1. Cryptocurrencies are secured using cryptography, which is a form of advanced mathematics that requires special codes to access funds or information.
2. In the case of a cryptocurrency transaction, the sender generates a unique digital signature using their private key, which is a secret code that is known only by them.
3. This digital signature is then sent along with the transaction data (the sender’s address, the recipient’s address, and the amount being transferred) to the blockchain network.
4. Before being accepted, every transaction is verified by miners, who add it to the distributed public ledger (called the blockchain).
5. The miners use a protocol called “proof of work” to verify the validity of the transaction.
6. Once the transaction is added to the blockchain, it is immutable and the coins cannot be used again.
7. When the receiver receives the cryptocurrency, they can use their own private key to verify that the transaction originated from the sender.
8. As an extra layer of security, most cryptocurrency networks implement a “multisignature” feature, which requires multiple digital signatures to confirm a transaction, making it much harder for a hacker or malicious actor to steal funds.