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 aspect. In fact, this evolution is a continuous process, and thus human life on earth is constantly improving day by day. One of the latest inclusions in this aspect is cryptocurrencies.
Cryptocurrency is nothing but a digital currency that is designed to require security and anonymity in online money transactions. It uses cryptographic encryption to generate currency and verify transactions. New coins are created through a process called mining, while transactions are recorded in a public ledger called a chain of transaction blocks.
A little step back
The evolution of cryptocurrency is mainly attributed to the virtual world of the network and involves the procedure of transforming readable information into code that is almost impossible. This makes it easier to track purchases and transfers involving currency. Cryptography, since its introduction during World War II to provide communication, has evolved in this digital age, mingling with mathematical theories and computer science. Thus, it is now used to provide not only communication and information, but also money transfers via the virtual network.
How to use cryptocurrency
It is very easy for ordinary people to take advantage of this digital currency. Just follow the steps below:
- You need a digital wallet (obviously to store the currency)
- Use the wallet to create unique public addresses (this allows you to receive the currency)
- Use public addresses to transfer funds to or from the wallet
A cryptocurrency wallet is nothing but a software program that is able to store both private and public keys. In addition, it can also interact with various blockchains so that users can send and receive digital currency and also monitor their balance.
The way digital wallets work
Unlike conventional wallets, which we carry in our pockets, digital wallets do not store currency. In fact, the concept of a blockchain is so cleverly mixed with cryptocurrency that currencies are never stored in a particular place. Nor do they exist anywhere in hard money or in physical form. Only records of your transactions are stored in the blockchain and nothing else.
A real life example
Suppose a friend sends you some digital currency, say in the form of bitcoin. What this friend is doing is transferring ownership of the coins to your wallet address. Now, when you want to use this money, you unlock the fund.
To unlock the fund, you must match the private key in your wallet with the public address to which the coins are assigned. Only when these private and public addresses match will your account be credited and your wallet balance swell. 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.
Understanding the address of the cryptocurrency
By nature, this is a public address with a unique string of characters. This allows a user or digital wallet owner to receive cryptocurrency from others. Each public address that is generated has a corresponding personal address. This automatic match proves or establishes ownership of a public address. As a more practical analogy, you can consider a public cryptocurrency address as your email address to which others can send emails. Emails are the currency that people send you.
Understanding the latest version of the technology in the form of cryptocurrency is not difficult. One needs a little interest and spends time online to understand the basics.