for it. There's no common measure of value now since there's no common measure of which value of a commodity can be expressed. There's a problem when you have to decide how many apples you are ready to trade for one orange or mango. Not all codes can divide or be subdivided. 

For example, you can divide a live animal into different smaller units the goods cannot be transported easily. Now, unlike our modern currency fits in your wallet or your mobile phone. The goods that you own cannot be taken with you everywhere you go after realizing that the barter system then works very well. The currency went through a few iterations in 110 BC, an official currency minted in thousand 250 AD gold plated. Florence was introduced and used across Europe and from 1680 to 1980, the paper currency gained widespread popularity and was used across the world.

 

This is how modern currency as we know it came into existence modern currency included paper currency and coins, credit cards, and digital wallets. For example, you have Apple pay Amazon pay DM PayPal and banks and governments controlled so on all this. Now this means that there was a centralized regulatory authority the delimited how paper currency and credit cards worked now.

Imagine the scenario of doing an online transaction here. You're thanking your friend for paying for your lunch. Are you saying that you're sending the money to their account, now this transaction takes place successfully, but there are several ways where this could have gone wrong? They could have been a technical issue at the bank. For example, the systems could have been the machines weren't working properly. And so on that means there's a central point of failure, which is the bank the user's accounts could have gotten hacked. For example, it could have been a DDoS attack or identity theft. So on or the transfer limits for that account were exceeded, thus the future of currency lies with cryptocurrency.

Imagine the transaction between two people in the future. One of them has the Bitcoin app and there's a notification asking whether they are sure they're ready to transfer five bitcoins. If yes, processing takes place. Here we're authenticating the user's identity by checking whether they have the required balance to make that transaction and other things. Now, after that's done, the payment is transferred, and they received the payment. All this happens in a matter of minutes and is as simple as that this. Removes all the problems of modern banking there are no limits to the funds you can transfer your accounts cannot be hacked and there's no central point of failure. Now, as of 2018, there are over 1,600 cryptocurrencies available now.

Now there are some popular ones like Bitcoin litecoin it's Harry amends each cash and new cryptocurrency crops up every single day. Now, considering how much growth there has at the moment, there's a good chance there's plenty more to come in the upcoming years. A cryptocurrency is a digital or virtual currency that is a medium of exchange.

Now cryptocurrency is quite like a real-world currency that does not have any physical embodiment. It also uses cryptography to work the way it does. Now some features of cryptocurrency are that there's a limit to how many units can exist with Bitcoin. This limit exists at 21 million now, after this, it will produce no more bitcoins and you can verify the transfer of funds. Now the hashing algorithms that Bitcoin uses make it very easy for users to determine if a transaction is valid. They operate independently of a bank or a central authority they work in a decentralized manner. Now new units can be added only after certain conditions are met, for example, for Bitcoin it has added only after a block to the blockchain will the miner be rewarded with bitcoins and this is the only way it can generate new bitcoins. So what makes cryptocurrency so special? There are little to no transaction costs. Now, if you use the digital wallet, you'll know that if you're transferring money from your wallet to your bank account.

If you are setting up an account in your bank, you need to do some amount of paperwork and documentation with cryptocurrencies. It avoids international transactions that are faster than wire transfers take about half a day to transfer money from one place to another. But with cryptocurrencies, it only takes a matter of minutes or seconds.

What's the crypto in cryptocurrencies? It's a method of using encryption and decryption to secure communication in the presence of third parties with ill intent. Now, this refers to third parties who want to steal your data or want to eavesdrop on your conversation. Cryptography uses computational algorithms like sha-256 which is the hashing algorithm that Bitcoin uses a public key which is like a digital identity of the user which he shares with everyone and a private key which is a digital signature of the user which he keeps hidden.

Bitcoin Transactions

Now let's talk about a normal Bitcoin transaction. First, you have the transaction details. Now details who you want to send it to and how many bitcoins do you want to send them. Then it's passed through a hashing algorithm for Bitcoin we use the sha-256 algorithm, the output that you get through a signature algorithm with the user private key. Now, this is used to identify the user this output is then distributed across the network for people to verify this by using the sender's public key.

The people who verify the transaction to check whether or not it's valid are unknown. Now after this, the transaction and several others are added to the blockchain where they cannot be changed again. Bitcoin is a digital currency that is decentralized and works on blockchain technology. It uses a peer-to-peer network to perform.

Ethereum is a currency that's accepted in the Ethereum Network. Now the Ethereum network uses blockchain technology to create an open-source platform for building and deploying decentralized applications.

VidCon and Ethereum are the biggest and most valuable cryptocurrencies in the market right now. Both of them use blockchain technology, which is nothing but technology. It involves transactions to a container called a block and creating a chain of blocks in which data cannot be altered. Currency is mine using a method called proof-of-work, which is a form of the mathematical puzzle that needs to be solved before a block can be added to the blockchain. Finally, it uses across the world.

Let's talk about the differences with Bitcoin. It uses to send money to someone. This is like how real-life currency works with Ethereum. It is used as a currency within the Ethereum Network, although it can be used for real-life transactions as well Bitcoin transactions are manual, which means you have to perform these transactions with Ethereum. You have the option to make these transactions manual or automatic or programmable, so these transactions will take place when certain conditions meet for Bitcoin. It takes 10 minutes to perform a transaction, which is the time it takes for a block to be added to the blockchain. With Ethereum, it takes about 20 seconds to do a transaction no blockchain is used as money for real transactions. Ethereum is used to power the Ethereum network and power real-life transactions.

 

What is Cryptocurrency Mining?

Cryptocurrency mining is one of the key elements that allow cryptocurrency to work the peer-to-peer decentralized networks. It is a process in which transactions between users are verified and added to the public ledger. And also a process in which it is used to introduce new coins into the existing circulating supply.

 

How does it work?

A miner is a network that collects transactions and works to organize them into the blocks. Whenever transactions are made, miners receive and verify the transactions and add them into the memory pool. It assembles them into blocks of notable transactions.

 The first in mining the block is to hash each transaction in the memory pool. Before starting the process, the mining load extra transactions themselves to mining reward. This transaction refers to as COINBASE TRANSACTION. After every transaction, it hashed. These hashes are known as a Markle tree or a Hash tree. They organize these hashes into pairs and hashes again until reached the top of the tree as a Root hash or a Markle root. Their hashes are checked and when the valid hash is found the founder will broadcast it to the network. Another way it checks if the hash is valid and adds a block into their copy of the blockchain and moves on to mining the next block.

Yet, sometimes the two miners broadcast the valid block at a time, and competition between these two blocks will continue until it mines the next block with the best and either one of the competing blocks.