What is Cryptocurrency?




There's Bitcoin there's litecoin there's Eetherium so just what is cryptocurrency and how does it work essentially it's digital money that is bought and sold online there are no bills or coins it's not based on another asset like gold and it doesn't go through traditional financial institutions like banks instead these currencies operate in a completely decentralized system that uses so-called blockchain technology to track transactions to see how this works let's look at how you buy something with cryptocurrency say that Alice wants to buy a bike from Dan's using Bitcoin her crypto currency of choice Alice begins by logging into her Bitcoin wallet with a private key a unique combination of letters and numbers with a traditional financial transaction the exchange gets sent to banks on each side who record the money being subtracted from one account and added to another but remember in this scenario there are no banks or middlemen instead Alice's transaction is shared with everyone in the Bitcoin network these networked computers at Alice's transaction to a shared list of recent transactions known as a block every 10 minutes the newest block of transactions is added on or chained to all the previous blocks that's how you get a blockchain to ensure that each block of transactions on the chain is verified a subset of bitcoins network joins a race to solve a very difficult math puzzle and if they solve it first their record of the block of transactions becomes the official record they're rewarded with bitcoins of their own and the network gets a new block on the chain this entire process is known as mining but instead of chipping away at rock you're solving complex puzzles the fact that many computers are competing to verify a block ensures that no single computer can monopolize the Bitcoin market to ensure the competition stays fair and evenly timed the puzzle becomes harder when more computers join in the Bitcoin protocol says mining will continue until there are 21 million bitcoins in existence that's set to  happen around 20 140 if Bitcoin lasts that long.