For a long time, financial institutions have embraced their roles as trusted third parties in the transfer of currencies. However, this system has proven to be fundamentally flawed where trust is involved. This is where cryptocurrency, whose exchange and distribution are entirely confined to the digital world, comes in. All cryptocurrencies are based on blockchain, with the most prominent one in the market being bitcoin. The popularity of bitcoin can be largely attributed to its underlying mechanism to store data that is immutable, is immune to fraud, and uses cryptology in a secure way for sharing data across parties.

Bitcoin involves a peer-to-peer system that prevents double-spending while utilizing a distributed timestamp server on a proof-of-work system. Each record in the database, known as a block, points to the previous block in the chain. The majority decision is represented by the longest blockchain, which has the greatest proof-of-work invested in it. Nodes check the validity of the transaction in the block then proceed to create progressing blocks using the hash of the accepted block as the previous hash. CPU power and electricity is utilized. Transactions are hashed in a Merkle tree, thus saving on disk space. Payments can also be verified in a simple manner and privacy is maintained by keeping public keys anonymous.

With the help of blockchain, we can envision a world which is completely automated digitally and where transparency is embraced. Intermediaries will be completely eliminated and business transactions will be operated seamlessly.