Cryptocurrency is a limited entry into a database, a digital currency that does not require a central authority. Cryptocurrency is usually transferred between peers and confirmed in a public ledger through a thorough process known as mining. There are basic terminologies that one needs to learn so as to understand how the entire process works.
a) Public ledger
All transactions that are confirmed within cryptocurrency are usually stored in a public ledger. This ledger is what is commonly referred to as the block chain. This means that each record is known as a block.
b) Wallets
This is where both private and public keys are stored. These keys are used either to receive or spend the cryptocurrency.
Examples of wallets include as follows:
• Desktop wallet
• Mobile wallet
• Paper wallet
• Hardware wallet
• Online wallet
c) Transaction
This is the transfer of funds between wallets. Once the transfer is complete, it is stored in the public ledger where it waits to be confirmed.
d) Mining
Mining in cryptocurrency simply means confirming or validating the transactions carried out after which they are added to the public ledger. It is within this process that miners obtain rewards, usually new cryptocurrency, for their effort in solving a complex computational problem.
#How cryptocurrency works.
• A transaction is requested.
• This requested transaction is made known to a point-to-point (p2p) network. This is a network consisting of computers known as nodes.
• Validation and authentication of the transaction and the user’s status is carried out by the network of nodes.
• The transaction, once verified, is pooled with other transaction to create new data for the public ledger.
• The block of data is later on added to the present block chain such that it is permanent and cannot be altered.
#What can you do with cryptocurrency?
• Buy goods
• Make investments
• Mining
• Accept as payment in businesses
#Most common cryptocurrencies include as follows:
• Bitcoin
• Litecoin
• IOTA
• NEO
• NEM
• Ethereum
• Ripple
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