When you make a wire transfer (or any transaction, ed.), your issuing bank doesn’t actually take the money from your account right away and transfer it to the recipient’s account. The bank simply keeps information about the payment in its database for as long as it needs and is comfortable. Only the balance in your bank account and possibly the beneficiary’s balance changes instantly. Money now moves on the principle of changing records in databases, not physically.
In order for cryptocurrency to function independently of any centralized intermediary, all participants in the process need to have a way to record and store financial transactions to eliminate the problem of double debiting, which allows you to pay twice with the same crypto token, that is, to “buy” goods for twice the amount available. In doing so, the problem should be solved without the use of some central server and base, as is done in banks.
Most existing cryptocurrencies use an open cryptographically secure distributed transaction registry called “blockchain. A blockchain is a chain of blocks of transaction records that are linked together and secured using cryptography. Each block contains its own unique cryptographic identifier that points (links) it to the previous block in the chain.
Once added to the blockchain, the blocks can no longer be changed without losing data about the entire chain that follows, which immediately lets other users know that there has been a third-party tampering to bypass the rules. This makes it possible to simply refuse to use the modified version of the chain (because without recognition of the modified block by most participants in the process, it is useless) and continue to work with the original branch.
Electronic cryptocurrency wallets can be linked to the blockchain to ensure that their balance is true, and new transactions are verified using data in the blockchain to ensure that each one is real and was produced by a cryptocurrency that actually belongs to the payer (or his wallet).