CryptoCurrency – A study
Cryptocurrency in general a reference to all decentralized digital currencies.It uses crptography for coin creation and online transactions.They are open source and available publicly with a transaction ledger to record the transactions.
In other words, Cryptocurrency is a virtual money over the internet.
The decentralized nature of cryptocurrencies prevents any single authority, such as a central bank or government, from ultimate control. By maintaining a public ledger, known as a blockchain, cryptocurrencies provide transparency, which is essential for building trust between untrusted parties. With the core software open sourced,anybody can view, submit bug fixes, or submit updates, which in turn helps improve the system.All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances.
In cryptocurrency, the term “token” describes a digital asset. It refers to the fact that cryptos are both value tokens / currency tokens (they represent value, but aren’t themselves of any inherent value) and they use strings of data called tokens (tokenization is a type of encryption).
How It works ??
As Bitcoin was the original open source cryptocurrency, most others are built using the same core technologies, such as keys, wallets, miners, and decentralized peertopeer networks. Ownership of cryptocurrencies requires a pair of keys (one public and one private), each a unique string of numbers and letters. It relies on the power of the internet to guarantee its value and confirm transactions. Users on a network verify every transaction, and those transactions then become a matter of public record. This prevents the same digital currency or coin from being spent twice by the same person.A public key functions as an “address”, to which other users send units of the cryptocurrency. A private key is kept confidential and allows a user to claim ownership of the associated cryptocurrency units. Wallets store the cryptographic keys that are used to access a currencies.
Mining of Coins(Currencies)
The currency creation (coins) in cryptocurrencies involves a process called as mining. The traders(miners) use a mathematical cryptographic algorithm to be solved to obtain certain amount of bitcoins in exchange.
Risks in Cryptocurrency
As with all currencies, cryptocurrencies come with risks. The more prominent risks come from theft, fraud, volatility, technical failures, lack of government support, regulatory uncertainty, competition from other currencies, and level of adoption. Many of these risks could result in one or more cryptocurrencies losing all value. For cryptocurrencies, theft most often occurs online from either an insider, an individual who works at or has physical access to the company, or an outside individual, who
gains unauthorized access to the company’s or individual’s systems online through a hack. In both cases, control of the cryptocurrency is transferred away from the owner. There have been two main targets for theft: exchanges and users. Over the last five years, many cryptocurrency exchanges have been hacked resulting in theft and the loss of cryptocurrency.
gains unauthorized access to the company’s or individual’s systems online through a hack. In both cases, control of the cryptocurrency is transferred away from the owner. There have been two main targets for theft: exchanges and users. Over the last five years, many cryptocurrency exchanges have been hacked resulting in theft and the loss of cryptocurrency.
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