A
cryptocurrency, crypto-currency, or crypto is a digital currency designed to
work as a medium of exchange through a computer network that is not reliant on
any central authority
Its digital ledger is a computerized database using strong cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership.
So, Cryptocurrency is a decentralized medium of exchange having cryptography that is used for verifying and facilitating each transaction. And the mode of exchange runs on the blockchain technology that lends the current decentralized status. It is a shared public ledger that contains all the transactions that have ever taken place within a network.
How does cryptocurrency works?
According
to Satoshi founder of Bitcoin, Cryptocurrency is a peer-to-peer cash system and
does not require a central authority. A cryptocurrency is a tradable digital
asset or digital form of money, built on blockchain technology that only exists
online.
Cryptocurrencies
use encryption to authenticate and protect transactions, hence their name.
There are currently over a thousand different cryptocurrencies in the world.
1.
Architecture: Decentralized cryptocurrency is produced by an entire
cryptocurrency system collectively, at a rate that is defined when the system
is created and which is publicly stated. As of May 2018, over 1,800
cryptocurrency specifications existed.
Miners
use their computers to help validate and timestamp transactions, adding them to
the ledger by a particular timestamping scheme. In a proof-of-stake (PoS)
blockchain, transactions are validated by holders of the associated
cryptocurrency, sometimes grouped in stake pools.
2.
Blockchain: The validity of each cryptocurrency's coins is provided by a
blockchain. A blockchain is a continuously growing list of records, called
blocks, which are linked and secured using cryptography. Each block typically
contains a hash pointer as a link to a previous block, a timestamp, and
transaction data.
3.
Nodes: A node is a computer that
connects to a cryptocurrency network. The node supports the cryptocurrency's
network through either; relaying transactions, validation, or hosting a copy of
the blockchain. When a transaction is made the node creating the transaction
broadcasts details of the transaction using encryption to other nodes
throughout the node network so that the transaction is known.
3.
Timestamping: It is proof of work. Cryptocurrencies use various timestamping
schemes to "prove" the validity of transactions added to the
blockchain ledger without the need for a trusted third party.
4.
Mining: In cryptocurrency networks, mining is a validation of transactions. And
miner gets an incentive as well as rewards for processing crypto coin
transactions.
5.
GPU price rise: An increase in cryptocurrency mining increased the demand for
graphics cards (GPU) in 2017. Popular favorites of cryptocurrency miners such
as Nvidia's GTX 1060 and GTX 1070 graphics cards, as well as AMD's RX 570 and
RX 580 GPUs, doubled or tripled in price – or were out of stock
6.
Wallet: cryptocurrency wallet stores the public and private "keys"
(address) or seeds that can be used to receive or spend the cryptocurrency.
With the private key, it is possible to write in the public ledger, effectively
spending the associated cryptocurrency. With the public key, others can send
currency to the wallet.
7.
Anonymity: Bitcoin is pseudonymous rather than anonymous in that the
cryptocurrency within a wallet is not tied to people, but rather to one or more
specific keys (or "addresses"). Thereby, Bitcoin owners are not
identifiable, but all transactions are publicly available in the blockchain.