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What is Cryptocurrency? How Does it work?



Cryptocurrencies are popular today especially with the success of Bitcoin as it is the first public cryptocurrency. They are important investment vehicles for many blockchain companies today.Dogecoin, a cryptocurrency made as a joke based on dog meme has reached a market cap of $25.8 billion, as of mid-July 2021


Cryptocurrencies are favorably compared with legacy currencies like the Dollar, especially in that they can be used as a medium of exchange and store of value on blockchain and semi-blockchain networks. However, they have certain limitations such as high volatility and low adoption.




What Is Cryptocurrency?

Cryptocurrencies are a form of digital money that can be exchanged online for goods and services. Cryptocurrencies are based on decentralised Blockchain technology, which ensures that an individual or a single group cannot control it. Cryptocurrency can be bought and sold online on cryptocurrency exchanges and can also be sent to others using crypto-wallets. One of the main attractions of using cryptocurrencies is that it is considered an easy, cheap and secure way to transfer funds across the world, in a matter of seconds.The most popular cryptocurrency, Bitcoin, has had volatile price moves this year, reaching nearly USD 65,000 in April before losing nearly half its value in May 2021.


The supply of cryptocurrency is also free of the control of any central authority since they operate on decentralized blockchain networks that rely on the consensus of several users to operate.
The below image explains the Centralized network (non-blockchain) versus Decentralized network on blockchain. Cryptocurrencies exist on a decentralized blockchain network.


What is Block Chain?

Blockchain is basically a type of database of information or a record of transactions stored in ‘blocks’. A block records all the transactions that take place in a specific period. These blocks are then chained together in chronological order to create a Blockchain.

These Blockchains are decentralised, meaning the record of transactions is spread over a very large network of computers around the world, which have a record of all the transactions that have ever
taken place on the Blockchain network.

How Are Cryptocurrencies Created/Manufactured?

Cryptocurrencies are created using computer codes and cryptography algorithms that make it possible to secure it through cryptography. That is why the name is “crypto.” Additionally, every transaction is secured using cryptographic codes.

The code, which is written by crypto and blockchain developers on the blockchain or other digital ledger technologies, dictates the maximum supply, rewards to miners, confirmation times, and other things critical to the operation of a cryptocurrency.





Anyone can start a crypto project and cryptocurrency. Some defined amount of cryptocurrencies is generated on the blockchain after coding is done. These are distributed as defined by the project, for instance to developers, founders, public through public offerings(IDO,Airdrops),etc.

How Do You Get Cryptocurrency?

Any investor can purchase cryptocurrency through crypto exchanges like WazirX,Coinswitch Kuber,Binance,etc. or you can also get cryptocurrency via minning also.

What Are the Most Popular Cryptocurrencies?

Bitcoin is by far the most popular cryptocurrency, followed by other currencies called as Altcoins such as Etherum, Litecoin, and Cardano.
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