Cryptocurrencies use a distributed network to allow peer-to-peer (P2P) payment, a transaction verification system that does not require third parties. In order to maintain this security, cryptocurrencies use mathematical algorithms and a public accounting register called blockchain, to ensure that every transaction is legitimate and avoid fraud. The requirement to generate a new group of transactions (a block) and add it to the distributed transaction database or block chain is called proof-of-work.

Most cryptocurrencies are open source. This is fundamental because it is the only way that users can be sure that creators will not add anything that would allow them to fool the system. Each cryptocurrency usually has a central group of developers that can add, subtract or modify characteristics.

How does it work?

Virtual money blockchain based ...