In the times we live in, technology has made incredible advances compared to any time in the past. This evolution redefines human life in almost every aspect. In fact, this evolution is a continuous process, and thus human life on earth is constantly improving day by day. One of the newest inclusions in this aspect is cryptocurrencies.
Cryptocurrency is nothing but a digital currency that is designed to require security and anonymity in online money transactions. It uses cryptographic encryption both to generate currency and to verify transactions. New coins are created through a process called digging, while transactions are recorded in a public ledger called the Transaction Block Chain.
A little back
The evolution of cryptocurrency is mainly attributed to the virtual world of the network and involves the procedure of transforming readable information into code that is almost impenetrable. This makes it easier to track purchases and transfers involving currency. Cryptography, after its introduction during World War II for secure communication, has evolved into this digital age, mingling with mathematical theories and computer science. Thus, it is now used to provide not only communication and information, but also for money transfers in the virtual network.
How to use cryptocurrency
It is very easy for ordinary people to use this digital currency. Just follow the steps below:
- You need a digital wallet (obviously to store the currency)
- Use the wallet to create unique public addresses (this allows you to receive the currency)
- Use public addresses to transfer funds to or from your wallet
A cryptocurrency wallet is nothing but a software program that can store both private and public keys. In addition, it can also interact with various blockchains so that users can send and receive digital currency, as well as monitor their balance.
The way digital wallets work
Unlike conventional wallets, which we carry in our pockets, digital wallets do not store currency. In fact, the concept of the blockchain is so intelligently mixed with cryptocurrency that currencies are never stored in a certain place. Nor do they exist anywhere in hard money or physical form. Only records of your transactions are stored in the blockchain and nothing else.
Real life example
Suppose a friend sends you some digital currency, say in the form of bitcoin. What this friend is doing is transferring ownership of the coins to the address of your wallet. Now, when you want to use this money, you unlock the fund.
To unlock the fund, you need to match the private key in your wallet with the public address to which the coins are assigned. Only when these private and public addresses match will your account be credited and your wallet balance increase. At the same time, it will reduce the balance of the sender of the digital currency. In digital currency transactions, the actual exchange of physical coins never takes place.
Understanding the cryptocurrency address
By nature, this is a public address with a unique string of characters. This allows a user or digital wallet owner to receive cryptocurrency from others. Each public address that is generated has a matching private address. This automatic match proves or establishes ownership of a public address. As a more practical analogy, you might consider a public cryptocurrency address as your email address to which others can send emails. Emails are the currency that people send you.
Understanding the latest version of the technology in the form of cryptocurrency is not difficult. One needs a little interest and spending time online to clarify the basics.