How to Invest in Cryptocurrency? | Financial Literacy

What is Cryptocurrency and Blockchain Technology

Cryptocurrency is a digital or virtual currency that uses cryptography for secure financial transactions. It is decentralized and operates on a peer-to-peer network, meaning it is not controlled by any central authority such as a bank or government.

Blockchain technology is a decentralized, digital ledger that records transactions on multiple computers, rather than a central server. It allows for secure and transparent record-keeping and can be used in various industries beyond just financial transactions, such as supply chain management and voting systems. It is the underlying technology behind many cryptocurrencies.

How Blockchain Technology works?

Blockchain technology is a decentralized, distributed ledger system that uses a network of computers to record and verify transactions. It works by creating a digital record of transactions, called a block, which is then added to a chain of other blocks, creating a record of all transactions that have occurred on the network.

The key feature of blockchain technology is its decentralized nature, meaning that it is not controlled by any single entity, such as a bank or government. Instead, the network is maintained by a network of computers, called nodes, which work together to validate and verify transactions.

When a transaction is made on the blockchain, it is broadcast to the entire network of nodes. These nodes then validate the transaction, ensuring that it is legitimate and conforms to the rules set by the network. Once the transaction is validated, it is added to the block, which is then added to the chain of blocks.

Because the blockchain is decentralized and transparent, it is nearly impossible to alter or manipulate the data contained within it. This makes it a secure and reliable method of recording and storing data, particularly financial transactions.

Thus, blockchain technology works by creating a decentralized, transparent, and secure ledger of transactions, which is maintained by a network of computers working together to validate and verify each transaction.