Introduction to Cryptocurrency
What is Cryptocurrency?
Cryptocurrency is a type of digital or virtual currency that uses cryptographic techniques to secure transactions. It does not rely on a central authority or regulatory body but instead uses a decentralized system to record transactions and issue new units.
Features of Cryptocurrency
- Decentralization: Cryptocurrencies are not controlled by any central institution, and transactions are verified and recorded using distributed ledger technology (such as blockchain).
- Security: Cryptocurrencies utilize cryptographic algorithms to ensure the security and verifiability of transactions.
- Limited Supply: Most cryptocurrencies have a limited total supply, usually based on a predetermined algorithm.
- Anonymity: Some cryptocurrencies prioritize privacy protection, employing ring signatures and stealth address mechanisms to obscure transaction details.
How Cryptocurrency Works
- Blockchain: Cryptocurrencies operate on a distributed public ledger called blockchain, which records the history of all transactions.
- Mining: Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complex mathematical problems to generate coins.
- Transaction Verification: Transactions require a two-factor authentication process to ensure security.
Types of Cryptocurrency
- Bitcoin: The first cryptocurrency, established in 2009.
- Ethereum: A decentralized application platform based on blockchain technology that supports smart contracts.
- Monero: A privacy-focused cryptocurrency that employs ring signatures and stealth addresses.
- Dash: A cryptocurrency based on Bitcoin that adds features such as instant payments and privacy enhancements.
