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Cryptocurrency and Blockchain Technology Explained
Cryptocurrency and blockchain technology are two terms that every person has heard about. Especially if you are into the news nowadays and are interested in finance and investment, there’s no way that you haven’t listened to these terms. Cryptocurrency is all over the news; it is talked about, argued on, and even on tutorials; it is just everywhere.
Despite harsh comments from crypto critics, a lot of people are still interested in investing in cryptocurrency. This is because many people are now sick and tired of traditional centralized finance, and if you are one of these people, this article is for you. It will be helpful as it will discuss more the basics of cryptocurrencies and blockchain technology.
Let’s start with cryptocurrencies, or simply crypto; these are digital assets that use cryptography, an encryption technique used in crypto trading to ensure every transaction’s security and validity. Thousands do cryptography. Even millions of computer networks are called nodes.
Cryptocurrencies are mainly used for trading – to buy and to sell – goods and services. Another use of cryptocurrencies, especially the newer ones, is to provide a set of rules or obligations for its holders.
For those who believe in the potentially bright future that crypto may have ahead, the reliable option of the Bitcoin Up platform is often a sure bet. Crypto are assets with no intrinsic value, meaning it has no set value; it changes constantly depending on the market and its exchanges. Sometimes it hits high surges other times, its value crashes. Unlike fiat, the traditional currency, they are not issued by a central authority like the government, banks, and payment companies. Further, they are not regarded as legal tender or something that can pay off your debt.
Most people are attracted to cryptocurrency because of its security and its trades, which are all due to its thrust to change global finance through its innovative and groundbreaking technology – the blockchain.
The Blockchain Technology Explained
Blockchain technology is the foundation of trading Bitcoin, Ethereum, and other cryptocurrencies. It is a continuously updating digital public ledger. Yes, this technology allows everyone to access the blockchain, every block of the chain, which in simpler terms means every page of the digital ledger. But it doesn’t necessarily mean that just anyone can change transaction records as they wish because it will be almost impossible to do so.
This is because, from a technical perspective, blockchain uses Proof of Work (PoW) which basically means it utilizes consensus algorithms. In simpler terms, when a transaction happens, that transaction is recorded simultaneously into multiple nodes, which basically means not just one node but every node in existence will check whether a transaction someone declared did happen. There has to be a consensus between all of the nodes doing the encryption for a transaction to be considered real and be listed in the chain as an official transaction.
Another positive thing about blockchain is that nodes are connected to the blockchain network, and once the node joins the blockchain network, it automatically allows it to download the copy of the blockchain and announce it to every user and or trader in real-time.
Another glaring factor that makes blockchain technology all the more appealing to crypto investors and traders is its decentralized nature which allows trade transactions to continuously happen without the help of a central authority. Rather, it is run through nodes, as mentioned earlier. Traders–the buyer and seller–interact directly with each other during a transaction. This eliminates the need for a trusted third-party intermediary. Thus, the cost one pays the third-party institution is also eliminated.
We know that everything has its pros and cons, so do the crypto and blockchain. There are risks to any kind and form of investing, whether it is in crypto or in stocks, whether it is digital or not. Further, crypto is still a volatile asset, and blockchain is still developing.
However, with crypto and blockchain still not meeting their full potential, experts believe in the future of crypto and blockchain as its proponents are challenged to discover and unlock its full potential as it will continue to innovate the future of the world of finance.