Cracking the code: Understanding cryptocurrency and Cryptography.

Money in digital form is exactly what cryptocurrency is. Although it is a digital currency, it holds the same monetary value as the physical money you have in your hands.

Cryptocurrencies do not exist as a stack of notes or coins. Instead, they live only on the internet. Consider them virtual tokens, the value of which is decided by market forces created by those seeking to purchase or sell them.

How cryptocurrency work

Cryptocurrency is on the blockchain technology. Contrary to popular belief, cryptocurrency is stored on a blockchain and not in crypto wallets.

A crypto wallet is just a medium that enables users to perform cryptocurrency transactions and access funds on the blockchain. A crypto wallet performs the same function as a traditional bank account.

A cryptocurrency blockchain is similar to a bank’s ledger. Each cryptocurrency has its own block that contains the verified record of every single transaction ever made using that currency.

Similar to the way we have different dominations in paper currency, cryptocurrency has different types like bitcoin (which is the most popular cryptocurrency), Ethereum, litecoin, BNB, USDT, and lots more.

Blockchain transactions are public but also pseudonymous. In other words, while transactions are visible on the blockchain, the users behind them are not easily identifiable. Cryptocurrencies achieve this through the use of cryptographic techniques.

Cryptocurrency uses cryptography to perform secured digital transaction-cryptography enables cryptocurrency transactions to be secured, trust-less, and obscure to any third-party intermediaries.

What is cryptography and why is it important in cryptocurrency?

Cryptography is the science of hiding information. It is the practice of sending encrypted, secure messages between two parties. The sender encrypts the message which will be obscure(uncertain) to a third party(anyone other than the receiver), and the receiver decrypts the message and makes it legible again.

In cryptocurrency transactions, because of cryptographic techniques, Personal information like name, and account number isn’t needed, unlike the traditional bank way of doing transactions. Instead of names and account numbers, all you need to provide is a computer-generated string of letters and numbers known as an “address”.

This address is not inherently tied to any of your personal information, so you can theoretically send cryptocurrencies to other people without ever knowing each other’s actual identities.

You also don’t need any intermediaries like the bank or payment service. The transaction is just between the two parties(sender and receiver).

What makes cryptocurrency unique and the future of finance?

Cryptocurrencies are the first alternative to the traditional banking system and have powerful advantages over most currently used payment methods. Some of these advantages include;

1. Decentralization: There is no need for currency owners to “trust” a single governing entity, as everyone in the network has access to the same information that cannot be altered. This allows for greater autonomy, as well as less vulnerability to manipulation or control by a single entity.

2. Irreversibility: Unlike a credit card payment, cryptocurrency payments can’t be reversed. For merchants, this hugely reduces the likelihood of being defrauded. For customers, it has the potential to make commerce cheaper by eliminating one of the major arguments credit card companies make for their high processing fees.

3. Borderless: It can be used for international transactions and is exchanged globally. Regardless of where you live or who you are, you can send it almost instantaneously to others anywhere in the world, without concern for geographic distance and country borders.

4. They are Permission-less: Anybody can send and receive cryptocurrencies. You don’t need to register an account or fill out an application.

5. Safety: The network powering Bitcoin has never been hacked. And the fundamental ideas behind cryptocurrencies help make them safe: the systems are permission-less and the core software is open-source, meaning countless computer scientists and cryptographers have been able to examine all aspects of the networks and their security.

6. Portability: Because your cryptocurrency holdings aren’t tied to a financial institution or government, they are available to you no matter where you are in the world or what happens to any of the global financial system’s major intermediaries.

7. Transparency: The entire system functions on shared ownership, where data is available and is tamper-proof. Blockchain technology is public and records all transactions on a transparent and tamper-proof ledger. Therefore, once a transaction is added to the blockchain, it can be viewed by anyone and cannot be altered or deleted.