Cryptocurrency and Everything You Should Know About It

Technology and Security

All cryptocurrencies make use of a Distributed Ledger Technology (i.e., a ledger that is spread across the network among all peers) to get rid of third parties, and the commonly used is the world’s leading software platform for digital assets known as the blockchain. Blockchain, often described as the record-keeping technology behind bitcoin is a decentralized public ledger of all cryptocurrency transactions that provide the validity of each cryptocurrency’s tokens. It was first mentioned in a paper published in 2008 by Satoshi Nakamoto, the mysterious founder or founders of Bitcoin.

One of the essential features of cryptocurrency is security, provided by the Blockchain technology. Imagine you want to transfer some money to a friend, you would have to get to the bank and ask them to transfer the funds to your friend’s account. After this is done, the entry would be updated on the two accounts, i.e., the sender and the receiver. However, the problem with this is that, apart from being charged for the service in some cases, the entries can be easily manipulated or changed. Blockchain comes in here! Rather than keeping information in one central point, the same data is stored on different devices on the network. So, if by any chance, one piece of information is tampered with without the knowledge of the rightful owner, there are other countless other examples of the right information, thereby, making the false obsolete. In essence, no data can be tampered with without having to change every block that came after it which is impossible without being seen by other participants because each of the blocks is secured and bound to each other using cryptographic principles (i.e., chain). With this, blockchain forms the bedrock for many cryptocurrencies by allowing them to operate without the need for a central authority. Blockchain also helps in eliminating many of the processing and transaction fees and also gives a more stable currency to countries with unstable currencies.

And Everything Else (Not Really)

The following are some basic properties of cryptocurrency that you should note:

1. Unlike the fiat currencies, you can’t hold cryptocurrency in your hand; cryptocurrencies only exist in the blockchain
2. Peer-to-Peer: No intermediary in the money transfer process
3. Decentralized: No central computer or server. They are distributed across a chain of thousands of computers.
4. Encrypted: Only the owner of the private key can access and send cryptocurrency. Just like a password for cryptocurrency
5. Irreversibility of the transaction after confirmation
6. Global: Transactions are propagated nearly instantly regardless of your physical location
7. Pseudonymous/anonymity: You don’t have to give any personal details about yourself

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In conclusion, it is glaring these digital assets have received so much attention from investors, and many have gained significantly in value. However, investors should note that cryptocurrencies are speculative investments, as nobody is certain about what the future holds. While many have said that cryptocurrencies are here to stay, they could also be a fad. In light of this, investors should discuss with professionals in this field before taking any step to purchase any cryptocurrency.

Thanks for reading.

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