How cryptocurrency is work?

1. Blockchain Technology

A blockchain is a digital ledger that records all transactions across a distributed network. Each "block" contains a list of transactions, and blocks are linked chronologically, forming a "chain." This ensures transparency and security.

2. Decentralization

Cryptocurrencies like Bitcoin and Ethereum operate without a central authority (like a bank). Instead, a network of computers (nodes) validates and processes transactions, ensuring trust through consensus mechanisms.

3. Transactions

When someone sends cryptocurrency:

Sender’s Wallet: Initiates a transaction using a private key (a secure digital signature).

Broadcast to Network: The transaction is broadcast to the network.

Validation: Miners or validators confirm the transaction by solving complex cryptographic puzzles.



4. Mining/Validation

Proof of Work (PoW): Miners compete to solve puzzles, adding the transaction to the blockchain and earning rewards (e.g., Bitcoin).

Thanks for breaking down how cryptocurrency works! The transparency and security provided by blockchain technology, along with decentralization and validation processes, truly revolutionize traditional transactions. Mining and validation methods like Proof of Work ensure the integrity of the system. Great explanation!