What is a crypto currency?
A crypto currency is digital money that unlike traditional currency, it is not controlled by any banks or government entities and the creation and movement of crypto currency is recorded on a public ledger called a “blockchain.” Once the information is recorded on the blockchain, it also serves as a permanent preservation of history that cannot be changed. The public ledger can be examined by anyone.
Traditional fiat currencies, such as a physical paper reserve note, plastic or coin is backed by a government entity and is controlled and recorded on a private ledger by the banks.
How is crypto currency created?
Traditionally, physical currencies are created by printing paper currencies or minting coins. However, crypto currencies are created mathematically by solving (also known as hashing) complex mathematical problems called algorithms. The entire process is called mining by using powerful computers to solve the algorithms. The mining process also helps to secure the network and to confirm transactions. Every time an algorithm is solved, a certain amount of crypto currency is awarded and recorded on the blockchain. The newly awarded crypto currency can then be traded on an exchange for other crypto currencies or for goods and services or traded for traditional currencies.
Last update on March 24, 9:18 pm by Crypto-city.