Cryptocurrency Fundamentals
Cryptocurrencies are a type of digital currency that uses cryptography to secure transactions and control the creation of new units. Unlike traditional currencies, cryptocurrencies are not backed by a government or central bank, making them decentralized and resistant to censorship.
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How Do Cryptocurrencies Work?
Cryptocurrencies operate through a network of distributed computers that use a public ledger called blockchain to record all transactions. Each transaction is grouped into a block and added to the existing blockchain, creating an immutable history of all transactions.
More about Blockchain
The blockchain is a public and decentralized ledger that records all transactions of a cryptocurrency in chronological order. Each block in the chain contains a set of transactions and a timestamp that links it to the previous block, creating a chain of blocks that is immutable and resistant to manipulation.
What is Mining?
Mining is the process of validating transactions and adding new blocks to the blockchain. Miners use computing power to solve complex mathematical problems that verify transactions and create new blocks. In return, miners receive a reward in the form of cryptocurrency.
What is a Wallet?
A wallet is a program or device used to store, send, and receive cryptocurrencies. Wallets can be software, hardware, or paper, and they use public and private keys to secure transactions.
What is a Smart Contract?
A smart contract is a computer program that automatically executes when certain conditions are met. Smart contracts are used on blockchains to automate transactions and agreements without the need for intermediaries.
What is a Token?
A token is a unit of value issued by an organization that represents a specific asset or utility. Tokens are used on blockchains to represent digital assets such as shares, bonds, properties, or currencies.