Technology has turned the whole world into a global village. Everything you want is just a click away. From buying clothes to ordering food can be done on using our phones. You can connect with the whole world online just sitting in front of your computer screens. Where technology seems to have redefined everything. It’s time that we upgrade ourselves from paper currency to cryptocurrency.
Let us understand the meaning of cryptocurrency:
A cryptocurrency is a digital form of currency that uses strong cryptography using a technology called blockchain to secure financial transactions, verify the transfer of assets, and control the creation of additional units.
To understand the concept of cryptocurrency it is very important to understand blockchain.
What is Blockchain?
Blockchain is the technology behind cryptocurrency. In a layman’s language, blockchain can be defined as a shared digital ledger. All the transactions that have been done using a cryptocurrency all such transactions are updated in a digital ledger called blockchain. Blockchain is supported by a peer to peer network that can be either public or private. Every member of the community network uses the same consensus mechanism to verify transactions. Thus there is no single point of failure and no way to make modifications to transaction records. Thus blockchain reduces risk, chances of fraud, and brings transparency.
How does a blockchain function?
Every block in blockchain stores information about transactions. Below are the points which explain how a new block is added to the blockchain:
In order for a block to be added to the blockchain, however, four things must happen:
1. When a transaction i.e. purchase/sale occurs the network of computers verifies that the transaction actually happened the way the user reported. The network of computers check the date, time, parties involved in the transaction, etc.
2. After verification, the transaction is stored in a block, every block is given a hash and then finally the block is added to the blockchain with various other blocks.
3. Then the new block is publicly viewed by anyone available for anyone to view.
Is blockchain safe?
Blockchain technology offers new tools for authentication and authorization in the digital world that preclude the need for many centralized administrators. Blockchains have the ability to prevent alteration of transactions that have already been confirmed by the network of computer. Moreover, the copy of every block is available with all the computers in the network thus everytime a hacker tries to change the information stored in the block he will have to alter the same information in every copy of that block which is not possible. Also., every block that is added to the blockchain is first verified by the network of computers which is an add on the security feature of blockchain. Blockchains heavily rely on cryptography which itself explain that the technology ensures safety and security.
So this was a brief overview of blockchains. Do you think with the help of blockchains cryptocurrency is ready to replace paper currency?