Money keeps changing. A few years ago, the discovery of Bitcoin, the first cryptocurrency in the world, and now there are thousands of cryptocurrencies used by people around the world including such as Ethereal and Litecoin.
To make cryptocurrency like Bitcoin, we must first take responsibility for tracking transactions from banks and managing them ourselves. The first step is to make a payment book for one person to another. This ledger will track who is in debt to whom and each person's payment records.
The next step is to prevent people from cheating by adding transactions that will be canceled if one party disagrees. One easy way to deal with the problem is to ask the two people in the transaction to sign the payment. Each participant can add their "digital signature" by using public / private key encryption so everyone knows that the transaction is legitimate.
But there is one last problem, who is the owner of the ledger? In a traditional currency system, the bank will regulate it, but we are here to build a currency that does not need a bank. Instead, everyone has their own ledgers, and all transactions are published so that everyone updates their ledgers at the same time.
In this way, anyone can safely exchange money without worrying about whether the people who handle it can be trusted. Instead of trusting the central bank or the government to ensure our transactions, we can use cryptography to force everyone to play fair. While crypto currencies are still in their infancy, in the next few years, perhaps their preferred way of making payments is worldwide.
But what is cryptocurrency? How does it work?
In general currencies, such as U.S. dollars, transactions are handled either through cash exchanges or through electronic transfers. These electronic transfers are managed by large banks that are trusted to keep money safe and make honest transactions.To make cryptocurrency like Bitcoin, we must first take responsibility for tracking transactions from banks and managing them ourselves. The first step is to make a payment book for one person to another. This ledger will track who is in debt to whom and each person's payment records.
The next step is to prevent people from cheating by adding transactions that will be canceled if one party disagrees. One easy way to deal with the problem is to ask the two people in the transaction to sign the payment. Each participant can add their "digital signature" by using public / private key encryption so everyone knows that the transaction is legitimate.
But there is one last problem, who is the owner of the ledger? In a traditional currency system, the bank will regulate it, but we are here to build a currency that does not need a bank. Instead, everyone has their own ledgers, and all transactions are published so that everyone updates their ledgers at the same time.
In this way, anyone can safely exchange money without worrying about whether the people who handle it can be trusted. Instead of trusting the central bank or the government to ensure our transactions, we can use cryptography to force everyone to play fair. While crypto currencies are still in their infancy, in the next few years, perhaps their preferred way of making payments is worldwide.
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