Cryptocurrency Explained

How it works ?

Trusted intermediaries say goodbye

Peer to Peer trustless transactions - Typically the way a contract is fufilled in todays society is people agree, they trust one another, and when the deal is done they exchanged what was agreed upon be it a cash transaction or a barter. With the invention of Bitcoin, came the removal of a intemediary handling money. Bank, and mastercard were eliminated and all there is is the exchange between two or more indviduals a digital signatures.

Digital Signatures - a digital signature is a encrypted signature using public key cryptography

Public Key Cryptography - Public Key Cryptography goes as follows : When you trade digital assets this could be cryptocurrency, digital passports, logistical data, what have you, you sign these with the corresponding receipts digital public signature before you send it off. The public signature can only be unlocked by the receipts private key. Meaning if the user keeps his private key secret and only releases his public key like a email address almost no one should be able to crack the encryption anytime soon.

Exchanges - Exchanges serve one purpose and that is to convert a fiat currency to a cryptocurrency. Fiat currency refers to any national government currency such as the US dollar or the PESO.

The Problem with Exchanges -

Exchanges are centralized! one of the orginal goals of Bitcoin / Cryptocurrency was originally to get rid of these intermediaries. In blockchain's infancy when Bitcoin was new and it and the blockchain were still unheard of. It was mainly traded on the dark web. The origin. of its original utility. However as popularity grew people started to speculate then exchanges set up shop and became the gate keepers for most consumers who want to convert their native currency to a cryptocurrency. This is factor on why exchange rates change so rapidly

Trusted immediataries are back