A cryptocurrency is a medium of exchange such as the US dollar, but is digital and relies on smart contracts to verify the transfer of funds and control the creation of monetary units. Bitcoin is the name of the most recognized cryptocurrency, the one for which blockchain technology, as we currently know it, was created. Bitcoin relies on smart contracts.
Blockchains are best thought of as a ledger, just like an Excel spreadsheet, except that they are maintained on a peer-to-peer network on the internet, rather than on a centralized server. At the heart of every blockchain is an agreed upon protocol that ensures that only information upon which the network reaches consensus will be included in the blockchain. In other words, a network of computers all running a common software application (rather than the Federal Reserve, which does the same thing for banks) must come to agreement upon whether a change to the blockchain should be made, and if so, what that change should be.
As transactions are broadcast throughout the Bitcoin network, miners group these transactions into “blocks” (which simply refers to a collection of transactions. Once a miner successfully mines a block, that block is subjected to a cryptographic hash. This hash is then carried forward and becomes a part of the next block to be mined, which block is then subjected to a cryptographic hash. This process continues over and over again so that every block is back-linked to the blocks before it. As a result of every block being connected to its predecessor block, it becomes impossible to easily go back and change a record in a prior block (which becomes increasingly more difficult the more blocks back you go).
Unlike a normal wallet, crypto wallets technically don’t store your crypto. Your holdings live on the blockchain, but can only be accessed using a private key. Your keys prove your ownership of your digital money and allow you to make transactions. If you lose your private keys, you lose access to your money. That’s why it’s important to keep your hardware wallet safe.
Some crypt wallets are:
• The term smart contracts is generally understood to mean programming code that is executed on the blockchain in a manner that changes the state of every participant's ledger.
• There is some confusion created by the misconception that all smart contracts are legally binding agreements.
• There exists Federal and fairly uniform state legislation that, with certain limited exceptions, recognizes the validity of electronic signatures to the same extent as traditional “wet ink” signatures.
• Smart contracts are being most actively developed in the financial services and supply chain industries.