How Does Crypto-technology Work ?

 

If truth be told, in order to understand this, one needs to have knowledge of advanced mathematics and computer science . But if you want to start investment or trading, then basic knowledge would suffice .

      Let us take the example of Bitcoins

There is one public account in digital form, of all the bitcoin transactions this is called a 'ledger' . A copy of this ledger exists on all the systems that are a part of the Bitcoin network Those that run this system are called 'Miners' The job of the miners is to verify transactions Say, A has to transfer 2 Bitcoins to B's account Miners will have to confirm whether A actually does have 2 Bitcoins in his account or not To complete the transaction, miners will have to solve a complicated mathematical equation You might have studied about variables back in school. Every Bitcoin transaction has a unique variable The job of the miners is to calculate it It's not that they sit with a pen or paper to solve the equations All these calculations are carried out on the computers automatically because they are extremely complicated and their combinations run in crores which is why these miners require computers with very complex and high processing power Once the equation is solved, the other computers within the network confirm it and this transaction is added to the chain A block of transactions gets created. And hence, the technology is called 'block chain' And 

what do miners get in exchange for this?  They get the most valuable thing- Bitcoins! This system is called 'Proof of work' The miners have to prove the computation work they do in order to get awarded the Bitcoins in return If all this explanation went straight above your head like a bouncer, then do not worry! Because understanding the philosophy, vision and future of crpto technology is far more important than understanding the working of crpto technology .

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