Cryptocurrency and Blockchain
In the last couple of years, cryptocurrencies such as bitcoins, Ethereum, among others, have received significant attention. These media of exchange employ digital security techniques such as cryptography and a distributed electronic database known as a blockchain.
What is Cryptocurrency?
A cryptocurrency is a type of digital money that employs computer codes to protect financial transactions. Cryptocurrencies are most decentralized – they function without the interference of central authorities such as banks and governments. Some key aspects of cryptocurrency include:Some key aspects of cryptocurrency include:
– Transactions that are green and require the use of cryptography and signatures for certification of transfers and combating counterfeited.
– Peer to peer networks are those that are decentralised and are spread across computers in the different parts of the world and not a single server or a company.
– No intermediaries – users of the site can transact directly with each other without having to engage the services of banks or payment processors.
– Less inflation – some of the cryprocurrencies have fixed value for total units in circulation
Bitcoin was the first digital currency to gain popularity and is considered the first success story in the context of cryptocurrency. Since then, there are thousands of other cryptocurrencies now including Ethereum, Ripple XRP, Litecoin, Tether and many others.
Understanding Blockchain
The advent of cryptocurrencies could only occur due to the existence of another technological advancement – the blockchain. Blockchain means a distributed digital ledger that can store data about transactions in a purely and transparent manner. Here are some key principles:Here are some key principles:
– Distributed – This means that the ledger is not stored in a centralized location but across multiple computers around the world.
– Direct communication – individuals can communicate with other users without having to deal with a middleman
– Realtime – every user can see the transactions that are being done from a particular account.
– Permanent – Once a transaction is made, it becomes a part of the blockchain and the information embedded is encrypted.
– Programmable – The developers can encapsulate some logic on the blockchain so that smart contracts as well as decentralized applications can be created.
The initial blockchain was introduced in 2008 but was adopted in 2009 as the foundation for the Bitcoin cryptocurrency. Blockchain is a solution that offers decentralisation, transparency and unalterability to cryptocurrency operations. Blockchain is being investigated and used for more than data, contracts, identity, and asset management in various industries other than finance.
Blockchain 101 and Crypto Currency
Nonetheless, long-term trends in cryptocurrencies and blockchain were less rosy, which was demonstrated by large-scale fluctuations and scandals. Blockchain offers a potential for developing an open web space apart from the direct affiliation with a company and government regulation. And now, large-scale companies such as Tesla, Visa, and PayPal admit transactions through cryptocurrency. We still may be early, but the technological advancement will continue advancing.