#CryptoBasics #cryptobasis #CryptoBasic $BTC $XRP $ETH
what is crypto
Cryptocurrency is a digital or virtual form of currency that uses cryptography for security and operates on a decentralized blockchain network instead of a central bank. It functions as a digital medium of exchange, allowing for peer-to-peer online transactions without traditional financial intermediaries like banks. Transactions are recorded on a public, distributed ledger called a blockchain, which is a secure and transparent system that verifies and timestamps every transaction.
Key Characteristics
Digital & Decentralized:
Cryptocurrency exists only in digital form and is not controlled by any single central authority or government.
Cryptography:
Advanced encryption techniques (cryptography) are used to secure transactions and control the creation of new units.
Blockchain Technology:
Transactions are recorded on a distributed, public ledger known as a blockchain, which provides a transparent and immutable record of all activity.
Peer-to-Peer:
Transactions occur directly between users without needing a third-party facilitator, like a bank.
Digital Wallets:
Users store their cryptocurrency in digital wallets and are responsible for managing their own private keys, which grant access to their funds.
How it Works
Transaction Initiation: When a user wants to send cryptocurrency, they initiate a transaction using their private key to sign it.
Network Verification: The transaction is sent to the cryptocurrency network, where computers (miners or validators) verify and validate it using complex algorithms.
Blockchain Integration: Validated transactions are grouped into blocks and added to the existing blockchain, creating a permanent and public record.