In the time we live in, technology has made incredible advances compared to any time in the past. This evolution has redefined human life in almost every case. Indeed, this evolution is an ongoing process and thus, human life on earth is constantly evolving day by day. One of the latest inclusions in this direction is cryptocurrency.
Cryptocurrency is nothing more than a digital currency, designed to impose security and privacy on online financial transactions. It uses cryptographic encryption to both create coins and verify transactions. The new currencies are created by the mining process, where transactions are recorded on a public ledger, called a transaction block chain.
The evolution of cryptocurrencies is largely responsible for the virtual world of the web and involves the process of converting readable information into code, which is almost unknown. Thus, it becomes easier to track the purchases and transfers involved with the currency. Cryptography, since its introduction in World War II to protect communications, has evolved in this digital age, combined with mathematical theory and computer science. So, it is now used not only for communication and information, but also for money transfer across the virtual web.
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 (of course, to save money)
- Use wallet to create unique public address (this enables you to accept currency)
- Use public addresses to transfer funds in or out of wallets
A cryptocurrency wallet is nothing more than a software program that is capable of storing both private and public keys. In addition, it can interact with various blockchains, allowing users to send and receive digital currency and monitor their balance.
The way digital wallets work
Unlike conventional wallets that we carry in our pockets, digital wallets do not store money. In fact, the concept of blockchain has been so cleverly mixed with cryptocurrency that currencies are never stored in certain places. Or they don’t exist anywhere in solid cash or physical form. Only records of your transactions are stored in the blockchain and nothing else.
Real life examples
Suppose a friend sends you some digital currency, say in the form of bitcoin. All this friend does is transfer ownership of the coin to your wallet address. Now, when you want to use that money, you have unlocked the fund.
To unlock funds, you need to match the private key in your wallet to the public address where the coins were allocated. Only when these private and public addresses match, will it be credited to your account and your wallet balance will swell. At the same time, the balance of digital currency senders will be reduced. In transactions related to digital currency, the actual exchange of real money never occurs.
Understand the address of cryptocurrency
Naturally, this is a public address of a unique character. This enables a user or owner of a digital wallet to receive cryptocurrencies from others. Each public address, which is generated, matches the personal 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 where others can send emails. Email is the currency that people send you.
Understanding the latest version of technology in the form of cryptocurrencies is not difficult. One needs to have a little interest and spend time on the net to clear up the basics.