Understanding the Basics and Dynamics of Cryptocurrency from the Ground Up

OlufisayoNovember 17, 201901,044 views

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The idea of cryptocurrency and how it works is usually difficult for the layman to understand, but the concept is really easy once it is seen as internet-based currency. And that is what it is, a digital medium of exchange that operates on blockchain technology so that the application of the currency is transparent, unchangeable and even decentralized – meaning it is not controlled by a central authority or government.

Some of the examples of cryptocurrency are Bitcoin, Ethereum, Litecoin, Monero, Ripple, NEM, Dash, Waves, and Stablecoins among others that anyone can buy and sell of popular platforms such as Virgocx.ca among others.

People can send cryptocurrencies to one another using private or public keys with a very minor and negligible processing fee. The fees charged by banks and other financial institutions to transfer funds are much higher than those required to transfer cryptocurrencies, making it a better alternative in many cases.

Cryptocurrency surfaced as the byproduct of Bitcoin which was created by Satoshi Nakamoto in 2008. The intention of the anonymous Nakamoto was to invent an electronic cash system that can be used for peer-to-peer financial transactions on the internet, with no server or governing authority to make it truly decentralized. Bitcoin creation led to the birth of cryptocurrency.

How does it work? It works by users or operators, called miners, creating and confirming cryptocurrency transactions. Users or operators are also known as peers within the network. A peer knows the transaction history of everyone within the network with the currency balance of everyone knowable to every peer.

When one peer makes payment to another peer, a transaction file that shows the transaction is created and provable that A sent so-and-so amount to B with A signing away the transaction with his private key.

Following A’s signature with his private key, the completed transaction is broadcast over the entire network and all the peers can see it. While the entire network sees the transaction almost immediately, it might take a few moments before the transaction gets confirmed.

Once a transaction is confirmed, it becomes permanent and irreversible; without confirmable, it will only remain pending. Only miners can confirm transactions, making it legitimate and a confirmed transaction within the database and blockchain; miners get paid a fraction of the cryptocurrency transaction.

Cryptocurrencies today are taking the world by a storm since banks and business organizations and even governments have begun to adopt it for safe financial transactions that cannot be compromised by the activity of any one person or agency.

It is the currency of the future but a few things remain the product of probability in the mining and applicability of the digital token. However, you can learn more today by simply reaching out to us for more information.

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