WHAT IS BLOCKCHAIN AND CRYPTOCURRENCY TECHNOLOGY

Posted on October 25, 2018

The truth is that most of us believe blockchain is the same as cryptocurrency, some would say they’re synonymous words. Basically, most people can’t really figure out the differences and similarities between blockchain and cryptocurrency and what links them together. This article would help you have a clear view as regards what blockchain technology is, and how it links to cryptocurrency technology. Let’s start off by discussing cryptocurrency.

What is Cryptocurrency?

Cryptocurrency is a digital currency or asset that can be used to accumulate wealth. It is almost taking the place of tangible currencies as medium of exchange in financial transactions. The introduction of cryptocurrency technology can be regarded as one of the most appropriate invention in history. It was brought into existence with the aim of using digital knowledge to secure communications, information and financial transactions. Cryptocurrency is known for strong encryption which makes it so easy to secure personal information, track transactions and keep records of purchases made through it.

Source of Cryptocurrency

You can wonder where those coins come from, well, it is always a reward for miners who try to solve complicated mathematical puzzles to place the next block on the blockchain. Basically, team of miners would come together and try to confirm transactions by solving the puzzle and spreading the transactions across the network. After a successful transaction, the miners would receive a reward and transaction fee which is in form of cryptocurrency. To some extent, the programming required for the transaction to be successfully completed is very complicated and requires a lot of effort. It is very rare for individuals to acquire coins through this means.

Cryptocurrency in the world today  

Today, cryptocurrency is one of the major currency used for online purchases. A lot of merchants accepts cryptocurrency as mode of payment. Unlike normal banks, transactions with cryptocurrency requires no third party and the coin is untraceable. It is more secured to do business with cryptocurrency. Mining of cryptocurrency is quite breathtaking and expensive therefore it might be required of you to find other means of acquiring this digital currency. The usual way to acquire it is by buying from cryptocurrency exchange platforms.  Also, you can acquire it directly from individuals that are willing to sell the ones they have in stock. Well, this can be quite risky as you’re prone to scam.

Cryptocurrency Wallet

In cryptocurrency technology, there is what we call cryptocurrency wallet which is where you’ll store your acquired coin. With this wallet, you’ll receive your purchased coin no matter what method used in buying the coin. Crypto wallet comes in three forms; hardware wallet, paper wallet and software wallet in which the latter is not as secured as others. Most individuals use software wallet but with a strong security option to secure it. Acquiring cryptocurrency can be quite simple if only you put into consideration important factors and steps in purchasing it.

Investing in Cryptocurrency

Unarguably, cryptocurrency is very volatile. Investing in cryptocurrency is quite risky as the price varies every now and then. You can acquire a huge worth of cryptocurrency now and in few days, the value would decrease drastically. It can also be the other way round though. Also, in most case, you’ll be doing business with people you don’t see therefore there is high potential of being scam. Cryptocurrency investment involves high risk but I can tell you, if you’re really passionate about it and can think well, you’ll surely flourish in trading crypto.

Popular and Major Cryptocurrencies

There are numerous cryptocurrencies but Bitcoin is the most popular of them all. Unlike other cryptocurrencies, Bitcoin is accepted all over the universe. Bitcoin is the most traded cryptocurrency, then you can think of it as the most risky. Other popular cryptocurrencies include: Ethereum which is the second most traded cryptocurrency, Ripple, Zcash, Litecoin, Altcoin, etc.

Now let’s us take a look at what blockchain really entails and how it is related to cryptocurrency.  

What is Blockchain?

Blockchain works in hand with cryptocurrency. As the name suggest, it can be imagined as a form of block linked together with chains, where new information is stored in a recent block with the old block containing previous information pushed backwards. The chain continues like that in a way that previous information can’t be adjusted or changed. Blockchain is a form of database that is not controlled by a single entity. It is a network of database distributed all over different digital platforms. Blockchain is a technology applicable in cryptocurrency.

How does Blockchain links with Cryptocurrency

In cryptocurrency, blockchain technology is mainly used in storing information and data. History of transactions made with cryptocurrency are confirmed and updated into the blockchain network where it can’t be altered or corrupted. Numerous computer networks are jointly linked to manage database records of every transactions made with cryptocurrency. Blockchain permanently store information. Once a transaction has been confirmed and updated into Blockchain, there is no means of reversal even if there is any error or mistake. This is more of the reason why cryptocurrency is untraceable. Information stored in blockchain can’t be erase or change. If you send coin to a wrong address, you won’t be able to retract the coin.

Blockchain Security

Blockchain is widely accepted by several financial institutions but it is well known through cryptocurrency. Storing data and information across blockchain network is more secured as it is not controlled by single entity. It is very difficult and unusual to experience any manipulation in transactions. Blockchain has an enhanced encryption security option. It is controlled by several networks which makes it so difficult for hackers to intrude. Every cryptocurrency transaction stored on blockchain is incorruptible and strongly secured.

Conclusion

The world is approaching an era where Cryptocurrency would be the main currency throughout the universe. We’ll get to a point where top merchants would only accept cryptocurrency as means of payment. Cryptocurrency has come to safe us the stress of handing flat currencies and experiencing transaction errors. Cryptocurrency uses the blockchain technology to store and secure transaction information.