Understanding The Background of Digital Currency – Cryptocurrency
What is Cryptocurrency?
In a very short time, cryptocurrency has demonstrated its power in the financial market. because cryptocurrency can also be called digital money because it is only available online and we can not able to physically exchange it.
This is a Peer to Peer Electronic System, which we can use to buy Goods and Services in place of regular currencies through the Internet.
Other currencies such as Rupees in India, Dollars in USA, Euro in Europe etc. are used in the entire country and used in the same way, these currencies are also used in the entire world. But here, cryptocurrencies are decentralized currency, so they do not have any agency or government or board authority.
Bitcoin is the first cryptocurrency from the world.which was released by Satoshi Nakamoto for the first time in January 2009 as an open source software. This is a programmer. Nobody knows about it. Different people have been claiming themselves to be Satoshi Nakamoto at different places.This is a digital currency that is used only to buy goods and services online.If we talk about today, its value has increased a lot now, which is now close to 5 lakh the value of a coin.
The Basics of Cryptocurrency
1.Public Ledgers or Blockchain
Blockchain is a very rapidly growing topic in recent times and it is also quite complex,blockchain technology has changed the way of digital transactions, as well as its impact on daily business of many big industries.
Blockchain is a technology that has been programmed algorithm to record Financial Transaction. This is a digital system, in which an Internet technology has the primary strength.which can store blocks of identical information on its network.In every transaction Public ledger is verified by the majority of the participants in a system consensus. And, once The information entered can never be erased.
Block-chain has the ability to distribute digital information, meaning that it acts like a distributed network.Not all records in the database are stored in a computer,In distributed network millions of computers.each computer in the block chain can describe the entire history of each record. This database is encrypted and entered in a confidential manner.
Transaction data is permanently recorded in files called blocks. A block store information about recent bitcoin transactions that have not yet entered any pre-block in the transaction record history. Thus a block is like an account or a page of the passbook.Each time a block is ‘completed’, it gives way to the next block in blockchain.thus a block is a permanent recorded of the transaction record history, which is written once, can not be changed or removed.
If we use physical money,then we follow the bank’s payment process and only then we can exchange currency,Bitcoin Technology ‘Peer to Peer Network’ Based technology, due to which you can transfer any person directly without any bank or authority, all transactions in the Bitcoin system are encrypted, so it is a secure system,in order to transfer like a bank account in Bitcoin. Digital bitcoin is wallet and it is the wallet address of 24 to 27 alphanumeric character like this bank account number.
Record of transaction done with bitcoin remains in an account called bitcoin block-chain.There are 3 methods to get bitcoin,such a website (Unocoin, Zebpay etc) that offer free bitcoin, and for that, you have to do some work, and in return you get bitcoin, or in return for cash or you can get it in exchange for any goods, in the countries where bitcoin is legal, you can get a copy of Bitcoin cash in front of him or his seller or payment of a goods,the third method is Bitcoin mining.
Encryption is a art that converts the information into an unreadable code using some high protecting program,which becomes difficult to access.Uses a key to encrypt the data or information that is safe with the sender and the receiver.The data is encrypted by an algorithm, which is called cipher. This gives us encrypted information. Encrypt information is called ciphertext.
Once encrypted, your data becomes completely secure. Encrypted information can be made readable again, which is called decryption.In the process, they use the same key vice versa, so that the information or data was the decrypted.
Encryption is capable of protecting the confidentiality of sensitive data, but to secure the authenticity of an data, other techniques are required; for example,
1. Verify the digital signature
2. Authentication code for message.
3. Standard cryptography software and hardware for encryption.
To move the control of an organization or government from a single place to several smaller ones. It’s like a Bitcoin data center but it’s a Decentralized system that controls the miners located across the globe, no single person here can control it. It is called Decentralized System because it can not be controlled from any individual.
Bitcoin Mining does both things as it adds new transaction to the Block chain and second one is releases the newly created Bitcoin. Bitcoin Mining mainly compiles the recent transactions to create blocks and is to solve computationally difficult Puzzle.the puzzle that the first participant here solves is that he can place the next block in the Block Chain and he can claim his prize. at the end of the award, it gets bitcoin, which is nothing but transaction Fees.
From Mining Software, we process the transaction of bitcoin and it is also confirmed. These miners work because if they complete this transaction they get Transaction Fees from users soon for Transaction Processing
A new Transaction has to be included in a block to be confirmed and a Mathematical Proof Of Work is also required to be provided. Generating this type of proof is very difficult as it is the only way to generate it in which your system takes billions of calculation per second
To confirm that Transaction For this, miners should do all these calculations before accepting them by their block network, so that they can be rewarded at the right time for their work. As more miners join in the network, the way to find a valid block becomes even more difficult and it does not have any other network but so that only 10 minutes of searching the Average Time Block can remain. This is why Bitcoin mining has become a competitive business, where no one miner has control in the hands.
Bitcoin can be stored only electronically and needs bitcoin wallet to keep it. There are many types of Bitcoin wallets such as desktop wallet, mobile wallet, online / web-based wallet, hardware wallet, using one of these wallet, we have to create an account. This wallet gives us an unique id in the form of the address as if you have earned bitcoin from anywhere and you have to store it in your account, then you will need that address there and with the help of that you can give bitcoin to your keep it in wallet.Other than this,if you have to buy bitcoin or sell, then you need a bitcoin wallet and after that the bitcoin you sell, you also get the amount of money you get in the transfer bitcoin wallet.
Advantages of Cryptocurrency
1.Ultra secure and Personal data protection.
2.Access to Everyone
2.Quick and Fast Settlements
6.No third party
7.Lower Transaction Fees and No documentation/paperwork.
Disadvantages of Cryptocurrency
1.Difficult to understand for new people
2.No way to reverse the Payment Settlements
3.Lack of digital knowledge
The most relevant cryptocurrencies 2015 – 2018
Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin Gold (BTG), Ethereum / Ether (ETH), Litecoin (LTC), Ripple (XRP), Stellar Lumens (XLM), Tether (USDT), Tron (TRX)