Blockchain: 3 Things That You Need To Know About Cryptocurrency
by Kella Pacquiao
I think anyone already has heard the fancy words like ”cryptocurrency,” “bitcoin” and “blockchain.” But to no surprise, it is just a few of people that truly know what it meant and how it can help our lives to improve.
What is Blockchain?
Blockchain is an encryption technology that is behind the infamous cryptocurrency called Bitcoin. Blockchain is the database managed by a peer-to-peer of computer networks or simply called as nodes.
In plain English, blockchain is the collection of recorded transactions and been unidentified confirmed. Events are recorded and shared between many groups. The nice thing about this is that once that the information has been documented, it can never be altered or changed.
Imagine if the blockchain became the public record, everyone can be assured that no one can amend the details recorded.
Menlo Venture investor, Mark Siegel said “It’s revolutionary.”
Cryptocurrency is different from the currency that we have today.
Bitcoin and other cryptocurrencies exist solely in the digital world. They aren’t physical coins that you can hold in your hand. The ownership of this new type of currency is different from what we have today. You can’t have it in your hands or put the number of your Bitcoin earnings to your bank account. But it can be handled to transfer the amount of it to another person by simply making a new record to the blockchain.
This just means that you can pay without using your bills but it is possible with just transferring data.
So how does blockchain exists?
The very nature of cryptocurrency is that it has public access to the other blocks. This means that it isn’t not only connected to one computer.
As we have mentioned, the bitcoin blockchain is being managed by nodes. These certain nodes have the complete copy of what the blockchain has. Nodes continuously move around and at the same time, their own copies will merge with the other users. By providing access and copies to the public, the chain will be foolproof. It is a system that is reliable and secure.
So to make it clear, there are three reasons why people were completely smitten by the works of cryptocurrencies. It is because it is a decentralized system, anonymous and no third parties can get in the middle of it. The face value of blockchain is that anyone can see and check it. That is how this technology is anonymously effective and public at the same time.
Hmm.. okay. But how can I earn Bitcoins and other cryptocurrencies?
There are few that you can go around earning the B coins. You can accept and then trade it or you can go ahead and mine it. Just keep it in mind that the equipment for mining may be costly. Miners typically spend thousands of dollars just to buy the right equipment for the sole purpose to mine Bitcoins.
But hold up, are the miners similar to what miners do in the real world? Of course. Just like what traditional miners do, miners also actively look for something they want. The computer continuously works on to solve complex calculations to get the right answer.
Miners solve problems to mine for cryptocurrencies. But how is that even possible? How can solving problems help them to mine?
The relevant connection from mining to cryptocurrency
Solving problems are necessary transactions to verify the posted data to see if it is valid and that’s how the number piled up to be in form of digital currency.
The role of the miners is to collect and compile the transactions and stack them into a single block. Generally, a block comprises four types of information. These are the summary of the transaction, time stamp, the previous block reference and the Proof of Work. These blocks are put together in a form of chain. The chain is tight and doesn’t allow any inconsistencies within it. This just means that the system is secure and all the transactions that have been verified are valid.
This doesn’t mean that blockchain is simply can be done by a single person confirming a transaction.
It needs a number of independent confirmations. Not to mention, the equations are pretty hard to crack. Also, the required hardware of it is different from your average laptop.
It is also impossible for someone to come in and decided to edit the existing block. Every block done is securely hash. Once the block is done, it can never be changed.
Change and endless possibilities in cryptocurrency
“I think bitcoin is the future currency,” an American venture capital investor, Tim Draper said.
Blockchain brings a promising future to the economy. It is a concept that is new to some but now, most major companies and banks have departments specializing in the cryptocurrency. Some establishments are carefully considering to have their own private blockchains.
IBM, Intel, and Microsoft are now free to offer blockchain as another form of a software tool to get their tasks done.
Not to mention, there was a huge leap of value in Bitcoin on 2017. The Bitcoin value unexpectedly rose from $6,334 to $14,774 back in November 2017. It was a huge leap of 133 percent.
It is visible that VC firms and investors made their way to take bets in the blockchain. They recognized that there is hidden potential in it. Bank transactions and government documents are just a few that can be used with the cryptocurrency. The transactions will be seamless.
This can also be made better if it can be used with Internet of Things. It will help it to be more connected and easier to connect to the world.
It was a pleasant surprise when the nine major banks such as J.P. Morgan and Goldman Sachs joined a partnership to flourish the technologies of blockchain.
Yes, we all know that blockchain isn’t perfect but it is getting better than it used to. Blockchain isn’t a new technology but it was just recently gain popularity and recognition to the common folks.
We still have a long way to tell what will happen. The price of Bitcoin may continue to rise as it has been but also may unexpectedly plummet in the near future.