Blockchain advantages and how cryptocurrency works

Blockchain advantages and how cryptocurrency works

Crypto currency is a type of blockchain technology, the technology that bitcoin and different distributed ledger systems area unit based on. Basically, a huge ledger of transactions, blockchain is AN open and shared info that operates in an exceedingly regionalized network format. It permits users to transfer and add data thereto anonymously, without security compromises.

In alternative words, crypto currency, like Bitcoin, is anonymous economic system that employs blockchain technology to work. rather than employing a MasterCard to buy an item on-line, users will use Bitcoin or another kind of crypto currency. And it is obtaining pretty fashionable — in Nov 2016, the market capitalization of crypto currencies reached $13.8 billion.

The Anatomy of Crypto currency

There are some exceptions to the rule, there are a number of factors that make crypto currency so different from the financial systems.

Adaptive Scaling

Adaptive scaling means crypto currencies are built with a number of measures to ensure that they will work well in large or small scales.

A number of other measures are included in digital coins which allows for adaptive scaling including limiting the supply overtime and reducing the reward for mining as more total coins are mined.


Crypto currency uses a system of cryptography which is also known as encryption to control the creation of coins and to verify number of transactions.


Most currencies in circulation are controlled by a centralized, and their creation can be regulated. Crypto currency’s creation and transactions are open source, controlled by code, and rely on “peer-to-peer” networks. There is no single entity that can affect the currency.


Traditional currency is defined by a physical object, crypto currency is all digital. Digital coins are stored in digital wallets and transferred digitally to other peoples’ digital wallets. No physical object ever exists.

Open Source

Crypto currencies are typically open source means that developers can create APIs without paying a fee and anyone can use or join the network.


Crypto currencies use a proof-of-work system which uses a hard-to-compute but easy-to-verify computational puzzle to limit exploitation of crypto currency mining. It is like a really hard to solve “captcha” that requires lots of computing power.


Owners of cryptocurrency keep their digital coins in an encrypted digital wallet. A coin-holder’s identification is stored in an encrypted address that they have control over – it is not attached to a person’s identity. The connection between you and your coins is pseudonymous rather than anonymous as ledgers are open to the public.


To be an effective currency, it has to have value. The US dollar used to represent actual gold. Cryptocurrency works with coins and tokens concept. In cryptocurrency, “coins” are generated or produced by “miners”. These miners are people who run programs on specialized hardware made specifically to solve proof-of-work puzzles. The idea of work giving value to currency is called a “proof-of-work” system. Value is created as when transactions are added to public ledgers as creating a verified transaction takes work as well.

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