How do Cryptocurrencies Work?

Cryptocurrencies are a form of money that lives online in distributed, decentralized databases.

• Database: Nearly all money today (92%) exists only online and is stored in databases – cryptocurrencies are no exception

• Distributed: Identical copies of these databases are shared over thousands of computers located all over the world

• Decentralized: Cryptocurrencies rely on a combination of blockchains, digital key cryptography and consensus mining to ensure decentralization

I know this might all seem a bit confusing, so let’s dive into each of these a bit deeper in the next sections.