Digital asset, the creation and control of which is carried out using cryptography. Accounting is usually decentralized. Data functioning is based on blockchain technology using the principle of consensus.
The most famous representatives: Bitcoin, Ethereum.
The compulsory components of each cryptocurrency are: the algorithm for which it exists, the network, network members — miners or node holders, blockchain — data that is stored with all network members about all transactions, a crypto-encryption method.
I think how simpler to explain the essence of cryptocurrency. It is probably necessary to present the financial system and the relations of its participants without parasitic intermediaries without additional costs for accounting and notary expenses. This is the case when the participants of a decentralized system are themselves banks, accountants and notaries. A record of each operation is simultaneously kept by all members of the network; it is impossible to falsify or change information about the procedures already performed. It should be understood when we say the word cryptocurrency is digital money with the quality of decentralization, the whole life of such a currency occurs on the network and is recorded in the Blockchain.
The familiar monetary system is centralized or peer-to-peer, subordinate to the main center, which can: block the account, issue, increase or decrease the cost of the operation, suspend the transactions you make with your money, ask for a bunch of papers and ask a million questions. And you must obey them.
In the case of cryptocurrency, the nodes are a computer, computers, a database – which work according to a pre-programmed algorithm. There is no one main center to which everyone obeys. All are equal, none of the participants in the network is not in a position to redistribute funds, falsify transaction records, or lock accounts.
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