How does cryptocurrency work?
Thanks to Bitcoin, not a day goes by without some news from the Cryptocurrency world. However, a lot of people don’t know or don’t understand how cryptocurrency and the blockchain works. Here is a quick primer on the blockchain, the entire technology on which cryptocurrency is built.
When dealing with virtual currency, the biggest stumbling block is the confirmation of stake and existence. For example, in a real-world transaction, when someone gives something to another person, both people are party to the transaction. However, when the currency is virtual, confirming the transaction id harder. The solution to the problem and one that presents several other advantages is the blockchain.
The easiest way to describe the blockchain is as a ledger of all transactions. There are two ways the blockchain operates. When someone confirms a block, it becomes read-only, and nobody can change it. Also, the block is distributed across the entire network of nodes. When a new happens in the network, like a coin transfer, it is only available to the recipient when the block is confirmed, which can take as long as 15 minutes.
With the distributed nature of the blockchain, it is secure from corruption. Unfortunately, this very same technology makes it theft easy. Much like cash, when you lose it, it is gone forever. Which is why it is very important that owners of bitcoin secure their wallets.
