Origin of Cryptocurrency

Cryptocurrency is created by code. New coins are created when transactions are confirmed, often through a process called mining.

Coins such as Bitcoin and Ethereum use mining, but not all cryptocurrencies use mining to generate new coins, and coins can be created in other ways as well.

How exactly coins are created depends on what is defined in the code of a particular cryptocurrency. For example, rather than mining or just mining, a virtual currency may create some tokens at launch to reward developers, or reward token holders with their tokens as interest.

Other points to consider understanding how cryptocurrencies are created.

Consider the following points.

• Cryptocurrency is software. All functions, from recording transactions to storing data, are dictated by code.

• Especially for cryptocurrencies whose primary function is to act as money, cryptocurrency transactions are typically stored in a type of database known as a blockchain (although other cryptocurrencies also use proprietary technology, the essence is the same).

• What we consider a cryptocurrency, for example 1 Bitcoin, is simply a number recorded on a cryptocurrency blockchain. Another word for this value is “token” (often called “coin”).

• Cryptocurrencies are created through algorithms based on cryptography. Therefore, it is also called “virtual currency”. Each transaction contains a unique encryption code that secures the network.

• Cryptocurrency software is decentralized and decentralized. That means it’s not just hosted on one company’s servers, but on many people’s computers around the world.

• Algorithms are typically written to award coins to computers that add transactions to the blockchain. The process of adding transactions to the blockchain is called mining.Cryptocurrency code defines maximum supply, mining rewards, etc.

• Therefore, in most cryptocurrencies, new coins are primarily created by people around the world running the hardware that adds transactions to the blockchain. Otherwise, cryptocurrency tokens are created through other mechanisms included in the cryptocurrency’s software.

Finally, the code for almost all cryptocurrencies is public, so anyone can see how the coins are created.