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).