The word cryptocurrency stands for an encrypted digital currency that can be transmitted and validated through a specific process generally referred to as mining. We will further investigate how cryptocurrencies actually work and what types of cryptocurrencies there are. Here is a brief overview of the main properties of cryptocurrency and essential facts you should know about it. In order to have a clear understanding of how this kind of currency actually works, there is a need to differentiate a few terms discussed below.
First, there is a need to define public ledgers. It needs to be noted that all confirmed transactions with the use of cryptocurrency are kept in public ledgers. The identity of the user generally remains confidential and the public ledger makes sure that the relevant balance of the user is calculated correctly. The new transactions are usually monitored in order to make sure that the user of the digital wallet spends only the coins he/she owns.
The second term that needs to be deciphered is a transaction. It generally refers to the transition of money between two e-wallets. The transactions are all kept in public ledgers and wait to be confirmed. The process of transaction confirmation usually takes several minutes. There is one more term that is used in regard to cryptocurrency – mining. To put it simply, mining stands for the procedure of approving the transaction and transferring them to the public ledger. The mining procedure adds value to cryptocurrency and is generally referred to as a proof-of-work system.
Typically, there are various factors (apart from the essential ones described above) that make this financial system different from that of the past. The first factor is adaptive scaling, which makes it possible for cryptocurrencies to work properly on different scales. One of such systems can be found in Bitcoin.
so, what are you thinking?