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how crypto works and its functions


image how crypto works and its functions

How do cryptocurrencies work?
After understanding the meaning of cryptocurrency, then you need to understand how cryptocurrency works. This is very interesting because of its high flexibility, which can be done at any time. just armed with a smartphone or PC that is connected to the internet and has been registered on one of the cryptocurrency trading platforms, you can transact with people from different countries though.

After that, the ledger will serve as witness evidence as well as verify that the transaction is legal.The witness mechanism and transaction verification are carried out by completing mathematical calculations where the larger the network of a cryptocurrency, the more calculations that must be completed, and the greater the computing power required.

The system used in cryptocurrency is a peer-to-peer network system and not a supercomputer. This peer-to-peer network will combine many ordinary computers to replace the task of supercomputers. Well, the owner of this computer is usually known as miner or miner.

To get high security evidence, digital signatures must still be combined with descriptions and history so that a transaction block will be formed. This transaction block will be distributed to all miners as transaction witnesses.

For example, if a transaction involves 9 miners, then one block will be divided into 9 miners. After that, these 9 miners are tasked with completing mathematical calculations to verify that the contents of the block are correct. This is where the security of cryptocurrencies is difficult for hackers to penetrate.

The next step, after all the miners agree that the block is correct, the transaction will continue and the newly completed block will be merged with the previous block. Then, a new block will appear for further processing. This system of interrelated blocks is called a blockchain.

Finally, the confirmed transaction is then stored permanently and no party can change or manipulate it.

 Cryptocurrency Functions-Reporting from Gatra, Achie Mahfudloh — Founder of Stockgrow, cryptocurrency has a function

1. Transaction

There have been many companies or organizations that have accepted payments using this virtual currency, from hotels, airlines, restaurants, to applications. According to Cointelegraph, some examples are Dell, Steam, Fiverr, Overstock, Shopify, Etsy, Microsoft, Expedia, Air Baltic, and Subway in some locations.

2. Mining

According to Indodax CEO, Oscar Darmawan, in carrying out their work as described in the previous point, they will be rewarded in the form of Bitcoin and other crypto currencies (Ethereum, Litecoin, Bitcoin Cash, and so on).

3. Investment

In principle, this cryptocurrency applies the law of supply and demand where the price will rise when the amount of demand increases. The more people who invest, the price will also go up. However, it must be remembered that cryptocurrency investments fall into the high risk category.

4. Trading

Due to high price fluctuations, many people take advantage of this for trading. The potential returns on trading cryptocurrencies are much higher compared to traditional types of investments such as stocks or other assets. However, it is necessary to recall the principle of high risk high return.