Cryptocurrencies are digital or virtual currencies that use cryptography for secure financial transactions. They are decentralized systems that allow for the creation of new units, the transfer of ownership, and the verification of transactions without the need for a central authority or intermediary.
The underlying technology that enables cryptocurrencies is called the blockchain. A blockchain is a distributed ledger that records transactions on multiple computers, called “nodes,” so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network.
Each block in the chain contains a list of transactions, a timestamp, and a cryptographic “hash” that links it to the previous block. Hashes are created by complex mathematical functions that take an input of any size and produce an output of a fixed size, known as a “hash value.” Hashes are unique, so if even a single character in the input is changed, the resulting hash will be completely different.
Miners play a crucial role in the cryptocurrency ecosystem. They use powerful computers to solve complex mathematical problems and verify transactions on the network, adding them to the blockchain in the process. In return for their work, miners are rewarded with a certain amount of cryptocurrency.
There are many different cryptocurrencies, each with its own set of features and characteristics. Some of the most well-known cryptocurrencies include Bitcoin, Ethereum, and Litecoin.