š§ Crypto 101: How Does Cryptocurrency Actually Work?
Ever wondered what makes
$BTC or $ETH tick? Letās break it down š
š 1. What is Cryptocurrency?
Cryptocurrency is digital money that operates on a decentralized network using blockchain technology. Unlike fiat, it doesnāt need banks or governments to function.
š” Think of it as a peer-to-peer financial system where trust is coded, not handed over to a third party.
āļø 2. Key Components That Power Crypto:
ā
Blockchain ā The digital ledger that records all transactions across the network. Itās transparent, tamper-proof, and distributed.
ā
Nodes ā Computers that validate and store the blockchain data. Every node has a full copy of the blockchain.
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Mining / Staking ā How new transactions are verified:
Proof of Work (PoW) (e.g.,
$BTC ): Miners solve math puzzles to validate blocks.
Proof of Stake (PoS) (e.g., $ETH): Validators are chosen based on how much crypto they lock in.
ā
Wallets & Keys ā
You own your crypto through:
Private Key ā Your digital signature. Never share this.
Public Key / Address ā Where people send you crypto.
š 3. Security Through Cryptography
Cryptocurrencies use asymmetric cryptography. That means a message encrypted with one key can only be decrypted with the other ā ensuring only you can access your funds.
š 4. The Trustless Revolution
Thereās no central authority. The code (smart contracts, consensus rules) enforces the system ā not a CEO or a bank.
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