Imagine an internet bank that never closes. There are no staff, no branches, and no waiting lines. Everything happens online, directly between people. Which means that you don’t need permission from a bank or government to send or receive money. 

That is the easiest way to understand what is a cryptocurrency. It is digital money that works without banks. Instead of coins or notes, it exists as data stored securely online. 

Technically, every cryptocurrency transaction is recorded on a system called the blockchain. You can think of it as a notebook that everyone can see but no one can erase or change. Which means that it keeps all transactions safe and transparent. 

Furthermore, every coin is protected by computer codes that stop it from being copied or faked. Therefore, we can say that cryptocurrency is not only digital but also secure. 

In short, cryptocurrency is money created and moved through technology instead of banks. It is a system where users, not institutions, control their money. 

How Does Cryptocurrency Work? 

Now that you know what is a crypto, let us see how it works. 

Think of cryptocurrency as a shared record book across thousands of computers. Each page is a block. When a transaction happens, it is added to a new page. 

Once confirmed by the network, the page locks in place. Hence, it is called a blockchain; a chain of blocks that can’t be changed. This keeps everything accurate and safe. 

Instead of one bank checking payments, thousands of computers do it together. Moreover, each computer holds a full record. Therefore, even if one fails, the system keeps running. 

In some cryptocurrencies, like Bitcoin, people use computers to verify transactions. They are called miners. Other coins, like Ethereum, let people help verify transactions if they hold coins.  

Hence, cryptocurrencies depend on users, not banks, to maintain the system. 

How to Store Cryptocurrency Safely 

You store your cryptocurrency in a wallet. It can be online (hot wallet) or offline (cold wallet). There are different types of crypto wallets, however most common types are: 

• Hot wallets are quick and easy for daily use. 

• Cold wallets are offline and safer for storing large amounts. 

Owning a wallet means you have a private key, a secret code that lets you access your coins. Therefore, protecting your key is very important and usually the best way to store crypto is to put it in cold wallets. 

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