CRYPTOCURRENCY -
DIGITAL
MONEY
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I
n today’s world, everything is converting into digital. Even
the currency is no exception. Yes, ‘digital currency’. This
is currency, which is available in digital form. Using these
currencies, customers have been able to do almost all the
things that physical currency could do and more.
‘Cryptocurrency’ is a type of digital currency that uses
encryption techniques to regulate the generation of units
and to verify fund transfers without the involvement of the
central bank. Cryptocurrency uses a decentralized approach
to operate, which means there are neither central servers nor
a central governing authority.
David Chaum introduced this idea of digital currency in 1983.
Over the last two decades, there had been few failed attempts
to introduce new types of digital currencies. Then, marking a
new start, Bitcoin came to life in 2008. This is described as a
peer-to-peer electronic cash system.
A public ledger called ‘blockchain’ is used to store all the
transactions within the network. Therefore, everyone can
see everyone’s account details such as sender, receiver and
transferred amount.
In this network, a transaction is a file which contains the
sender’s and receiver’s public keys and the amount of coins
transferred. When the sender signs off the transaction with
his private key, it gets broadcasted to the network.
There is a role called ‘Miner’
in the crypto world. Miners
are the only ones that can
confirm a transition in a
cryptocurrency
network.
First, the transitions are taken
by the miners and marked
as legitimate. Then they
spread those throughout the
network.
How cryptocurrencies work
Buying
Today, there are a lot of
parties who accept Bitcoins
as a method of payment,
both online and offline. Even
though there are many types
of other digital currencies
most of them are not widely
used as Bitcoins. Don’t be
surprised if you see a sign
that says ‘We accept Bitcoins’
when you register for your
university course or even
when you book your next air
ticket or hotel room.
GAUGE Magazine University of Peradeniya
PAGE| 43