The word “Bitcoin” and "cryptocurrency" has been in the news a lot lately, and you might be hearing them left right and centre from sources all over, so what is it all about? Well, let me tell you more about it!
A cryptocurrency (or crypto) is a type of digital/virtual money that allows users to exchange value in a computer network without the need of a middleman like a bank or payment gateway, allowing funds to be transferred worldwide, cheaply, and near-instantly.
Most cryptocurrencies are decentralized which means that there isn’t a central bank or entity that can change the rules without reaching a consensus. If a bank or government isn’t involved, how is crypto secure you would ask me? It’s secure because all transactions are vetted by a technology called a blockchain.
Cryptocurrencies are decentralized, which means there is no central bank or authority that can alter the rules without consensus. You'd ask me how crypto is safe if a bank or government isn't involved? Well, it's simple. Every transaction is verified by a technology called the blockchain.
Blockchain is a type of distributed ledger that records transactions, similar to the one used by banks. It is secured by a large network of computers. Each crypto transaction on this network is chronologically recorded in ‘blocks.' Because of these records, counterfeiting or forgeries are virtually impossible since the original document will be regarded as evidence and, any modifications to it will require the approval of everyone on the network.
Another fascinating feature of cryptocurrency networks' decentralized nature is their resistance to shutdown. In comparison, in order to shut down a centralized network, all that is required is to take down the system's main server. It is nearly impossible to determine a user's account balances if a bank's database is destroyed and there are no backups available. Another major plus on the crypto side!
Cryptocurrency units, depending on how they are used, might be referred to as coins or tokens. Some cryptocurrencies are intended to be used as units of exchange for goods and services, while others are meant to be stored-value alternatives. Some other cryptos are here to assist with the maintenance of computer networks executing complicated financial operations.