Table of Contents
What IS CRYPTOCURRENCY?
Cryptocurrency is a digital payment system that does not rely on banks to verify transactions. It is a peer-to-peer system that allows anyone, anywhere to send and receive payments. Instead of being physical money transported and exchanged in the real world, cryptocurrency payments simply exist as digital entries in an online database that describe specific transactions. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger. Cryptocurrency is stored in digital wallets.
How Does Cryptocurrency Work?
Cryptocurrencies run on a distributed public ledger called a blockchain, a record of all transactions updated and maintained by currency holders.
Cryptocurrency units are created through a process called mining, which uses computer power to solve complicated mathematical problems that generate coins. Users can also buy the coins from brokers and then store and spend them using crypto wallets.
When you own cryptocurrency, you don’t own anything tangible. What you have is a key that allows you to move a record or measurement from one person to another without a trusted third party.
Although Bitcoin has been around since 2009, cryptocurrencies and blockchain technology applications continue to grow in financial terms, with more applications expected in the future. Transactions like bonds, stocks, and other financial assets could eventually be traded using the technology.
Examples Of Cryptocurrencies
There are thousands of cryptocurrencies. Some of the best known are:
Founded in 2009, Bitcoin was the first cryptocurrency and is still the most traded. The currency was developed by Satoshi Nakamoto, who is believed to be a pseudonym for an individual or group of people whose exact identity is unknown.
Developed in 2015, Ethereum is a blockchain platform with its own cryptocurrency called Ether (ETH) or Ethereum. It is the most popular cryptocurrencys after bitcoin.
This currency is more similar to bitcoin, but has evolved faster to accommodate new innovations, including faster payments and processes to enable more transactions.
Ripple is a distributed ledger system founded in 2012. Ripple can be used to track different types of transactions, not just cryptocurrencies. The company behind it has worked with various banks and financial institutions.
Cryptocurrencies other than Bitcoin are collectively called “altcoins” to distinguish them from the original.
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