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To make it simple, cryptocurrency is a digital version of money where the transactions are done online. A cryptocurrency is a medium of exchange just like your normal everyday currency such as the USD, but designed for the purpose of exchanging digital information through a process known as cryptography.

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You can buy bitcoin at hundreds of exchanges, each price their bitcoin differently.

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How Are The Cryptocurrencies Value Determined ?

For instance the total amount of Bitcoin issued is only 21 million. Therefore Bitcoin’s supply will decrease in time and will reach its final number by 2140. It also explains why Bitcoin’s value is higher as compared to other cryptocurrencies. Now you must be wondering, what is cryptocurrency used for? Cryptocurrencies can be spent for different purposes and the best part is, all transactions are completed online!

Cryptocurrency is derived from the word “Cryptography”, which refers to the consensus-keeping process secured by strong cryptography. Blockchain technology functions in managing and maintaining a growing set of data blocks, and this is by using the decentralized or known as the P2P (Peer to Peer) network.
In blockchain, once a piece of data is recorded it cannot be edited or changed. To put it in simpler terms, it enables you to send a gold coin via email. The P2P network is a consensus network, which allows a new payment system and the transactions of new digital money.

Let’s illustrate an example. Cryptocurrency like Bitcoin consists of its own network of peers. Every peer has a record of the complete history of all transactions as well as the balance of every account. By the end of every transaction and upon confirmation, the transaction is known almost immediately by the whole network.
A transaction includes a process where A gives X amount of Bitcoins to B, and is signed by A’s private key. After signed, a transaction is broadcasted in the network. The information is sent from one peer to every other peer on the network. Confirmation is a critical stage in the cryptocurrency system.
Confirmation is everything. When the transaction is not confirmed, it has the possibility of being hacked and forged. When a transaction is confirmed, it is set in stone. It can’t be reversed, it is impossible to be hacked, it is not forgeable as it is part of a permanent record of the historical transaction: The Blockchain.