In the times we live in, technology has made incredible progress compared to any time in the past. This evolution has redefined human life in almost every way. In fact, this evolution is a continuous process and hence human life on earth is improving day by day. One of the latest inclusions in this regard is cryptocurrencies.
Cryptocurrency is nothing but a digital currency designed to enforce security and anonymity in online monetary transactions. It uses cryptographic encryption to both create currency and verify transactions. New coins are created by a process called mining, while transactions are recorded in a public ledger called the Transaction Block Chain.
A little setback
The evolution of cryptocurrency is largely attributed to the virtual world of the Internet and involves the process of converting readable information into code that is nearly invulnerable. Thus, it becomes easier to track currency-related purchases and transfers. Cryptography, since its introduction in World War II for secure communication, has evolved in this digital age, blending with mathematical theories and computer science. Thus, it is now used not only for communication and information, but also for securing money transfers in a virtual network.
How to use cryptocurrency?
It is very easy for common people to use this digital currency. Just follow the steps given below.
- You need a digital wallet (obviously to store currency)
- Use the wallet to generate unique public addresses (this allows you to receive currency)
- Use public addresses to transfer funds from wallet or AMD
A cryptocurrency wallet is nothing more than a software program capable of storing both private and public keys. In addition, it can also interact with different blockchains so that users can send and receive digital currency as well as track their balance.
How digital wallets work
Unlike the regular wallets we carry in our pockets, digital wallets do not store currency. In fact, the blockchain concept has been so cleverly merged with cryptocurrency that currencies are never stored in a specific location. They are nowhere to be found in cash or physical form. Only your transaction records are stored on the blockchain and nothing else.
A real life example
Let’s say a friend sends you some digital currency, say in the form of Bitcoin. What this friend does is he transfers the ownership of the coins to your wallet address. Now, when you want to use that money, you’ve opened the fund.
To unlock the fund, you need to match your wallet’s private key with the public address the coins are allocated to. Only when both private and public addresses match will your account be registered and your wallet balance will be inflated. At the same time, the balance of the sender of the digital currency will decrease. In digital currency transactions, the actual exchange of physical coins never takes place under any circumstances.
Understanding cryptocurrency address
By its nature, it is a public message with a unique string of characters. This enables a user or digital wallet owner to receive cryptocurrency from others. Every public address that is created has a corresponding private address. This automatic match confirms or verifies the ownership of the public address. As a more practical analogy, you can think of a public cryptocurrency address as your email address to which others can send emails. Emails are the currency people send you.
Understanding the latest technology in the form of cryptocurrency is not difficult. One needs to spend a little interest and time on the net to understand the basics.