The Digital Revolution: Understanding Blockchain and Cryptocurrency – Types, Advantages, and Disadvantages

Blockchain and crypto currency

The world is gradually progressing towards digitalization. Our life is getting comfortable with the revolution of digitalization. It is becoming an essential part of every aspect of our life. Either it is online banking or shopping from e-stores. If we see banking in the last ten years, the banking sector took a dramatic change due to digitalization. It has introduced a digital currency known as Cryptocurrency and block-chain technology. If you are new to these terms and want to learn, then this is a place.

In this article, we will discuss crypto-currency, its types, block-chain, and factors related to them. Let’s first discuss Blockchain.

What Block-chain is:

The traditional definition can be “Block-chain is a distributive, decentralized public ledger.” This definition seems to be challenging to understand, so basically, Blockchain is a chain of blocks, where chain means public database and blocks implies information.

Blocks contain digital information about the transaction, including date, time, and amount of the transactions.

It also stores the information about people participating in the transaction; for instance, if you are buying something from Amazon, the block will record your name along with amazon.com INC. However, it will not use your original name but a username or “digital signature.”

Blocks contain information to differentiate from other blocks. It is like between two individuals, their identity to differentiate is their name, just like that blocks contain “hash” that enable us to distinguish one block from another. Hashes are cryptographic codes created by unique algorithms. For example, if you have ordered something on Amazon and order another identical item while the first item is still in transit, we can still tell the blocks because of their different codes.

We have discussed a single transaction on one block. However, a single block can contain 1Mb data, which means it can handle thousands of transactions.

How Block-chain mechanism works?

Block-chain consists of many blocks threaded with each other, and a new block is added to the block-chain when the block contains information. In order to do that, four things must happen.

First of all, the transaction must take place. For example, as we discussed earlier, we search thoroughly on amazon and checking out multiple items; we make a purchase. The information of your package joined with thousands of other transaction’s information in a block.

The transaction must get verified. Like other public records, there is always someone in charge of examining data entries. In block-chain, the job is done by a network of computers. When you make a purchase on Amazon, this network of computers confirms that your transaction has happened the same way you did it. They confirm the info, which includes the date, time, amount, and participants included in the transactions.

The transaction is stored in a block. After it is verified, it will get a green signal. The info of the transaction is stored in a block, along with hundreds and thousands of other transactions.

Once the verification is, a new phase starts where the block is given identity, so it gets ready to be added; after verification, the block must be given a unique code called a hash. Once the hash block is hashed, it is added to the block-chain as a new block.

Once the block is added to the block-chain, it becomes available for everyone. If you take a look at Bitcoins’ (crypto-currency) block-chain, you will realize that you have access to transaction data. Now let’s discuss crypto-currency.

What Cryptocurrency is?

The cryptocurrency is a digital currency, which is protected by cryptography, allowing crypto-currency to be safe from threats like counterfeit, double-spend, etc. The cryptocurrency is not issued by central authorities, resulting in immunity from any type of government interference. Crypto-currency is used for making sure of safe online payments. The term crypto means encryption algorithms and techniques used to secure the network. One of the best features of this is that most of the cryptocurrencies are decentralized. It is due to the block-chain network. Because this decentralized network allows crypto-currency to be out of the league of government, the government can’t control it anymore.

Types of crypto-currency:

There are many types of cryptocurrency like Bitcoins, Litecoins, Peercoins, Namecoins, and other unpopular crypto-currencies. Bitcoin is the first-ever block-chain based cryptocurrency. It was launched in 2009, and till 2019 it is about 18 million Bitcoins circulating in the marketing, making the total worth of 146 billion dollars. It is the most popular and valued crypto-currency, among others. A lot of unpopular crypto-currency in the world, but all of them are either clone of Bitcoin or they are built from scratch. The total worth of all the crypto-currencies in the world is 214 billion dollars, and Bitcoins represents more than 50 percent of them.

Advantages of Crypto-currencies:

Crypto-currency makes the transaction easier; it transfers funds directly between two parties removing the need of a third party.

The transfers are way safer and secure by the use of public keys and private keys.

Crypto-currency works on a decentralized system, so the government can no longer control it.

Crypto-currency is generally not issued by the central authority, so it is safe from government or third-party interference.

Disadvantages of crypto-currency:

Crypto-currency is mostly used in illegal activities like money laundering, as it’s nature is semi-anonymous.

The price of crypto-currency is solely based on supply and demand, so the rate of exchange can fluctuate greatly.

Crypto-currency is a secure way of transaction, but other aspects of cryptocurrency like exchange wallets are very vulnerable to hacking.

Conclusion:

Cryptocurrency and blockchain have turned around the perspective of people investing in different areas. Crypto-currency is a great way to earn money, and many applications working on it already. Crypto-currency is the future for the banking industry, and it may overcome the banking system. In this article, we have discussed blockchain, working of blockchain, crypto-currency, its types, advantages, and disadvantages. I have provided my best in this article. Hopefully, this article will be worth reading. Please share your view by giving us your feedback in the comment section.