In a cryptocurrency network, transactions are sent between peers.
- The currency is transferred from a cryptocurrency wallet to another wallet by matching up public keys which relate back to user-held private keys also known as cryptographic keys.
- These transactions made between peers are recorded in blocks on a public ledger of transactions called a “Blockchain.” All users of a given cryptocurrency have access to the ledger.
- The transaction amounts are public. But the information of the sender of the transaction is encrypted. Each transaction leads back to a digital “cryptocurrency wallet.” Whoever owns the password (or key) to the wallet, owns the amount of cryptocurrency denoted on the ledger.
- When someone sends or receives cryptocurrency, they send from one wallet to another wallet using a set of private and public passwords. The transaction is queued up to be added to the ledger.
- Many transactions are added to a ledger at once. These “blocks” of transactions are added sequentially. That is why the ledger and the technology behind it is called blockchain.