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The Rise of Cryptocurrency: Understanding the Fundamentals

What is Cryptocurrency?

Cryptocurrencies, often referred to as “crypto,” are digital or virtual assets that use cryptography for security. Unlike traditional currencies, cryptocurrencies operate independently of central banks and are not subject to government control. Instead, transactions are verified and recorded on a decentralized network called a “blockchain,” ensuring transparency and secure authentication.

How Cryptocurrencies are Created

Cryptocurrency units, known as “coins” or “tokens,” are created through a process called “mining.” Mining involves solving complex mathematical problems by using specialized computer hardware. The first miner to solve the problem receives a block reward in the form of cryptocurrency, adding a block to the blockchain. This process not only creates new cryptocurrency units but also verifies and secures transactions on the network.