The cryptocurrency and Blockchain network is a digital marketplace that uses encryption, peer-to-peer networking, and an online open ledger to transfer the information of the transaction. To start trading, you need to have Bitcoin or Ethereum first. However, hundreds of cryptocurrencies are available with varying degrees of liquidity on multiple recipients exchanges worldwide.
Crypto is digital money, and the blockchain network is the technology that makes it work. Unfortunately, this simple-seeming system is much more complicated than that. To avoid all the complications and know more about this crypto world, some basic details of this system and its work are provided here.
What is CryptoCurrency?
Crypto is digital money. The blockchain network is the facilitating hand that powers currencies like Bitcoin. It was created as a reaction to the global financial crisis of 2008. The idea was that creating a currency based on mathematical principles would make it secure, reliable, and fair to all users. There are already over 1000 cryptocurrencies available today. They are also commonly called digital or virtual currencies.
Crypto has become big business, with investors pouring billions of dollars into coin offerings that raise funds for startups. Till now, billions of dollars of money have been invested in coin offerings specifically for cryptocurrencies through multiple recipients and blockchain technologies so far. This included the cost of creating the coins and marketing and PR.
The Blockchain Network
The blockchain network is the underlying technology that powers cryptocurrencies like Bitcoin, Ethereum, Ripple, etc. However, the same technology can also be used to create secure business applications that are not connected to any currency or asset! For example, it can be used to register legal documents like property records or medical records.
The blockchain networks that Satoshi Nakamoto created power cryptocurrencies in 2009. He designed Bitcoin, Ethereum, Ripple, Monero, etc. In 2014 Vitalik Buterin from Russia invented Ethereum, which was very different from Bitcoin because it had Smart Contracts, a way to write decentralized programs on the blockchain network.
Working of CryptoCurrency
Cryptos are usually backed by what's called "cryptocurrency". For example, Bitcoin is backed by the Bitcoin network. The Bitcoin network is run by miners who secure the blockchain network by validating transactions and creating new blocks. All Bitcoin transactions are public but only appear after miners verify them. Each transaction in the Bitcoin network is signed with a unique private key. The miner, who verifies the transaction, verifies ownership of all bitcoins in existence at that time.
Using cryptography properly ensures that these currencies are not counterfeited or forged by creating complex mathematical problems difficult enough to be computed but simple enough for anyone with a computer to solve. While it has seen some distortions in its performance in recent times, cryptocurrency still makes perfect sense to store wealth securely.
The blockchain network records everything happening across it by storing all digital currency transaction resolutions that have ever taken place in a block which can be compared to an Excel spreadsheet. In addition, they provide multiple recipients and secure trading options to all the users of the cryptosystem.