How cryptocurrency works?

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    Before knowing about what cryptocurrency is, nowadays we use paper currency and coins and then credit cards, etc these are all managed by banks and the government.
    For example, if you want to send money to your friend through an online transaction, it is in the form of a centralized transaction. Sends money through a bank and the receiver receives the money through the bank in the form of an online transaction. Here the bank is a centralized authority.
    There are some flaws in the centralized transaction
  • sometimes the bank server goes down
  • technical issues may occur
  • the user account's maybe get hacked.
    This is why the future of currency lies with cryptocurrency.

    Imagine a transaction that happened between two people in the future is like one person has the bitcoin application, a notification arrives that whether to send the bitcoin or not if you click yes it receives to the receiver the process makes simple there is no centralized authority. This is in the form of a Decentralized transaction.

   As of 2021, there are nearly 6000 cryptocurrencies are there. Some popular ones are bitcoin,ethereum, Cardano, etc.
  
So exactly what cryptocurrency is, it is a digital or virtual currency that is used as the medium of exchange. Crypto refers to cryptography it means encrypting and decrypting the transactions and data. With that
  • There is a limit to how many units exist.
  • It works in a decentralized manner.
  • Easily verifies the transfer of funds.
  • Allows new units to be added only after certain conditions are met.

Specialty of cryptocurrency

  1. 24/7 access to money
  2. There is no limit in transactions.
  3. Anyone to use
  4. International transactions are faster.

Blockchain

Start with the example, if I am sending money to my friend, it doesn't directly receive by my friend what happens is it goes to the bank, verifies then only the receiver receives the amount. In the meantime i.e the process of transaction hacker may hack the process.

But if you are sending money through the blockchain process it is verified by lakhs and crores of people so the hacker doesn't know who checks the process. This process is called mining. For example, if I am sending 100rupees to someone, so it updates that I am sending 100 rupees to someone to whoever checking the process. So if the hacker changes any one of that updated amount, but in all the checking process it is 100 only. So it is rechecked and updated correctly.

Now comes to what bitcoin is?
    It is a form of digital currency and it is decentralized . It uses blockchain technology to perform transactions on a peer to peer networks.
    Basically, it is a file on a computer that people can store in a digital wallet. People and you can send bitcoins to the digital wallet.
In the world of cryptocurrency till date up to 4000 are there. In these bitcoin and ethereum stood up for the last few years. Cryptocurrency is almost similar to the normal currency we use in our everyday life. There is a fine line between them is cryptocurrencies are decentralized.

Then come to know about what is the difference between Bitcoin vs Ethereum

Bitcoin

  • Bitcoin was introduced in the year 2009 as a decentralized cryptocurrency which means there is no centralized authority like a bank or government to control that.
  • It uses the encryption technique to send and receive money across the world.
  • All the payments that occurred are encrypted by cryptographic techniques.
  • Transaction fees are also low.

Ethereum

  • Ethereum or ether was introduced in the year 2015 which provides ether tokens for People to build and deploy the decentralized applications.
  • It can be used to pay for services and transaction fees.
  • This can also be used for peer-to-peer payments.
  • Many of the smart contracts can also be built here.



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