This post is for those who know nothing about cryptocurrency.
What is cryptocurrency?
It is a digital currency that uses cryptography for security. There are hundreds of cryptocurrencies these days, the most popular ones being Bitcoin, Ethereum, Steem etc. The value of a particular cryptocurrency increases when its demand increases. Bitcoin's value shot up this month like a rocket when more people began buying Bitcoin. When its value increased even more people started buying them in the hope that its value will increase further and will be able to reap the profit.
I hear about Bitcoin, Ethereum all the time. Where do these come from?
No, it is not from the bank. Anyone can create these cryptocurrencies by a process called mining. But you would need the right resources such as a GPU or an ASIC(Application-specific integrated circuit) or other hardware, as mining requires immense processing power and time. There is no one resource that will be good for mining all kinds of cryptocurrencies. For example, it's better to mine Bitcoin using an ASIC than a GPU. Also, it is better to mine Ethereum using a GPU rather than an ASIC.
What is mining?
The simple answer is - you have to run a computationally intensive program for which you will be paid with cryptocurrency. But it is not as simple as that.
When you mine, your program which you will run on a GPU or some other capable hardware, will be given a number of transactions to be validated. Your program will run a lot of complex computations to validate these given transactions and once you submit the solution to the issuer, you will be paid with a portion of the cryptocurrency transaction you helped verify.
You probably can run this on your laptop, but a laptop with its limited capabilities will take much much longer than a GPU to create a cryptocurrency, by when your electricity bill would have shot through the roof. At today's rate of big scale mining, the cost of running the program on a home computer is much greater than the profit you will ever make.
What is blockchain?
This is the underlying technology behind the cyptocurrencies.
Blockchain is a decentralized database (a database which is so widely spread across the world), which holds immutable records of the transactions (meaning it is almost impossible to hack and tamper with, as it is very difficult to alter a transaction that is stored in the database. This security is one of the alluring features of cryptocurrency trading)
Here is a video, which helped me understand what was happening under the hood :-
I myself am a newbie and I do not claim to be an expert in this field.
Shout out to the big whales out there :- If you find something here that needs correction or addition, please do let me know in the comments.
Thank you for reading!