Most of us are now quite familiar with the term Cryptocurrency but very few actually understand what this is and how it is used for transactions. Therefore, let us introduce you once again to what cryptocurrency is and how it works.
What is Cryptocurrency?
This is a type of digital currency, that uses cryptography to secure transactions. Some of the most popular cryptocurrencies today are Bitcoin and Ethereum. The currencies are transferred directly from peer to peer without any intervention of banks, financial institutions or government. The transactions are validated by “miners” who record transactions in the blockchain and prevent double spending of cryptocurrency.
Where is Cryptocurrency stored?
Cryptocurrency is typically stored in digital wallets that exist on the blockchain. These wallets can be accessed from anywhere in the world as long as you have an internet connection.
Cryptocurrency: How does the transaction work?
- Transaction begins:
Bitcoin — User goes to an online exchange to convert fiat currency for Bitcoins and stores them in a bitcoin wallet.
- Submitting Payments:
Bitcoin — A request is sent to Bitcoin network in order to make a purchase. Currently, there are many online merchants accepting bitcoin such as overstock.com.
- Verifying Transactions:
Bitcoin — Bitcoin’s decentralized peer-to-peer network of “miners” maintains a master ledger- a blockchain, to verify every transaction. It takes an average of 10 minutes to verify. Upon verification, data is broadcast to all users and the ledger is updated.
If you are interested in learning more about cryptocurrency, let us know. We would love to hear from you:
Josh.Wilmoth@CTTSonline.com