Introduction to Cryptocurrency
What is Cryptocurrency?
Cryptocurrency is a type of digital or virtual currency that employs cryptographic technology to secure transactions. It does not rely on a central issuing or regulatory authority but uses a decentralized system to record transactions and issue new units.
Basic Components of Cryptocurrency
- Rules and Protocols: A set of computer codes specifying how participants transact.
- Transaction History Ledger: A record storing all transactions, usually using blockchain technology.
- Decentralized Participant Network: Updates, stores, and reads the transaction ledger based on the rules in the protocol.
How Cryptocurrency Works
- Blockchain: Cryptocurrencies operate on a distributed public ledger that records all transactions.
- Mining: The process of creating new units of cryptocurrency by solving complex mathematical problems.
- Transactions: Using cryptographic techniques to verify and secure transactions.
Features of Cryptocurrency
- Decentralization: Does not rely on central authorities.
- Security: Utilises cryptographic technology to protect transactions.
- Anonymity: Transactions can be kept anonymous.
Storage and Use of Cryptocurrency
- Crypto Wallet: A physical device or online software used to securely store cryptocurrency private keys.
- Exchange: A platform that facilitates the buying and selling of cryptocurrencies.
Security of Cryptocurrency
- Blockchain Technology: Provides a secure transaction recording system.
- Two-Factor Authentication: Enhances the security of transactions.
Categories of Cryptocurrency
- Bitcoin: The first cryptocurrency.
- Tokens (Altcoins): Cryptocurrencies other than Bitcoin.
