The Base of a Cryptocurrency

Meaning of Crypto:

The word crypto comes from the greek word kryptos which means hidden, secret, concealed. The cryptology describes the science of encoding and decoding of information. In the case of cryptocurrency it is about a virtual, encrypted money based on a blockchain.

The Blockchain:

The blockchain is a database whose pieces are stored on different decentralized computing systems. Every computer can become a part of the network by “donating” computing capacity which are called miners. Within this network, every computer can manage and calculate the data sets. Therefore, every computer has a data copy of the chain what makes it impossible to delete full data sets. And that is the reason why cryptocurrency trading is secure and fast.

As the word says, it is a chain consisting out of blocks. A block contains encrypted data sets, which can consist of monetary units, ownership, fundamental rights, actually anything that fits in 40 bytes. For example, if you buy bitcoins a new block will be written which has the information of the amount you bought and your ownership. Each new block is connected to the previews block and contains its history in the form of a checksum and a checksum of the entire chain. But before a new block is actually written, it needs to be approved by each miner of the network. This process makes sure that fraud is ruled out.

Mining:

Every one that provides computing power to a network becomes a miner. A miner can be compared to an accountant. He verifies blocks and seals it, so it can’t never be changed again and is save from being manipulated. The more computing power the faster new blocks can be written.