What Is Cryptocurrency & How Does It Work?

You must have heard about Bitcoin, Dogecoin, or Ethereum. But, do you know anything about these digital currencies? These are some of the highest-ranking cryptocurrencies around the globe. However, Bitcoin was the first Crypto founded in 2009 and has grown its prominence since then. Following this, Bitcoin is one of the best-known Cryptocurrencies with a value of 43,049.30 USD in contemporary times. Therefore, if it seems captivating to you to discover more about Cryptocurrency, then we are here to solve your doubts. Henceforth, through this manual, we will enlighten you about “What Is Cryptocurrency” and “How does Cryptocurrency work.” Thus, let’s begin with knowing about these digital currencies and how to trade.

What Is Cryptocurrency?


Cryptocurrency is a digital currency that enables people to invest, buy and trade digitally. Therefore, Cryptocurrency is a form of payment that flows without the central monetary authority, e.g., bank or government. Furthermore, in simpler terms, Cryptocurrency is not physical money like dollars, pounds, or any other currency. Instead, it exists digitally, where people buy Crypto and use it to invest and trade in various goods and services. Hence, through Crypto, it has become an easy task to exchange currency and trade worldwide. Also, Crypto payments exist as digital entries to an online database describing specific transactions.

The public ledger records the trades when you transfer your funds. Moreover, digital wallets are where you store your cryptocurrency. Thus, Cryptocurrency got its name because it uses encryption. It uses advanced technology that stores and verifies transactions. Furthermore, it transmits data between the public ledger and digital wallets using an advanced coding system. Encryption aims to provide confidentiality, safety, and security. Hence, using cryptography to secure transactions. Also, people invest in Crypto because it comes with unique features. Thus, below are some of the enticing features of Crypto.

Things Worth Knowing About Cryptocurrency

  • Cryptocurrencies are the currency of the future. Therefore, people are racing to buy coins, before they become more valuable or their price skyrocket.
  • Also, trading in Cryptocurrency becomes unmediated because of no mediator as central banks for transactions. Hence, many people love to invest in Crypto since the value of money reduces via inflation over time.
  • Furthermore, Blockchain is a technology behind cryptocurrencies. Blockchain is a decentralized processing and recording system that is more secure for transactions than traditional payment systems.
  • Cryptocurrencies are always going high up in their value. 

Now many investors approach Crypto as mere speculations and not real investments. Following that, Cryptocurrencies generate no cash flow. Thus, for your gain, someone has to pay more for the currency than you did. Hence, it is an incredible volatile buy. Therefore, with further ado, let’s start with how it works.

How Does Cryptocurrency Work?

The decentralized network operates the Crypto. The basic notion behind decentralized networks is that it runs on software networks. Therefore, the computers run distinguish copies of the same program. Also, there is a link between every computer, but none of it controls the network. Thus, it is a “decentralized network” in crypto jargon. Moreover, these computers have two fundamental functions, i.e., processing trade transactions and maintaining a database to record the transactions. However, the transactions store the database, which further convert into ‘blocks.’ These ‘blocks’  connect in chronological order in a long, unbroken chain. Hence, naming this software as “blockchain.”


Also, anyone can run these software programs, being open source programs. “Ledger” is a database that records and stores every transaction and is visible to anybody. Moreover, it ensures that nobody in the network is counterfeiting the currency, hence maintaining transparency. A fantastic fact via trading through these currencies is that the computer agrees to the transactions collectively. Hence you can’t edit it later. Transactions are publicly visible and are permanent. Furthermore, “mining” generates the units of Crypto. It involves using the software to solve complicated mathematical problems which further create coins.

Can You Buy Cryptocurrency?

can you buy cryptocurrency

Yes, you can buy the currency from brokers, stores, or crypto exchange sites. Also, you can store or send them using your cryptographic wallets. Although cryptocurrency launched in 2009, Cryptocurrency and blockchain technology is conspicuously emerging in the financial sector. Thus, the usage of cryptocurrency through trading like bonds, stocks, etc., is going to expand more in upcoming days.


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