In the world of crypto, an algorithm is basically a set of instructions that tells a computer what to do—step by step. 

It’s like a digital recipe for solving problems or getting stuff done, whether that’s verifying a transaction or mining new coins.

These algorithms are a big deal in cryptocurrency. They help keep everything secure, fair, and running smoothly. 

Take Bitcoin, for example—it uses something called SHA-256 to validate transactions and mint new coins through mining. It’s a bit like a bouncer at the door checking IDs before letting people in.

So, when you send Bitcoin to someone, the network kicks into gear and uses an algorithm to check that the transaction is legit. 

Only after it passes the test does it get added to the blockchain. On the mining side, algorithms help miners solve tricky math puzzles—basically a competitive brain game—to earn fresh Bitcoin as a reward.

But algorithms aren’t just behind the scenes in crypto. They’re everywhere. They help save time, make processes more efficient, and bring a little order to the chaos. Businesses, especially in finance and tech, rely on them heavily. 

Ever wonder why your social media feed seems to know you too well? Yep, algorithms. They’re the reason you’re getting those oddly specific ads for hiking boots after one conversation about national parks.

Another place you’ll see them at work is in the world of trading—specifically, algo trading. That’s where computer programs handle the buying and selling of assets like stocks, commodities, or crypto. 

These systems follow pre-set rules to decide when to trade, how much to trade, and the best way to do it. No coffee breaks, no second-guessing—just pure data-driven hustle.

There are all kinds of trading algorithms out there. One type, called a mean reversion algorithm, looks at how a stock’s short-term price compares to its long-term average. If the price jumps too high above the norm, the algorithm might trigger a sell—aiming to cash in before things settle back down.