A digital currency is an encrypted, decentralized digital currency transferred between peers and confirmed in a general ledger through a process known as mining.
How the digital currency works in virtual reality
Below, we will take a simple look at how digital currencies work like Bitquin. First, let's review the fundamentals and imperatives of coding, and then we will make a general overview of the other features that have made the world's currency as it is today.
Digital Currency Basics
To understand how the digital currency works, you will need to learn some basic concepts. specially:
General Ledger: All confirmed transactions are stored from the beginning of the creation of the digital currency in the general ledger, the identities of the currency holders are encrypted and the system uses other encryption techniques to ensure the legality of record keeping. The bookbook ensures that the corresponding "digital portfolios" For execution, new transactions can also be verified to ensure that each transaction uses only the digital currencies currently owned by the spendor, Bitquin calls this general ledger "Transaction Block Series."
Transactions: The transfer of funds between two digital portfolios is called a transaction. The transaction is sent to a general ledger and awaits confirmation. The governor uses an encrypted electronic signature when conducting a transaction. The signature is an encrypted piece of data called an encrypted signature and provides a mathematical proof that the transaction came from the owner And the confirmation process takes part of the time (ten minutes for the Betquin coin ) while the metal confirms the transactions and adds them to the general ledger.
Mining is the process of confirming transactions and adding them to a general ledger, to add the metal must solve an increasingly complex mathematical problem (such as math puzzle), open source mining so that anyone can confirm the transaction, adding the first metal to solve the block puzzle of transactions to the ledger, The way in which transactions, blocks and general ledger work in the blockage together ensures that no one can easily add or change a block as desired. Once a block is added to the ledger, all interrelated transactions are permanent and add a small transaction fee to the mining portfolio The side of the newly created digital coins A), the mining process is what gives value to the digital currency and is known as the system of proof of work.
Digital coin dissection
Although there may be exceptions to the rule, there are some factors (other than the basics above) that make the traditional encryption currency quite different from past financial systems:
Adaptive hierarchy means that digital currencies are built with measures to ensure they work well in both large and small scales.
Example of Adaptive Gradient: Bitquin is programmed to allow the removal of a single block of transactions every 10 minutes. The algorithm is modified after each year (theoretically every two weeks) to get easier or harder depending on how long it takes to remove these blocks for 2016. So if It took only 13 days for the 2016 mining network. It means that it is very easy to disable so the difficulty increases. However, if it takes 15 days for the network to mine for 2016, it shows that it is very difficult to think so the difficulty is reduced.
Other actions are included in the digital currency to allow for adaptive gradation including reduction of supply over time (to create scarcity) and reduce the bonus for mining as more total electronic coins are extracted .
Encryption in digital currency
Encryption: Uses the Digital Currency Encryption System (AKA) to control the creation of virtual currencies and check transactions.
Decentralization: Most of the currencies traded are controlled by the central government so that their establishment can be organized by a third party. The establishment and operation of open-source digital currency, controlled by code, relying on peer-to-peer networks, Can affect the currency.
Traditional coins are defined by a physical object (the dollar is in the form of paper money and in its first years supported by gold for example), but all electronic currency is digital. Digital currencies are stored in digital portfolios and digitally transferred to other digital portfolios. An existing physical object exists.
Open source: Digital currencies are usually open source, meaning developers can create APIs without paying a fee and anyone can use or join the network.
Proof of work: Most digital currencies use the proof of work system. The proof-of-work system uses a computer puzzle that is hard to understand but easy to verify to reduce the exploitation of digital coin mining. Basically, it resembles a "CAPTCHA" solution.
Note: Other systems such as proof of work (such as proof of ownership) are also used.
Currency currency owner
Alias: The owner of the currency attached to their digital currency keeps an encrypted digital wallet. The identity of the digital currency holder is stored in an encrypted address that they have control over - not associated with the person's identity, and the relationship between you and your digital currencies is a pseudonym rather than an anonymous one. Ledgers are open to the public (thus, ledgers can be used to gather information about groups of individuals in the network).
To be effective, it must have value. The US Dollar is used to represent the actual gold. Gold has been prudent and requires refining and refinement, so scarcity and labor have given gold value, which in turn has given the value of the US dollar.
The digital currency works similarly in terms of value in electronic currency. Electronic currencies (which are no more than general approval of property records) are produced by the metal. The miners are people who run the software on specialized machines specially designed to solve work proofs. Working behind mining currencies gives them value, while the scarcity of digital currencies and their demand causes their value fluctuation, called the idea of work that gives value to the currency "proof of work" system, the other method of validation of digital currencies called the proof of share, the value is also created when adding Transactions to a tune The general professor goes on to create a verifiable transaction block, and the value comes from factors such as utility, supply and demand.
Learn more about how digital currency works
If you are at this stage a bit puzzled, do not worry and do not give up, understanding the basic concepts of encryption is a challenge, we all learn in different ways.
Do not worry about using a digital currency if you do not understand it at the beginning - every new video, commentary or article you learn from now will make your understanding of the currency clearer.
To learn more, visit some of the more technical pages on our site for deeper in-house coding.
You can ask any questions or questions in the comments and we will be charged with answering them with God's help.