Cryptocurrency: An Overview of its Basics
The decentralized digital nature of cryptocurrency offers an alternative banking system to traditional banks. How does cryptocurrency work and what is it? We’ll look at the basic concepts of cryptocurrency in this article and explain what you should know.
What is Cryptocurrency?
Cryptocurrency uses cryptography to control and monitor the creation of units and ensure transactions are secure. Decentralized cryptocurrency operates independent of central authorities, as opposed to traditional currency which is controlled and managed by financial institutions and governments. The decentralized nature of cryptocurrency makes it resistant to government manipulation and interference.
Bitcoin was the first cryptocurrency, created by an unidentified person in 2009. They used the pseudonym Satoshi Nakamoto. Since then, thousands more cryptocurrencies with different features and properties have appeared.
How does Cryptocurrency work?
The blockchain is an open ledger of cryptocurrency transactions that’s kept by a worldwide network. The validity of the transaction is checked by a global network using sophisticated algorithms. After a transaction has been validated, it will be added to the Blockchain and can’t be reversed or altered.
A limited supply is one of the most important features of cryptocurrency. Unlike government-printed currency, the maximum amount of most cryptos is fixed. Bitcoin for instance, will have a supply limit of 21 million coins by the year 2140. It is this limited supply that helps ensure cryptocurrency’s value as it increases in demand over time.