¥ The concept of cryptocurrency has been gaining traction in the financial world for many years now, but what exactly is it? This article will explain the fundamentals of cryptocurrency and how this digital currency is allowing people to transact in a whole new way.
What is Cryptocurrency?
Cryptocurrency is a digital form of money. It uses cryptography, which is a process that encodes information, to make transactions secure. Instead of using a central bank or government for its operations, cryptocurrencies operate on a decentralized distributed ledger— called a blockchain. All transactions that occur on the blockchain are approved by a consensus of users.
How Does Cryptocurrency Work?
Cryptocurrency works differently than traditional money. Instead of physical coins or bills, it only exists digitally. Transactions occur directly between two individuals (peer-to-peer) with no involvement from a third party such as a bank. These transactions are then stored on a public ledger called the blockchain. This makes cryptocurrency extremely secure, as all transactions are permanently recorded.
Transactions with cryptocurrency take place almost immediately and can be done anywhere in the world. All you need to do is transfer funds from one wallet to another. Cryptocurrency wallets are like bank accounts, only …