Get Familiar With The Basics of Crypto currencies to Understand The New Age Currencies Better

You must have heard about Bitcoin, the first cryptocurrency that made its appearance in 2009. However, have you not heard about Litecoin, Potcoin, Ethereum, IOTA, DigitalNote and Influence Mine? These are also cryptocurrencies in the digital currency world, which presently has nine hundred active cryptocurrencies. Investors who seek significant gains by overcoming the limitations of the stock markets are keen to invest in cryptocurrencies, which despite its volatility could provide very high returns.

Although the market of cryptocurrency is yet to stabilize, and it is still emerging, it holds significant promise for those who take an interest in acquiring cryptocurrency, initial coin offering or crypto mining operation that could turn their fortunes. People are minting money by trading, buying and mining cryptocurrency.  In this article, we will explore some basic terminologies related to a digital currency that should help to understand the world of cryptocurrency better. 

Cryptocurrency explained

If you wonder, what cryptocurrency is, then you should know that it is the term used for digital money that is gaining rapid popularity. The attraction of cryptocurrency is that unlike paper currency, this form of digital cash is designed to be anonymous (in most cases) and completely secure. The anonymity is the result of using the technique of cryptography that converts clear information into code that is almost impregnable. You just cannot crack the code, which adds to the security of the currency. All transactions including transfers and purchases are tracked with the help of cryptography thereby keeping the identity of the owners completely confidential.

Not a new technology

Cryptography emerged during the World War II, and the technique involves the use of computer science and mathematical theory to transfer information and data securely. Presently it finds use in securing information, communication and moving money online.

Working modality of cryptocurrencies

Government control that exists in printing and distributing paper currency is absent in case of cryptocurrencies. Cryptocurrency could be similar to creating money from thin air or nothing at all. There is neither any creator nor controller for digital cash. A cryptocurrency runs on an online, shared ledger known as blockchain that currency owners use for posting transaction and mining records. It is similar to any other financial accounting except that it runs on sophisticated software that records the ownership of the currency in circulation and all transactions while maintaining complete confidentiality of the owners.

What is blockchain?

All cryptocurrency transactions are recorded in a decentralized, digitized public ledger called the blockchain. Every transaction is a block that adds to the ledger in chronological order. The market participants can track digital currency transactions without the need of central record keeping. First developed for Bitcoin, all cryptocurrencies use it now.

Miners run the blockchain

Computer specialists known as miners are responsible for running the blockchain who use potent computers for tallying the transactions. Whenever any transaction happens, it is the task of the miners to update it in the blockchain and ensure that the information is authentic so that the transactions are secure and processed safely and adequately.