Blockchain And Cryptocurrency

Cryptocurrency and Bitcoin mining are the new buzzwords that have taken the tech enthusiasts by a storm. Starting from Bitcoin to Ethereum to more recent Dogecoin, everyone is awestruck by the investment opportunities and returns it is offering. But to understand what are cryptocurrencies, one needs a basic understanding of blockchain.


So why wait lets just dive into it.

Blockchain is a decentralized peer-to-peer ledger which enables transactions over the internet. In simple words Blockchain is a system of processing and recording information in a way that makes it impossible to change, hack, or cheat the system. A block refers to several transactions which are verified and then added to the chain thereby eliminating brokers and saving cost.


The main emphasis and prime advantage here is a block once added can never ever be changed or modified in any manner.


KEY FEATURES


  • It is completely automated

  • It is Chronological and time stamped

  • It is flexible and secure


BITCOIN







Bitcoin is the first application of Blockchain. It is a cryptocurrency that was invented by Satoshi Nakamoto in 2008.


WORKING


Buyer sends a message on the network. Bitcoin miners run complex computer algorithms to solve complicated puzzles in an effort to confirm groups of transactions. Upon success, these blocks are added to the blockchain record, and the miners are rewarded with a small commission as bitcoins.


ADVANTAGES:

  • No tax is applied on its payments.

  • It cannot be stolen.

  • No third party intervention.

  • Transactions are irreversible.

 

DISADVANTAGES:

  • No physical form like cash or card.

  • Fluctuating value.

  • People purchase and hoard it in hopes of higher returns.



MINING


The process of maintaining a trustless public ledger is known as mining. Miners are groups of people who record the transitions taking place with respective cryptocurrency as a token on a blockchain. 


Mining is difficult for a normal computer because Bitcoin's software makes the process artificially more time-consuming. Without which people would easily spoof transactions by logging various fraudulent transactions in the blockchain thereby making it impossible to distinguish between the real and fraud data thereby making Bitcoin worthless. 


Combining "proof of work" with cryptographic techniques was Bitcoin’s USP.. Bitcoin's software adjusts the difficulty miners face in order to make the volume of transactions digestible. The network has time to verify the new block and the ledger that precedes it.


Miners are rewarded with Bitcoin for verifying blocks of transactions. This reward is reduced to half for every 210,000 blocks mined or roughly about every four years. This is called "the halvening." This system is built-in as a deflationary one for the rate at which new Bitcoin is released into circulation.


This process is designed so that rewards for Bitcoin mining will continue until about 2140. Starting with 50 Bitcoins as reward, after the third halving that took place on May 11, 2020, the reward for each block mined became 6.25 bitcoins.

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