What is Cryptocurrency Plus Answers to 7 Other Common Crypto Questions

Cryptocurrencies like Bitcoin, Ethereum, and dozens of lesser-known digital currencies frequently appear in the news, often following wild price spikes, and sometimes to cover the revolutionary blockchain technology they are built upon.

7 Other Common Crypto Questions

1. What Is Cryptocurrency?

Cryptocurrency is any digital store of value that one can exchange for goods and services.

2. What Is the Purpose of Cryptocurrency?

Cryptocurrency was initially conceived as a way of making international trade easier. Consumers in developing countries often lack consistent access to conventional fiat currency options such as U.S. Dollars or European Euros.

3. What Is Blockchain Technology?

You can think of a blockchain similar to your account history on an online bank account. Transaction information gets stored in “blocks” that can be “chained” together to create a system with infinite memory, where the name originates.

4. What Do Transactions Look Like on the Blockchain?

Every transaction includes three critical pieces of information: Input, Output, and Amount.

5. How Do Cryptocurrency Wallets Work?

Each wallet consists of two random strings of characters. The first string acts like a username to signify your account on the blockchain, while the second is a private key or password.

6. Are Cryptocurrencies Safe?

Blockchain technology is often described as “hack-proof” because any hacker would need to modify all blocks simultaneously to ensure that the chain was in agreement.

7. How Does the Mining Process Work?

A complex process called a cryptographic hash function is at the root of mining. Put simply, a hash function is a mathematical trick that takes data of any size, performs an operation on it, and outputs something of a fixed size.

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