How do common cryptocurrencies like Bitcoin and Ethereum work?

3 answers

• Nov 26, 2021 · 3 years ago
  Bitcoin and Ethereum are decentralized digital currencies that operate on blockchain technology. Bitcoin was the first cryptocurrency and remains the most well-known. It uses a peer-to-peer network to facilitate transactions and maintain a public ledger called the blockchain. Ethereum, on the other hand, is a platform that enables the creation of decentralized applications (dApps) and smart contracts. Both cryptocurrencies use cryptographic techniques to secure transactions and prevent fraud. The blockchain ensures transparency and immutability by recording all transactions in a decentralized manner. Miners validate transactions and add them to the blockchain through a process called mining. This process involves solving complex mathematical problems to verify the authenticity of transactions. Once a transaction is confirmed, it becomes a permanent part of the blockchain and cannot be altered. This decentralized nature of cryptocurrencies makes them resistant to censorship and control by any central authority.
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• Nov 26, 2021 · 3 years ago
  Cryptocurrencies like Bitcoin and Ethereum work by utilizing blockchain technology. The blockchain is a distributed ledger that records all transactions in a transparent and secure manner. Each transaction is verified by multiple participants in the network, known as nodes. These nodes use cryptographic algorithms to ensure the integrity of the transactions and prevent double-spending. Bitcoin and Ethereum also use consensus mechanisms, such as Proof of Work (PoW) or Proof of Stake (PoS), to validate transactions and maintain the security of the network. In PoW, miners compete to solve complex mathematical puzzles, while in PoS, validators are chosen based on the amount of cryptocurrency they hold. Both mechanisms ensure that only valid transactions are added to the blockchain. Additionally, cryptocurrencies rely on public and private key cryptography to secure wallets and enable secure transactions. Public keys are used to receive funds, while private keys are used to sign transactions and prove ownership. Overall, cryptocurrencies like Bitcoin and Ethereum provide a decentralized and secure way to transfer value and execute smart contracts.
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• Nov 26, 2021 · 3 years ago
  Cryptocurrencies like Bitcoin and Ethereum work by leveraging blockchain technology, which is a decentralized and transparent ledger. Bitcoin, for example, operates on a proof-of-work consensus algorithm, where miners compete to solve complex mathematical puzzles to validate transactions. Once a transaction is verified, it is added to a block, which is then added to the blockchain. This process ensures the security and immutability of the transactions. Ethereum, on the other hand, uses a similar blockchain technology but with a focus on smart contracts. Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They automatically execute when the conditions specified in the code are met. This enables the creation of decentralized applications and eliminates the need for intermediaries. Both Bitcoin and Ethereum provide a secure and transparent way to transfer value and execute programmable contracts. However, it's important to note that there are also other cryptocurrencies and blockchain platforms available, each with its own unique features and use cases.
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