Explaining Cryptocurrency in Simple Terms
Cryptocurrency is a form of digital or virtual currency that relies on cryptography to secure transactions. Unlike traditional currencies, which are issued by governments and regulated by central banks, cryptocurrencies are decentralized and operate on blockchain technology.
Decentralization and Blockchain
Cryptocurrencies are decentralized, meaning no central authority (like a government or financial institution) controls them. This decentralization is made possible through blockchain, a distributed ledger that records every transaction across a network of computers. Blockchain ensures transparency, security, and immutability of transaction data.
How Cryptocurrency Works
Cryptocurrency transactions are validated by network participants known as miners (in Proof of Work systems) or validators (in Proof of Stake systems). Once a transaction is validated, it is recorded on the blockchain. Users can store, transfer, and trade cryptocurrencies without the need for intermediaries.
