A Brief Introduction to Cryptocurrency and Blockchain
What is Cryptocurrency?
Cryptocurrency is an upgraded form
of digital currency, which is used as a substitute for payments created using
encryption algorithms. Cryptocurrencies primarily are used to buy and sell
goods and services. But the newer and versatile forms of cryptocurrencies are
now being used for several other purposes. To purchase, sell and use
cryptocurrency you need a crypto wallet. These crypto wallets can be cloud-based
storage services and cryptocurrency can be directly stored on your personal
computers and mobile devices.
Recent statistics published
on Feb 22, 2021 crypto
exchanger and trader company Binance is ranked on the top among world crypto
exchangers companies. Further researches reveal the fact that there are only 10
million bitcoin holders worldwide. Most of these bitcoin
holders have bitcoin because of profit and investment purposes. For lower-class
cryptocurrency is not that necessary because their daily needs are already
fulfilled by government-backed currency function. One of the unique features of
using cryptocurrency is that it doesn’t involve a third financial institution
intermediate. Both crypto merchants and consumers find advantages in using
cryptocurrency, as the lack of a third party or middleman lowers the rates of
cryptocurrencies. Consumers find advantage insecurity associated with
cryptocurrency. If the system is hacked bank is unable to recover the missing
money and information. But in the case of crypto, you can recover and utilize
the recovered database immediately.
Blockchain Technology
Blockchain technology is the main
advantage of using Cryptocurrencies. Unlike government verified currencies,
cryptocurrency doesn’t require a central authority such as a state bank,
government, and other such sources. Cryptocurrency buyers and sellers directly
interact with each other and their dealings are allowed to happen without the
cost of the middle man or third party. Thus, it highlights other benefits of
using crypto as a future currency.
Another amazing feature of
blockchain technology is its accessibility to interacting parties. Most crypto
dealings are taking place as peer-peer exchanges, in which the buyer directly
contacts the seller on exchange websites, and the seller after negotiation
fixed a deal with a buyer. Then seller releases the currency from his/her
crypto wallet and the buyer paid a specific amount of that currency. With
blockchain technology, both buyers and sellers are allowed to see the same
ledger of transactions. But it is not under the control of both parties. It
operates in consensus, so both buyer and seller need to approve and verify the
ledger for the transaction to happen. From a technical point of view, the
transaction is based on a consensus algorithm.
In other words, the transaction is
recorded or checked in multiple nodes rather than a single server. A node is a
computer or a device connected to the network of blockchain that is allowed to
download a copy of the blockchain upon connecting to the network. For a particular
transaction to proceed all devices in the node needs to agree.
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