Cryptocurrency is a digital or virtual form of money exchange using different cryptographical functions to complete a financial transaction. Blockchain technology gets leverage by using cryptocurrencies for being decentralized, immutable, and transparent. Moreover, the best part of digital money is that it is not controlled by any centralized or government authority. The decentralization of the virtual currencies is the only way to provide immunity to it from government control and any other interference. The money can be sent directly or exchanged between the public and private parties using this coin trading platform. Moreover, the traditional financial firms cannot charge high charges because the transfers are done with minimal processing fees. These days many people are aware of the exchange coins or tokens making it a global phenomenon, and it can bring in remarkable changes in the global economic system as well.
The coins can be used and exchanged like any other fiat currencies without being detected by any financial institutions or government bodies. However, being used as a mode of payment, cryptocurrencies are quite similar to different commodities such as gold because the method of payment is fundamental to its value. A well-built network of bitcoin includes network of peers with a complete individual history of every transaction, thus helping in maintaining a proper balance of every account. After completion of a transaction, it is broadcasted in the virtual network and sent to every peer participating in the network. This is also known as P2P (Peer 2 Peer) technology. In the financial markets, the tokens, bitcoins, and bitcoin cash are treated as a form of funding where returns depend on the ups and down value of the currencies.
In the bitcoin exchange websites, mining is a process where every currency transaction is verified before offering new units in the end.The main objective of mining or the miners is to guarantee the security of the network, generate new coins, and ensure that all the participants are well synchronized and use computational capacity to process every single transaction. Mining is completed in three simple steps:
- Every new cryptocurrency transaction is grouped to create a new block in the network.
- Every block is coded and linked to the existing blockchain or a new blockchain.
- In the end, every miner is able to stake on the amount directly into the financial market.
In the cryptocurrency exchange, only the miners confirm the transactions and every node is added to the database, thus completing the network of a blockchain.