Jan 6, 2025
Ibiam Wayas
What is a cryptocurrency? It’s more than digital money. Cryptocurrency is a type of digital or virtual currency that uses cryptography for security.
Unlike traditional money issued by governments, cryptocurrencies operate on a decentralized technology called blockchain. This decentralized nature means that no single entity, like a bank or government, has control over the currency.
Cryptocurrencies function through a combination of blockchain technology, cryptographic security, and decentralized networks. At the core of every cryptocurrency is the blockchain, a digital ledger that records all transactions across a network of computers.
Many cryptocurrencies, including Bitcoin, use a process called mining to validate transactions and add them to the blockchain. This process involves using powerful computers to solve complex mathematical problems, and the first to solve the problem gets to add the block to the blockchain and is rewarded with new cryptocurrency.
Other consensus mechanisms include Proof of Stake (PoS), where validators are chosen based on the number of coins they hold and are willing to “stake” as collateral.
Cryptocurrencies are gradually gaining acceptance as a legitimate form of payment among businesses, from small retailers to large corporations. This trend is expected to continue, making digital currencies more mainstream.
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