Cryptocurrencies have become a new tool of exchange to carry out virtual transactions. They are virtual currencies that are completely different from traditional or fiat currencies concerning their independence, authority, and market acceptance. Cryptocurrencies are free from the control of the government or any centralized authority such as banks.
They exist on their own on a blockchain platform and it is highly encrypted to keep it secure from forgery and duplication. The features of cryptocurrency itself will tell you whether it can be decrypted or not.
The uniqueness of cryptocurrencies
Cryptocurrencies are decentralized payment systems. Unlike Fiat currencies which are governed by a centralized bank or the government, the ownership of cryptocurrencies can only be enjoyed by its registered users. Nodes or network participants run software that links crypto users to other users to enable sharing of information between them.
A centralized system requires communication via a central server; whereas, in a decentralized system of cryptocurrencies, the interconnected nodes relay data only between themselves. This nature makes cryptocurrencies majorly resistant to censorship or shutdown. As a cryptocurrency owner, you are your server and the nodes will keep a record of the database without you having to worry.
Even when you are offline information from your node can be extracted making them functional 24×7. Cryptocurrencies allowed the transfer of money anywhere across the globe without having to deal with intermediaries. Its decentralized nature is why it is secured from extreme authority.
The invention of Bitcoin in 2009, by an anonymous programmer or a group of programmers, under the pseudonym ‘ Satoshi Nakamoto’, gave rise to the invention of other coins, the name of the inventor’s identity remaining unknown. Cryptocurrency is a peer-to-peer-based digital monetary system with highly secured encryptions.
How do Cryptocurrencies work?
Cryptographic techniques are extensively used by cryptocurrencies, to secure transactions between users. For sending and receiving funds, users rely on the public-key cryptography scheme. There is a private key and a public key in every cryptocurrency trading.
A private key is mandatorily a huge number that no one can crack. The private key has to be kept secured and can be used to generate another public key but not vice versa. The private key is extremely important, losing which would cause you to use all the cryptocurrencies that you own. This private key is an extremely secure code and recovering it becomes impossible. Thus, private keys should be stored in safe locations, known as cryptocurrency wallets.
Principally everyone can be a Crypto miner. The decentralized system does not require a task to be delegated to authority but it requires a mechanism that prevents it from being misused. To avoid the system from breaking, Satoshi made the rule that the Crypto miners would need to invest in some computer work of theirs, to qualify for mining.
The miners need to have private server farms, heavy equipment, and huge electricity bills using which they have to find a product of cryptographic function hash that connects the new block and the predecessor.
It is known as proof-of-work. Bitcoin is based on the SHA 256 hash algorithm, which is a kind of cryptographic puzzle that needs to be solved by miners. Miners also have to be the first ones to do so. Cryptography, on which cryptocurrencies are based, is secured by maths and not with trust or people. Therefore, cryptocurrencies are an intricate web of decentralization and anonymity.
Thus, it is presumed from its nature and characteristics that cryptocurrency cannot be decrypted easily. Cryptocurrency is an ever-moving and wild market. Almost every day, a new set of cryptocurrencies arise and the old ones die. The future of cryptocurrency entirely depends upon how people perceive it. Some believe that cryptocurrencies will emerge to replace gold in the virtual age and alter the current financial system. Others believe that cryptocurrencies will always stand secondary since it is not as traditional as the centralized financial system.