Network definition
The network on a coin is the technological infrastructure that supports the operations and transactions of a cryptocurrency. It includes:
- Nodes: Computers connected in the network, which serve to verify and record transactions.
- Blockchain: A digital ledger that records all transactions that occur in the network sequentially.
- Consensus Protocol: Rules that ensure all transactions that occur in the network are valid and trustworthy.
- Miners: Entities that process and confirm new transactions by adding blocks to the blockchain.
The functions of the network in crypto include:
- Security: Protects transactions from manipulation and attacks through strong encryption and verification mechanisms.
- Decentralization: Eliminates the need for a central authority such as a bank by distributing control to many nodes around the world.
- Transparency: Ensures all transactions are recorded on a publicly accessible blockchain, allowing for easy and transparent auditing.
- Efficiency: Facilitates the transfer of digital assets quickly and at a relatively low cost compared to traditional financial systems.
- Immutability: Guarantees that once a transaction is recorded on the blockchain, it cannot be altered or deleted, thus increasing trust.
- Automation: Supports smart contracts that automatically execute agreements based on pre-defined conditions.
With these functions, crypto networks create a secure, transparent, and efficient environment for conducting digital transactions.