Page 218 - A Canuck's Guide to Financial Literacy 2020

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Crypto-Currency

Cryptocurrency is a digital currency that is used as a medium of exchange to purchase
goods and services online. Cryptocurrencies are stored in a computerized database and
use cryptography to secure and verify transactions. This is known as blockchain technology.

Blockchain Technology

Think of blockchain as a decentralized ledger that records the origin of a digital asset. The
data is managed over a cluster of computers and not owned by a single entity. Since no
central authority owns the blockchain network, it’s very transparent and open for anyone to
see.

Through blockchain technology, an individual is able to complete a transaction at no cost in
a safe and secure manner. The transaction is initiated by one party by creating a “block”.
The block is verified by millions of computers connected to the network. The verified block is
then added to the chain. Details of the process are below.

1. A user requests a transaction via a digital blockchain wallet.
2. The transaction is broadcasted to all computers in the specific blockchain network.
3. Each computer in the network validates the transaction.