What is Cryptocurrency?
By Umair Ansar on The Capital
In this article, we will learn what is a cryptocurrency and what is the relation between cryptocurrency and Blockchain. How the cryptocurrency sends and received. What are cryptocurrency mining and types of cryptocurrency?
What is Cryptocurrency?
A cryptocurrency is an internet-based medium of exchange which uses cryptographic functions to conduct financial transactions. Cryptocurrencies leverage blockchain technology to gain decentralization, transparency, and immutability. The most important feature of cryptocurrency is that it is not controlled by the central authority.
How Cryptocurrency sent and received?
The cryptocurrency can be sent directly between two parties without any third-party source. Cryptocurrency can change via the use of public and private keys. When any two parties can exchange the cryptocurrency these transfers need some minimal processing fees and allows the users to avoid the steep fees charged by traditional financial institutions.
What is the first cryptocurrency and types of cryptocurrency?
The first-ever created cryptocurrency is Bitcoin and there are many more cryptocurrencies but we discuss only some cryptocurrencies. First, we have,
Bitcoin:
As I mentioned above that it was the first cryptocurrency that ever created. So, we know Bitcoin is a cryptocurrency and It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. The author of this whitepaper that established this digital cryptocurrency under the pseudonym, Satoshi Nakamoto. So, now you think ok well it is bitcoin cryptocurrency but how this currency works.
How does bitcoin work:
Using blockchain technology, bitcoin allows users to make peer to peer transactions. These transaction doesn’t need any third authority like a bank. Each bitcoin is actually a computer file that is stored in a “digital wallet” app on a smartphone or computer. We can send and receive money through a digital wallet. Every single record is saved in a public list called bitcoin. The coin limit of bitcoin is 21 million.
Litecoin:
Litecoin was launched by 2011 and used as an alternative to bitcoin. Unlike another cryptocurrency, it is also an open-source and global payment network that is decentralized. There is also no central authority. But there is some difference between Bitcoin and Litecoin.
Litecoin is faster transaction times than bitcoin.
Bitcoin limit is 21 million but litecoin is 84 million.
They operate on different algorithms, Litecoin being “scrypt” and Bitcoin is “Sha-256”.
Ethereum:
Ethereum is a platform that allows building “Dapps.” Its currency is known as “Ether”. This is the main concept because very people don’t know that Ethereum is a platform and its currency is “Ether.” This allows users to transactions between two parties but ethereum can process the transaction in a number of seconds where bitcoin transaction takes time up to 10 minutes.
So, conclude this there are many more cryptocurrencies exist but I explain to you the most common cryptocurrencies and also explain to you the concept of cryptocurrency that works using blockchain. Now we understand that blockchain is the technology that enables the existence of cryptocurrency. I hope you understand all the basic concepts of cryptocurrencies. If you like this then share it with your friends who don’t know about all this stuff. For now, Stay safe, stay home.
