How do cryptocurrencies work? – BBC News
When you want to buy something normally, using your normal bank card, this is what happens; I give my card details to the shop and the shop asks the bank if I’m good for the money. The bank checks its records to see if I’ve got enough in my account. If I do it lets the shop know it updates its records to show the movement of money from my account to the shops, and it takes a cut for its trouble.
Now if you wanted to remove the bank from that system, who else would you trust to keep those records, and not alter them or or cheat in any way? I wouldn’t trust you, in fact I wouldn’t trust any single person, but I might trust everyone!
The idea is you don’t have a central record of transactions, instead you distribute many many copies of this ledger around the world. Each owner of each copy records every transaction, so to buy something using cryptocurrency, I give the shop my details, the shop asks all the bookkeepers if I’m good for the money, the bookkeepers all che
ck their records to see if I have enough, if I do they tell the shop and then all update their records to show the movement of money.
So there’s no way that a forged transaction can make it in. If I
try to alter a ledger it won’t match all of the other copies and it gets rejected.Oh’ and one of them at random will be given a reward of some newly created cryptocurrency!
This is how cryptocurrencies work and remember all of these bookkeepers all of these Ledger’s they’re not actually people they’re computers lots of computers!
Source : Youtube