How do cryptocurrencies work? When people send transactions, they use a software called cryptocurrency wallets. Through them, balances can be sent from one account to another. Of course, to do so, each party needs a password. As stated before, all transactions are encrypted. However, they are broadcasted to the cryptocurrency network and queued up to be added to the public ledger (this action is called mining) that users can then download and run a copy of the software (called a full-node wallet). "The transaction amounts are public, but who sent the transaction is encrypted." Not all users have to do this in order to keep a record of their transactions. There are third parties, like Coinbase, that can hold the currency. To make it easier to understand, here is an example. We can imagine that every transaction is in a box that can be unlocked with a specific set of keys. The owner of the keys also owns the amount of cryptocurrency in that box. All these boxes, with transactions inside, are called blocks and are added though the process of mining, that is, adding blocks to the public ledger. The technology used is called blockchain, because it is a large chain of blocks full of transactions. 49
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