How Crypto Currency Works?

Cryptocurrency is a type of digital or virtual currency that utilizes cryptography for secure financial transactions, control the creation of new units, and verify the transfer of assets. Here's a simplified explanation of how cryptocurrency works:

 

Decentralization:

 Unlike traditional currencies issued by central banks, cryptocurrencies are decentralized. They operate on a technology called blockchain, which is a distributed ledger maintained by a network of computers (nodes) spread across the world. This decentralized nature eliminates the need for intermediaries like banks and allows for peer-to-peer transactions.

 

Blockchain Technology:

 A blockchain is a chain of blocks, where each block contains a list of transactions. When a transaction occurs, it is grouped with other transactions into a block. These blocks are then added to the blockchain in a sequential and immutable manner. The blockchain is continuously updated and verified by the network of nodes, ensuring transparency and security.

 

Cryptographic Security:

 Cryptocurrencies employ cryptographic techniques to secure transactions and control the creation of new units. Public-key cryptography is commonly used, where each participant in the network has a unique pair of cryptographic keys: a public key and a private key. The public key is used to receive funds, while the private key is kept secret and used to sign transactions to prove ownership.