Nearly 3000 cryptocurrencies; Bitcoin reigns supreme

The Supreme Court canceled the two-year-old circular of the Reserve Bank, allowing trading in cryptocurrencies. The trend of cryptocurrency has increased in the last few years in the era of internet and smartphones. Let us know what cryptocurrency is and how it works.

What is Cryptocurrency?

It is a digital currency and is not linked to any government or any bank. If one user sends cryptocurrency to another, then its record is through encryption i.e it is hashed. Cryptocurrencies work on distributed public ledgers which require massive energy (both computational and electrical). It is this concept that make crptos virtually impossible to hack.

Bitcoin mining is done by computer CPU

The power of a computer’s CPU is used to maintain the data of bitcoin transactions. Bitcoin has software installed in the CPU. This software performs complex mathematical calculations to create encryption for bitcoin. This maintains the credibility of the cryptocurrency. All transactions are recorded in public ledger where any one look up the amount of bitcoin transferred and the addresses of those involved without reveal the true identities of the people or organization.

People who perform these calculations on their computers through software are know as ‘miners’ and are rewarded in Bitcoins for verifying transactions. Anybody can do mining through high end CPUs although high end GPU’s (graphic card units) and dedicated machines have rendered CPU mining useless.

Bitcoin is currently at the forefront

Bitcoin is currently the largest cryptocurrency. The record of bitcoin is maintained in the public ledger. Since 2009, all transactions have been saved in the public ledger. All the records of the transaction are kept in multiple blocks. Hence they are also called blockchains. It was invented by an unknown person or persons known as Satoshi Nagamoto. It is believed that one of the reasons for creating Bitcoin was to make a decentralized digital currency i.e no bank or country…

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