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How cryptocurrency works?


How cryptocurrency works

Table of Contents

What is cryptocurrency?

Cryptocurrency Is a digital currency that is used to buy, sell, and transfer anything of value without involving any third-party system or central authority like banks. It is used as an electronic payment in which people from all over the world can transact with each other using digital cash without relying on fiat currency which is limited to a specific countryLearn more
You can not understand well cryptocurrency without knowing about blockchain. Blockchain is what makes this word called cryptocurrency.

What is Blockchain?

Blockchain is a decentralized distributed digital ledger that stores and records transactions or anything of value permanently. To understand fully this concept you have to hold a real image of the traditional monetary system and how it works. In traditional systems, we have databases that are managed and owned by financial sectors. All the transactions that are done in our daily life activities are being monitored and controlled by the government and financial sectors such as Banks that own the business. In other words, we can say our financial transactions are controlled by middlemen or central authorities which are Government and financial sectors like Banks.
What is the problem of this control?
With this control, you don't have full access to your financial data.
Let's take the example of banks
Banks limit the amount you can withdraw per day
Banks have access to your account balance
Banks can share your financial Data and personal information with the government because the government limits and controls the amount a normal citizen can hold in an account.
Banks can manipulate your financial data
You don't have access to financial services 24 hours a because financial sectors such as Banks operate only 5 days a week
The solution to all these problems is the use of Blockchain technology. Blockchain removes middlemen and allows a person to directly access services such as financial and government services without any authority control.
How a person can access services directly without any middleman in between or authority control?
This can be well explained using Bitcoin, the first digital currency that opened the door to all digital currencies available today.

How does Bitcoin(BTC) really work?

BTC is the first cryptocurrency that brought the idea of blockchain to the world and opened a door for other entrepreneurs who started to create new blockchains that bring more value to societies.
Bitcoins are generated by a process called mining.

Mining is the process of validating transactions occurring in the blockchain This process of veryfying transactions is a competitive process meaning there are many miners located in different locations across the world in which everyone has invested computational resources to perform the activity of validating Bitcoin transactions. This process involves solving complex mathematical cryptographic puzzles, and the one who succeeds in getting the answer is rewarded some amount of bitcoins for the job that has been done. For the miner to get a reward, needs to submit a proof-of-work to confirm the task. This is how bitcoins are released from the chain.

Who are miners?

A Miner is anyone who has invested the computational resources necessary to perform Bitcoin mining activities. Even, if you can become a miner, you just have to know the requirements needed to accomplish the task.

How to Own Bitcoins?

To own bitcoins you have to buy through exchanges. The best cryptocurrency exchange I recommend to you is Binance.  Create an account, deposit money, and buy the cryptocurrencies you desire.
As you do in traditional transactions you can do the same in cryptocurrency. You can buy and sell cryptocurrencies. You can exchange one cryptocurrency for another, you can exchange fiat currency vs cryptocurrency, and you can buy products and services using cryptocurrencies.
The difference between traditional transactions and cryptocurrency is that in the crypto industry, everything is done online and with no involvement of any middleman such as banks and government.
In the crypto industry, you become your own bank. You have full power and control of your own money. No one can know how much you have in your wallet unless you decide to share your private key with others.

Mindset Tip

"Every new paradigm is created from someone's mind, Satoshi Nakamoto created Bitcoin

Blockchain in his mind first through imagination then in reality. You can create anything 

you desire in your life "


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