Have you heard about the debit card or pay pal, cryptocurrency is equivalent to it except the numbers on the screen shown cryptocurrency instead of currencies like the dollar. However, to use these currencies, you do need to understand the concept of digital money, the blockchain, and cryptography.
Cryptocurrency or bitcoin is a best digital currency only exists on the computer and transfers between the peers without any interference of banks. The transactions are recorded public ledger digitally called a blockchain. Moreover, the transaction data and its record are encrypted using the cryptography. This is the reason it is called a cryptocurrency.
However, there is a drawback with this currency as it is controlled by the computer algorithm and users but not centralized by the central government. It is a globally distributed system traded online as cryptocurrency exchange like stock markets. Bitcoin is a main cryptocurrency that is used digitally unlike Ether, Ripple, and Litecoin.
Work of Crypto Currency
There is no interference of the bank in this transaction—then how does this work? The transaction is processed between the end users using the software, names as cryptocurrency wallet. One need to use this wallet for a transaction from one account to another. For every transfer, the person enters the password or private key associated with the account. The whole transaction is encrypted between the peers and the broadcast to the crypto currency’s network and added to the blockchain. Moreover, the transaction added to the public ledger via mining process.
It is kept secret who done the transaction but the amount is public and each transaction carry each set of key, whoever owns the key can transfer the amount. These transactions are added to the ledger simultaneously but it is sequentially added to the miners.