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Cryptocurrency Introduction

Cryptocurrency is a digital currency that uses encryption technology to ensure transaction security and control the creation of new units. Here are the main features and workings of cryptocurrencies:

Main Features

1. Decentralization: Cryptocurrencies are not controlled by any central institution, and transactions are recorded on a distributed public ledger (blockchain).
2. Immutability: Once a transaction is recorded on the blockchain, it cannot be tampered with or deleted.
3. Consensus Mechanism: Validity of transactions is verified through consensus algorithms (such as proof of work or proof of stake).

How It Works

1. Transaction Records: Transactions are recorded in blocks, including information such as transaction participants, transaction time, and transaction amount.
2. Consensus Reaching: A majority of participants in the distributed network must agree on the validity of the transaction.
3. Block Linking: Blocks are linked to the blockchain using encrypted hash values to ensure data integrity and immutability.

Blockchain Technology

Blockchain technology is the foundation of cryptocurrencies, providing a secure, transparent, and tamper-proof transaction recording system. Blockchains can be categorized into public chains, private chains, and consortium chains.

Use Cases

Cryptocurrencies can be used in various scenarios, such as cross-border payments, digital asset trading, etc. However, many experts believe that cryptocurrencies (such as Bitcoin) do not possess the basic characteristics of currency, price fluctuations.

Highly volatile, unable to serve as a stable store of value.