What is cryto currency??
Cryptocurrency is a digital or virtual currency that uses cryptography for security and is decentralized, meaning it's not controlled by any government or financial institution. Here's a simplified explanation of how it works:
1. Decentralised network: Cryptocurrencies operate on a decentralized network of computers, called nodes, that record and verify transactions.
2. Mining: New cryptocurrency coins are created through a process called mining, which involves solving complex mathematical problems.
3. Blockchain: Transactions are recorded on a public ledger called a blockchain, which is maintained by the nodes on the network.
4. Wallets: Users store their cryptocurrencies in digital wallets, which can be software, hardware, or paper-based.
5. Private keys: Each wallet has a unique private key, used to sign transactions and prove ownership.
6. Transactions: When a user wants to send cryptocurrency to another user, they create a transaction and broadcast it to the network.
7. Verification: Nodes verify the transaction using complex algorithms and cryptography.
8. Blockchain update: Once verified, the transaction is added to the blockchain, and the nodes update their copies.
9. Consensus: The decentralized network ensures that all nodes agree on the state of the blockchain, preventing fraud and errors.
Some key characteristics of cryptocurrencies include:
-Decentralized: Not controlled by any single entity
- Limited supply: Most cryptocurrencies have a capped supply
- Fast and global: Transactions are fast and can be sent globally
- Secure: Uses advanced cryptography for security
- Transparent: Transactions are recorded on a public ledger
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