There are many concepts that enable the successful working of Bitcoin and Alt Coins over the years. The following are fundamental technologies that contribute to Cryptocurrency domain.
1) BlockChain
Blockchain acts a record of ledger for all the transactions in the network. Think of a Blockchain as a database for storing all of the transactions occurred and will occur in the future.
Know more about the Blockchain technology in this post
2) Cryptography
Cryptography deals with the security aspects in the networking domain. It aims to protect the data that is being communicating over the network (generally Internet) so that, no outsider can understand the data except for the intended receiver. Cryptography is a demanding field in Computer Science.
Know more about Cryptography in this article...
3) Distributed / Decentralized
In every cryptocurrency, the underlying blockchain is distributed. It means the same blockchain is copied and distributed to many computers all over the globe. All of the Blockchains have same data. If anyone tries to change data then it will be detected because there are several copies of blockchain and we can know which is the valid blockchain.
Know more about this Consensus Protocol here
4) Peer 2 Peer
A Peer 2 Peer (also known as P2P) is decentralized application architecture in which all the users can interact or perform the required use case directly with each other. There will be no governing authority that facilitates the interaction or provides the approval. The users in the P2P network will have the full rights. Main aim is to avoid the mediator / intermediate authority or any 3rd party.
Examples are uTorrent, Bittorrent, Bitcoin Transactions...etc.
5) SHA 256 Algorithm
- S - Secure
- H- Hash
- A - Algorithm
SHA 256 is a Cryptographic Hash Function that converts any given input into a string of 64 random Hexa-Decimal characters. These 64 characters take 256 bits of size to store in memory. Hence, the name SHA 256.
Know more about the SHA 256 Algorithm here