Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. Here's how it works:
Transactions are recorded on a decentralized ledger: Cryptocurrency transactions are recorded on a decentralized digital ledger called a blockchain. The blockchain is a public ledger that records all transactions that have ever taken place on the network. Each block in the chain contains a number of transactions, and once a block is added to the chain, the transaction is considered confirmed and cannot be reversed.
Cryptography secures the transactions: Each transaction on the blockchain is secured using cryptography. This means that transactions are verified and confirmed by a network of computers before they are added to the blockchain. Once a transaction is confirmed, it cannot be altered or deleted.
Mining confirms transactions: Cryptocurrency transactions are confirmed by a process called mining. Mining involves solving complex mathematical problems in order to verify transactions and add them to the blockchain. Miners are rewarded with newly created coins for their efforts.
Limited supply of coins: Most cryptocurrencies have a limited supply of coins. For example, Bitcoin has a maximum supply of 21 million coins. This is designed to prevent inflation and ensure that the value of the currency remains stable.
Transactions are anonymous: Cryptocurrency transactions are anonymous, meaning that the identity of the person making the transaction is not revealed. Instead, transactions are identified by a unique public address that is generated for each transaction.
Overall, the decentralized and secure nature of cryptocurrency makes it a popular alternative to traditional fiat currencies. However, its volatile nature and lack of regulation have also made it a controversial topic