In our last article, we discussed the basics of how cryptocurrencies functioned and some of their benefits. We briefly mentioned that we would also explain the process of crypto mining. In order to do that, we also need to explain blockchains. These blockchains are central to how cryptocurrencies functions.
What are blockchains?
Blockchains are the main methods by which cryptocurrencies function. This is the central online ledger where all the exchanges of a cryptocurrency are recorded. So, every transfer someone makes of a certain crypto goes straight into the ledger. Each of these transactions will then be on one online block. The information is encrypted into this block with complex algorithms. This explains the “crypto” part of cryptocurrencies. This then ensures that people cannot immediately find out about your transfers, or take advantage of them. The thing is that there is no place where someone can store cryptocurrencies, as they are solely digital. One has to have a history of all transactions to figure out their cryptocurrency balance. So it is foreseeable how people could take advantage of such a system.
However, all transactions are, in fact, connected. Every online block has a connection to a previous block, with its own encryption. This previous block will have a connection to others and so on and so on. Therefore, all of the transactions for a cryptocurrency are connected. In order to decrypt one block, one has to decrypt them all. This is what makes cryptocurrencies so very safe from hackers, and why they have become so popular recently.
Quickly on cryptomining
Cryptomining is a part of this process. There are real-life people verifying every single transaction on a blockchain, through digital means. These individuals do so with monetary recompensation. This is a process we will explain in more detail in the upcoming article.