How Cryptocurrencies Work

First, you have to know that a cryptocurrency does not have any physical existence or appearance. It is a currency that exists only in the digital world. The main idea of digital coins is that no bank or government produces it. A private company or a group of developers and programmers could create their own cryptocurrency. Through mining (which is a topic that needs a complete post for explanation), crypto coins are generated. The record of every digital coin generated, exchanged, traded, spent, and transacted is stored on every computer connected to the blockchain – an infrastructure on which cryptocurrencies exist.

The Idea Is Not Really New

You will be surprised to know that the idea of digital coins or cryptocurrencies is not new. A software tool like Bittorrent is a perfect proof of the existence of decentralized technologies before the invention of cryptocurrencies. Bittorrent allows you to share files on a peer-to-peer network where a file is stored on not one but many computers. When you download the file, it is downloaded from all the computers that contain that file. The best thing is that Bittorrent lets you download the file simultaneously from all the computers. The computers do not have to have the complete file. Instead, your Bittorrent will download whatever chunk of file it finds on any computer on to yours.