Bitcoin was born under mysterious circumstances as open-source code in 2009. Bitcoin is a peer-to-peer digital currency transacted in blockchain and traded in crypto exchanges. The crypto uses a network of connected computers for worldwide transactions.
Why Bitcoin is a cryptocurrency
Why is this digital currency named cryptocurrency? Let's view it as crypto+ currency. The term «crypto» refers to cryptography, the prominent feature of this digital currency. Cryptography is about coding – creating and cracking of codes for secure financial communication. Cryptography uses encryption and intricate mathematical algorithm that are crucial for hiding the details of financial transactions. Cryptography is also helpful in maintaining reliable records of sales. The term «currency» refers to money that can be used as a means for payments. Though cryptocurrency is not like real-world fiat currencies, yet has the potential to serve the real purpose of money; only the transaction method is different. Anyone needs to know the cryptocurrency basics to understand how cryptocurrency works.
Important elements of cryptocurrency
Cryptography has a protocol based on which the entire process works. A cryptographic algorithm, called a cipher, works for encryption (converting data or information into code) and decryption (conversion of encrypted data into its original form or input). It is done as a mathematical function. Cryptographic algorithms have three main types – public key, secret-key, and hash function. A cryptographic algorithm works in association with a key – a phrase, word, or number.
Cryptography provides security to the details of transactions that depend on;
• the strength of the cryptographic algorithm, and
• the secrecy of the key.
The blockchain contains all information about cryptocurrency transactions. Let’s understand how it works.
• A hash is generated in each transaction. Hash refers to a string of letters and numbers.
• Transactions are entered in chronological order.
• The nodes in a blockchain inspect hash to ensure that a change has not occurred.
• Transactions are written into a block after approval by a majority of nodes. One block is linked to another block, and so on to create a blockchain.
• The blockchain is a digital ledger that is automatically updated every ten minutes.
• The crucial elements of digital transactions are protocols, digital signatures, and wallets. Contracts are a set of rules that are programmed into the blockchain; digital signature is a private key, a string of random numbers; wallets are alphanumerical strings.
• An alphanumeric string is called a cryptographic key created by keygens that are key generators. Advanced mathematical calculations involving prime numbers are used by keygens to generate keys.
• The bitcoin protocol is wholly autonomous and anonymous.
• A transaction is successful when placed in a block – proof of work.
When you have gained basic knowledge about the cryptography and working of the blockchain, it won’t be difficult for you to trust on cryptocurrency. Bitcoin miners get an education on many more things. Crypto mining is not a simple process that you can do on your home PC or smartphone. You need mining hardware, and a lot of expenses are incurred in the mining process. You cannot think of doing it in any situation. Experts in crypto mining solve many complications.
How can you own cryptocurrency?
Our aim here is to let you know how you can become a pride owner of Bitcoin or some useful altcoin. You can do it in the following ways;
• By accepting payment in Bitcoin or altcoin
• By mining process (hardly recommended)
• By buying on crypto exchanges.
Why people do crypto trading
People who have the passion of owning cryptocurrency or deriving profits from digital trading currencies rely on this method. Though it is not comfortable for a beginner to trade in Bitcoin or some other coin, yet this method can be considered apt for those who are able to understand crypto trading. Let it be on bitcoin trading robots to engage in trading activity. A passionate and active crypto trader can get the excellent benefits of crypto trading that are not available in stock or forex trade. Anyone can make successful crypto trade by using the right strategy of crypto trading.
It is a good piece of advice to think of trading crypto. You can be one of the luckiest people who created their wealth by trading Bitcoin. Crypto trading is for those who take significant advantage of the opportunity.