Cryptocurrency is basically a medium of exchange popularized by the internet. The transactions take place using innumerable cryptographical functions. This sort of transaction using cryptocurrencies leverages the technology which is based on a blockchain for gaining immutability, decentralization and transparency.
The most astonishing facet of cryptocurrency has to be the fact that it is very much decentralized, that is, no central authority has a regulation or control over it and this nature of decentralization by the blockchain make cryptocurrencies theoretically non-susceptible to the bygone manners of governmental interference and control.
By the usage of private and public keys, cryptocurrencies can be transferred between two participants, which is very much like our usual day-to-day transactions. These transfers incur minimal deduction of step fees and processing fees unlike our traditional institutions of finance are used to deducting.
How does cryptocurrency work?
Cryptocurrency was invented to prevent any third-party intervention in any transaction. This new system which enables electronic cash using a peer-to-peer networking grid that prevents double spending. The structure is completely devoid of any centralized authority or a third party and includes only the two parties engaged in the transaction.
For a transaction using digital cash you require a network via which you can make a payment, an account registered in the said payment portal, transaction and balances, this is very simple in digitized modes of payment, but the downside of this model is that it involves a lot of double spending. Double spending is when someone spends the same digital currency twice. For instance, when one transaction uses a similar method of input like another transaction which is already on the network.
But, in a decentralized cryptocurrency, there is zero presence of a controlling server and hence, every unit of the establishment of the network has to work equally. So, every unit has a record of transactions that were done to avoid double spending and also to check the validity of the transactions.
Emergence of Bitcoin in the field of Cryptocurrency:
It was in 2008, that an unknown entity by the name of Satoshi Nagamoto came up with a brilliant idea to negate the usage of any centralized server in any sort of transactions and make it a peer-to-peer transaction.
Taking away all the technical buzz around cryptocurrency, it is reduced to a limited amount of entry in a pre-prescribed database where no one can alter it without the fulfillment of some specified conditions.
Despite all the aura of mystery around the identity of Satoshi Nagamoto, who the internet believes is none other than the founder of PayPal, Tesla Motors, Neuralink and SpaceX. There are ample reasons for this belief among netizens too.
Since PayPal is a payment gateway and uses centralized governance for interference, Musk would have a better understanding of payment gateways and for a preventive measure could have come up with a foolproof algorithm for cryptocurrency.
Bitcoin,the most trusted cryptocurrency platform ensures that after a payment confirmation, the transaction is irreversible since the currencies are built on math rather than faith. This ensures that nobody can reverse the said transaction. Not the milkman, not the bank, not even Satoshi himself.