How crypto currencies work and What happens to your Money when you buy crypto currencies?
When you buy cryptocurrency, your money goes to the seller of the cryptocurrency, who may be an individual, a company, or an exchange platform. The seller receives your money in exchange for the cryptocurrency, which is then transferred to your digital wallet. Your digital wallet is a software program that stores your public and private keys, which are used to send and receive cryptocurrency.
The seller of the cryptocurrency may use your money for different purposes, depending on their goals and preferences. Some sellers may use your money to buy more cryptocurrency, to invest in other assets, to pay for goods and services, or to cash out and convert your money to their local currency. The seller may also use your money to pay for the transaction fees, which are charged by the network that verifies and records the cryptocurrency transactions on the blockchain.
The blockchain is a distributed ledger system that secures and tracks the cryptocurrency transactions. The blockchain is maintained by a network of computers, called nodes, that use cryptography to validate and encrypt the transactions. The nodes are rewarded with new cryptocurrency, or a portion of the transaction fees, for their work. This process is called mining.
Cryptocurrency is a digital payment platform that eliminates the need for a bank or financial institution to verify transactions and can be used for purchases or investments. Cryptocurrency has some advantages over traditional currency, such as lower transaction costs, faster processing, global accessibility, and transparency. However, cryptocurrency also has some disadvantages, such as volatility, security risks, regulatory uncertainty, and environmental impact.
