How cryptocurrency works?

How cryptocurrency works ?
crypto currency works on block chain system.

What is block chain?

Blockchain is a technology on which Bitcoin – or any other cryptocurrency – works. It’s nothing but a sophisticated record-maintaining system run by several users in a decentralized way.

When a Bitcoin is exchanged, a block of data (an alphanumeric code that signifies the cryptocurrency, its quantum and value) is created and shared across all the computers (or nodes) attached to the network. Think of this block as a series of such transactions. Once this block is verified, a formal record gets entered into the decentralized database for everyone (who is on that network) to see. Then, when that same Bitcoin is sought to be sold again, another block gets created. The previous transaction (or block) is not erased. The new block gets attached to the old block to form a chain (hence the term blockchain) for everyone to see the trail. This way of record keeping also means that the transaction cannot be reversed.
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Working of block chain?

Let’s say that you want to invest in cryptocurrency, such as Bitcoin, through a major cryptocurrency exchange. After purchasing it, you decide to spend it. What happens now? At first, the transaction is unconfirmed, which means the transaction is not yet official, and it doesn’t become “set in stone” until it goes through a verification process. Once confirmed, the transaction becomes part of a record of historical transactions housed on the blockchain.

Cryptocurrency Miners verify the transactions and then add them to the public ledger. They use powerful computers to solve complex math problems that are the key to the verification process. Cryptocurrency Mining is open source, so anyone can confirm a transaction, and the first miner to solve the problem gets to add a block to their transaction ledger. This process is called the “proof-of-work system.”

After adding a block to the ledger, the miner is given a reward for their efforts, which varies based on the cryptocurrency. For example, Bitcoin originally awarded 50 BTCs, but that award halves at preset times and today has decreased to 12.5 BTCs.

check out this article how to invest in crypto currencies

Posted by

aniruddha vikharankar
an investor, blogger, astrophile and a web developer .

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