Cryptocurrency is a digital or virtual form of money that uses cryptography for security. Unlike traditional currencies issued by governments (like the Indian Rupee or the US Dollar), cryptocurrencies operate on decentralized networks based on blockchain technology. This decentralization means that no single entity, like a bank or government, has control over the currency, making it a revolutionary development in the financial world.
How Does Cryptocurrency Work?
Cryptocurrencies work on a technology called blockchain—a distributed ledger that records all transactions across a network of computers. Each transaction is grouped into a "block," and these blocks are chained together to form a complete record of all transactions in the network. Because of the way blockchain is structured, it is incredibly secure and nearly impossible to alter once recorded, which is one of the main reasons cryptocurrencies are considered safe.
The most well-known cryptocurrency is Bitcoin, created in 2009 by an anonymous entity known as Satoshi Nakamoto. Since then, thousands of alternative cryptocurrencies have been developed, each with unique features and uses, such as Ethereum, Ripple, Litecoin, and more.