If you remove the unnecessary noises about cryptocurrencies and simplify its definition, you’ll find a limited entry in a database wherein no one can bring changes without fulfilling such specific conditions. The approach may seem ordinary, but this is the simplest way to define a currency.
Given that, the proper definition of cryptocurrency is that it is an internet-based exchange medium that utilizes functions of cryptography to conduct financial transactions. Also, cryptocurrency leverages blockchain technology to gain transparency, decentralization, and immutability easily.
How to create coins and confirm transactions as a miner?
Let us first have a look at the mechanisms that rule the cryptocurrency databases.
Bitcoin- being a cryptocurrency consists of a network of peers. Here, every peer has a record of complete transaction history, giving every account’s balance.
A transaction also refers to the file saying that Bob sent X Bitcoin to Alice, proven signed by Bob’s private key. This is a basic cryptography of the public key, and nothing is special at all. After being signed, the transaction will be then broadcasted in the network, following by being sent to every peer. This is what we call the basic P2P-Technology.
Cryptocurrency and Blockchain
Immediately, the whole network can know the transaction. But this only happens after some time and confirmation.
Confirmation is considered as cryptocurrencies’ critical concept. We can say then that cryptocurrencies involve and almost all about conformation.
Aside from that, when a transaction is unconfirmed, it can then be forged and declared pending. On the other hand, once it is confirmed, it is then set in stone. This makes it unable to be forged or reversed as it became a part of the immutable record of transaction history- also called the blockchain. To invest in bitcoins, you can visit Bitcoin Gemini App
Miners can confirm transactions
Yes, miners are the ones that confirm transactions, and they are the only ones allowed to do it. This is because it is their assignment or, let us say, a job in a cryptocurrency network. Miners take transactions and stamp it to consider as legit, then spread it within the network. After confirming a transaction, the node will now take action by adding the transaction into a database. This has been a part of the blockchain.
In this job also, the miners can receive rewards such as a token of the cryptocurrency. An example of that is the Bitcoins.
Now, let us discuss the monetary properties of cryptocurrency.
Most of the cryptocurrencies put a limit on their token supplies. There are recorded decreases in Bitcoin, and the target time in which it will reach the final number is 2140. Also, token supply is controlled by all cryptocurrencies through a written schedule in code. This only means that the monetary supply of cryptocurrencies in a given moment can be calculated today. Here, there is no surprise.
Bearer and not debt
Debt is responsible for creating your bank account’s fiat money, as well as the numbers that you see on a ledger representing not credits but all debts. This is called the system of IOU. Debts are not represented by cryptocurrencies but only themselves.
For a better understanding of the cryptocurrencies’ revolutionary impacts, you must consider both parties. Being an irreversible, permission less, and pseudonyms meaning payment is an attack the governments and banks’ control over the citizens’ monetary transactions. Anyone can’t be stopped from using Bitcoin, including undoing a transaction and accepting a payment.
As the money is limited and controlled in terms of supply by the unchangeable orders of the government or any central institution such as a bank, there will be an attack headed by the cryptocurrencies to the scope of monetary policy.