Cryptocurrency is a digital or virtual currency that uses cryptography for security. In the last few years, many of us may have heard the terms blockchain and cryptocurrency. Here, we need to understand the first point that cryptocurrency and blockchain are not the same. Many people assume that cryptocurrency means blockchain. The technology used to create cryptocurrencies is blockchain technology. A defining feature of a cryptocurrency, and arguably its biggest allure, is its organic nature. Blockchain is a distributed and decentralized technology.
Cryptocurrencies are created through a process called “mining.” Miners are rewarded with cryptocurrency for verifying and committing transactions to the blockchain public ledger. Ethereum, perhaps the second most valued cryptocurrency, has an annual mining reward of 5 ETH.
How does cryptocurrency work?
Cryptocurrency works using a technology called a blockchain. Blockchain is a decentralized technology spread across many computers that manage and record transactions. Each transaction is a file that consists of the sender’s and recipient’s public keys (wallet addresses) and the amount of cryptocurrency transferred. Miners verify each transaction by solving complex mathematical problems and add it to the blockchain for approval. Cryptography is making transactions more secure.
By design, cryptocurrency blockchains are inherently resistant to modification of the data. Ethereum, perhaps the second most valued cryptocurrency, has an annual mining reward of 5 ETH. To get more rewards and bit the competition group of miners work together to solve the puzzle.
History Of Cryptocurrency
In 2009, Satoshi Nakamoto launched Bitcoin, the world’s first cryptocurrency. The beautiful part of it was that anyone could take part in the mining process. Bitcoin quickly gained popularity, and by 2010 other developers began creating their own versions of the cryptocurrency. Some of examples of altcoin include Ethereum, Ripple, Litecoin, and Monero. Many companies started creating their own cryptocurrencies for different purposes.
What is the future of these cryptocurrencies?
Cryptocurrency is a relatively new technology. Currently, no one is able to predict the future of cryptocurrencies. Some believe that cryptocurrency will eventually replace traditional fiat currency, while others believe that cryptocurrency will simply complement existing currencies.