DIGITAL CURRENCY - SARAFU YA DIGITALI
Digital currency is created through a few distinct mechanisms depending on the specific type of currency: **cryptocurrencies** (like Bitcoin), **Central Bank Digital Currencies** (CBDCs), or **private electronic money** (like bank deposits or stablecoins). Here is a breakdown of how each major category of digital currency comes into existence. --- ## 1. Cryptocurrencies (Decentralized Digital Currencies) Unlike traditional money, cryptocurrencies are created through computer algorithms and cryptographic protocols running on a decentralized network of computers (blockchain). ### Method A: Proof of Work (PoW) – Mining * **How it works:** Special computers (nodes) compete to solve complex mathematical problems. * **Creation process:** The first computer to solve the puzzle earns the right to add a new block of transactions to the public ledger (blockchain). As a reward, the network automatically creates brand-new coins and awards them to the solver. * **Example:** **Bitcoin**. New Bitcoin...