Basics of cryptocurrency and how it works

In our time, technology has undergone an incredible development than ever before. This evolution has redefined human life in almost every way. In fact, this evolution is a continuous process, and thus human life on earth is evolving day by day. In this regard, one of the latest receipts is cryptocurrencies.

Cryptocurrency is nothing more than a digital currency designed to enforce security and anonymity in online money transactions. It uses cryptographic encryption to both create currency and authenticate transactions. New coins are created by an operation called mining, and the operation is recorded in a public book called the Operating Block Chain.

Small background

The evolution of cryptocurrency is mainly related to the virtual world of the web and involves the procedure of encrypting readable data into a code, which is almost undisclosed. This makes it easier to track purchases and transfers that cover the currency. Cryptography has evolved in World War II, from the day it was introduced to communication, in this digital age, mixed with mathematical theories and computer science. So now it is used not only for communication and data, but also to provide money transfers over the virtual website.

How to use cryptocurrency

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

  • You need a digital wallet (to store currency openly)
  • Use your wallet to create unique shared addresses (this allows you to buy currency)
  • Use common addresses to transfer money to or from your wallet

Crypto currency wallets

A cryptocurrency wallet is nothing more than a program that can store both private and public keys. In addition, it can interact with different blockchains, so users can send and receive digital currencies and leave a mark on their balances.

How digital wallets work

Unlike ordinary wallets that we carry in our pockets, digital wallets do not store currency. In fact, the concept of blockchain is so cleverly mixed with cryptocurrency that currencies are never kept in one place. Nor do they exist anywhere in money or physical form. Only the records of your transactions are stored in the blockchain and nothing else.

A real example

Suppose a friend sends you a digital currency, say in the form of bitcoin. What this friend is doing is transferring ownership of the coins to your wallet address. Now you can unlock the fund whenever you want to use that money.

To unlock the fund, you must match the private key in your wallet with the public address where the coins are assigned. Only when both private and public addresses are compatible will credit be credited to your account and the balance in your wallet swell. At the same time, the balance of the sender of digital currency will decrease. In the case of digital currency transactions, there is no real exchange of physical coins.

Understand the cryptocurrency address

By its very nature, it is a general reference to a unique symbol. This allows a user or digital wallet holder to receive cryptocurrency from others. Each generated public address has a corresponding private address. This automatic matching proves or identifies the ownership of a common address. As a more practical analogy, you can think of a common cryptocurrency address as an email address that others can send email to. Emails are the currency people send you.

The latest version of the technology, in the form of cryptocurrency, is not difficult to understand. It takes a little interest and time online to clarify the basics.