Page 14 - 1st Edition Style of Dallas - Final print

How Do Crypto

currencies

Work?

Blockchain Consultant

Raza Begg

The reason why cryptocurrencies are transaction fees. Usually, this is done which allows a new payment system
such in demand right now is because by a central server that keeps track of and the transactions of new digital
Satoshi Nakamoto successfully found your balances. This is most commonly money. Let’s illustrate an example.
a way to build a decentralized digital known as the Blockchain Technology. Cryptocurrency like Bitcoin consists of
cash system. What is a decentralized Cryptocurrency is derived from the its own network of peers. Every peer
cash system? A decentralized system word “Cryptography”, which refers has a record of the complete history of
means the network is powered by to the consensus-keeping process all transactions as well as the balance
its users without having any third secured by strong cryptography. of every account. By the end of every
party, central authority or middleman Blockchain technology functions in transaction and upon confirmation,
controlling it. Not the central bank managing and maintaining a growing the transaction is known almost
or the government has power over set of data blocks, and this is by using immediately by the whole network. A
this system. The problem with a the decentralized or known as the P2P transaction includes a process where
centralized network in a payment (Peer to Peer) network. In blockchain, A gives X amount of Bitcoins to B,
system is the so called “double once a piece of data is recorded it and is signed by A’s private key. After

spending”. Double spending happens cannot be edited or changed. signed, a transaction is broadcasted in
the network. The information is sent
when one entity spends the same To put it in simpler terms, it enables from one peer to every other peer on
amount twice. For instance, when you you to send a gold coin via email. The the network. Confirmation is a critical
purchase things online, you have to P2P network is a consensus network, stage in the cryptocurrency system.
incur for unnecessary and expensive