A whole lot of profits and wealth of the cryptocurrencies comes to mind when we hear the words Blockchain, Bitcoin, and cryptocurrency.
Blockchain technology was first used in 2009, when Bitcoin was introduced, which was the first to apply the concepts of Blockchain technology. As the words suggest, block-chain. The blocks of data are chained together in a digital format. The block consists of records which in turn consists of ledgers, where the transactions are written. In a Blockchain, the records are distributed among the nodes and everyone has a copy of it. So when one of the records is tampered or changed, it becomes very easy for us to recognize the tampered record. Which can be replaced with the authentic one by copying it from others on the network.
Basically, when the first record is written a specific key is generated for that record. The interesting thing happens when the further records are written. When the sending record is written the data and then let the first one goes to the second record and then comes out a unique key. When the third record is written the data and key from the first and sending record goes to the third record and then comes out a unique key. Hence as we can observe that there is a dependency between the records. The records are kind of chained to each other.
It is easy to assume the digital currency had been around since the late 1990’s about the time the internet really took off in the public eye and people dated bill payments and purchases online at that the online payment was done in local currencies which were controlled by the government. Unlike centralized banking where the government controls the value of the currency through the process of printing money. But in this case, the government has no control, since the cryptocurrencies are decentralized. Most cryptocurrencies are designed to decrease the production over time like Bitcoin. Bitcoin will never have more than 21 million in circulation. All cryptocurrencies are maintained by the community of cryptocurrency miners who are a member of the general public that has set-up their computers to participate in validating and processing a transaction. Otherwise, if we were to transact money from any part of the world it has to come through many layers and different organizations (banks) which spikes the transaction fees.
Unlike the physical currencies, cryptocurrencies can’t be printed as per our requirement, but they are mined by solving complex math problems and the term is called “Mining”. People who mine the Bitcoins or other cryptocurrencies run complex algorithms on powerful computers (usually supercomputers) so that the odds of finding the solution to the complex problem increases and hence chances of getting Bitcoin increases.
Bitcoin is one such example of a cryptocurrency. It is a type of decentralized cryptocurrency but not the physical currency like the Rupee, Dollar, Yen, Euro, etc that means the currency is not available physically but only available digitally on computers.A Bitcoin can be broken down up to 8 decimal places similarly like a Rupee which can be broken down into two decimal places. 0.00000001 is the least amount of Bitcoin that can be bought or sold.
Bitcoin gained value was not because some authority decided it’s valued instead people believed that it can’t be used as a medium for the transaction. Since the authority is distributed to everyone and there is no particular central authority maintaining all the transactions it is said to have a decentralized nature. Which in turn implies that it is difficult for a central administrator to get hacked and thereby decreases the vulnerability of getting hacked. There is a stability in the Bitcoin currency’s value because the government has no control over the Bitcoin.
Prior to the invention of Bitcoin, there were a lot of other cryptocurrencies being used. If a particular cryptocurrency was being spent there was no proper methodology to keep a track of that particular currency and the same cryptocurrency would be spent by someone else too. Which gave rise to a problem called “double spent”. With the invention of the Bitcoin currency which uses the blockchain technology, a public ledger is being maintained for each and every transaction is made by using a particular Bitcoin, hence, no particular Bitcoin can be transacted more than once.
The availability of Bitcoin is finite, unlike the physical currencies we have. There are only 21 million Bitcoins available, similar to the fact that there is a finite amount of gold present on the earth. Only a certain amount of Bitcoins are released every year
In a shell, Bitcoin is one of the most secure cryptocurrency can be anticipated as the future global currency. It would revolutionize the world as it’s technology is likely to bridge the trust gap we have today.