A cryptocurrency is a form of digital asset, internet-based medium of exchange, made safe and secure using cryptographic techniques. Cryptocurrencies work on underlying blockchain technology that is decentralized, i.e. not controlled by a central authority or governments.
When we talk about Bitcoin or cryptocurrencies in general, one of the blessings that came out of them is the Blockchain technology.
So what is blockchain? In simpler terms, blockchain is a chain of programmed, distributed, and secured blocks made secure using cryptographic techniques.
The “Block” in the blockchain is stores data in digital form, and it has three major roles in the blockchain.
- A block stores information about the transaction, e.g., the time, date, and total amount of transactions.
- A block in the blockchain is also responsible for storing the information of the sender and the receiver.
- Each block has a unique identifier that could be distinguished from other blocks in the blockchain. This identifier is known as “Hash.”
Blockchain is one of the technologies that could change the future trend of businesses that have digital existence. This is because it has three significant properties, i.e. Decentralization, Transparency and Immutability, and these properties could completely change the upcoming trends for digital businesses.
Centralized systems like Banks are controlled by central authorities or governments who could make a decision, and you have to abide by it. The blockchain, on the other hand, it is entirely decentralized and is not controlled or owned by a single entity. The system operates on the participation of the people in the network, i.e. nodes; and everyone in the network owns the information.
When it comes to blockchain, some people confuse privacy with transparency. Blockchain offers both privacy and transparency. For example, the information of the sender is stored on the network in a way like” “1MF1bhsFLkBzzz9vpFYUyBo9IluT sent 1 BTC” instead of “Ross sent 1 BTC”. This is important as user privacy is kept, and his identity is made secure by a key.
The tempering of data is one of the major concerns for modern-day business. In the blockchain, when something enters the network, it cannot be tempered. This is one of the significant properties of blockchain that gained the trust of new startups and businesses planning to shift to the blockchain. The inherent design of blockchain makes it almost impossible for the data to be tempered.
Finally, it was the year 2009, when the very first decentralized cryptocurrency Bitcoin was launched. Bitcoin could be used as a mode of transaction in exchange for goods and as a digital investment asset. Bitcoin uses blockchain technology to verify and manage the transactions made on the network. New Bitcoin is generated as a result of the mining process, where users are connected to the Bitcoin network and take part in solving complex mathematical problems and are rewarded by Bitcoin in return.
After Bitcoin, one of the major projects that impressed the crypto community is Ethereum. Over the years, Ethereum has offered a lot of innovations in the world of blockchain. Ethereum was released in 2015 by Vitalik Buterin. Over the years, the project focus is on introducing new and advanced technologies on the blockchain itself, and one such application is smart contracts.
Both technologies work on the distributed blockchain network. There are some significant technical differences in Bitcoin and Ethereum. Also, when it comes to capabilities and features, Bitcoin is known for one particular feature, i.e., a peer-to-peer electronic cash system that enables online Bitcoin payments on the blockchain. Ethereum, on the other, has features like smart contracts and DApps.
Ethereum has its cryptocurrency Ether (ETH). Despite being one of the best-performing currencies, its value is still far behind BTC. Bitcoin was created to serve as an alternative to traditional currencies, whereas Ethereum focuses on being a platform to facilitate immutable, programmatic contracts, and decentralized applications.
This was our brief guide covering the basics of blockchain, the cryptocurrency and the two major projects of the crypto space, for more guides keep following our blog section..