🧠 Crypto 101: How Does Cryptocurrency Actually Work?
Ever wondered what makes $BTC or $ETH tick? Let’s break it down 👇
🔗 1. What is Cryptocurrency?
Cryptocurrency is digital money that operates on a decentralized network using blockchain technology. Unlike fiat, it doesn’t need banks or governments to function.
💡 Think of it as a peer-to-peer financial system where trust is coded, not handed over to a third party.
⚙️ 2. Key Components That Power Crypto:
✅ Blockchain – The digital ledger that records all transactions across the network. It’s transparent, tamper-proof, and distributed.
✅ Nodes – Computers that validate and store the blockchain data. Every node has a full copy of the blockchain.
✅ Mining / Staking – 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.
✅ Wallets & Keys –
You own your crypto through:
Private Key – Your digital signature. Never share this.
Public Key / Address – Where people send you crypto.
🔒 3. Security Through Cryptography
Cryptocurrencies use asymmetric cryptography. That means a message encrypted with one key can only be decrypted with the other — ensuring only you can access your funds.
🌐 4. The Trustless Revolution
There’s no central authority. The code (smart contracts, consensus rules) enforces the system — not a CEO or a bank.
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