Cryptocurrency is the buzzword for a few years now. Many try to figure out what it is but found it really difficult to digest. Here is my attempt to explain cryptocurrency in the simplest form.
So if you need to understand cryptocurrency first you should understand cryptography. So what is cryptography?
The definition of cryptography as per Wikipedia is this
Cryptography or cryptology is the practice and study of techniques for secure communication in the presence of third parties called adversaries. More generally, cryptography is about constructing and analyzing protocols that prevent third parties or the public from reading private messages.
In this definition, you can take the meaning of the word ‘adversaries’ as enemy or opponent. And in this situation, the enemy or opponent is any third party or public.
So in simple terms, cryptography is the process of communicating among intended members using a technique where only the intended person can understand what’s the communication is.
Another way to explain cryptography is this
Cryptography is associated with the process of converting ordinary plain text into unintelligible text and vice-versa. It is a method of storing and transmitting data in a particular form so that only those for whom it is intended can read and process it. Cryptography not only protects data from theft or alteration, but can also be used for user authentication.
If you are someone who uses WhatsApp regularly, you might have read the term “end-to-end encryption frequently. In your WhatsApp app, if you go to Settings → Account → Security, you will find information about “end-to-end encryption which I have shared below as screen recording. In this screen recording, you can see how the word “Hello” is encrypted. Each alphabet is changed to something else automatically and randomly which even the WhatsApp team cannot understand. Everything is encrypted automatically and randomly in such a way that all the sender and the intended reader can understand what’s the message is. Once you type something first it will be encrypted and at the other end ie the person to who the message is sent, the encrypted message will again be decoded and converted into readable text.
Now let me make one type of encryption. Using
The first row is just normal numbers and the second row is encrypted signs which only you and I know. Now if I’m sending you an open letter that has a password to open a bank locker like this %\>#. Tell me who all can understand the password even if the letter is kept open. Only you and I can read it right? and what is that password? Password is
% = 2
\ = 8
# = 1
So the final password is 2891 right? This is what encryption is and each time I send you the signs the meaning of each sign changes automatically. That is how “end-to-end encryption” happens in WhatsApp and that is how cryptography works.
Now cryptography is a kind of advanced method of encryption where mathematical theory and computer science are used to transfer a form of currency from one person to another. This method helps to store and transmit data in a particular form so that only the people who are intended to receive the information can read and process it.
Ok so now we understood cryptography let us try to understand what is cryptocurrency.
Cryptocurrency is a digital form of cash that is run on cryptography and blockchain technology. If you want to understand the basics of blockchain you can watch this video first before reading further.
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