Cryptocurrency — Future of money
By Silla Priyadarshni on The Capital
Bitcoins are safe to us as the security here uses cryptography on several levels. That’s why it is considered as “Cryptocurrency.” Here, the information can only be decrypted with the help of keys as they guarantee about every message mathematically.
Bitcoins: Currency of Resistance
When an individual creates an account on the bitcoin network, which is basically termed as “Bitcoin wallet,” that account is linked to 2 unique keys: a public key and a private key. In simple terms, the former allows you to receive money without the other person being able to use your wallet. Whereas, the latter can be explained as “sender’s access code,” which means anyone having the private key can easily access the account and transfer funds. Hence, the private key should not be shared with anyone, unlike the public key. It is one of the secured and cost-effective ways to handle payments, thereby turning into the next generation digital currency exchange. There are so many online stores that currently accept bitcoins as a means of payment while selling goods.
What caused the rise and fall of the Bitcoin price?
Bitcoin’s price surge was mostly as a result of new investors or recognition from the world powers that cryptocurrencies are going mainstream. This might be the reason for its rise in value from $0.01 in 2010 to around $11,000 in late 2017. The value of bitcoins depends on the supply and demand of the currency. Generally, the value increases in times of high demand and decreases as the market falls. Apart from that, the price of bitcoin depends on the applications or how is it being utilised. The price is so volatile that it gets immediately affected as soon as there is any potential breakdown or demand for a more efficient currency. As can be deduced from the provided chart, there had been a recent fall in its value. Here several factors come into play. First reason can be pinpointed to Bitconnect, where people were allowed to put their money in a “Trading bot” that was claimed to be better than the average day trader. Many people invested in the platform, but unfortunately, the site was shut down after announcing that the balances would be refunded back in Bitconnect tokens, which had 0 price value. This was all just a Ponzi scheme.
Blockchain: The fundamental technology behind Cryptocurrencies
There’s a term “Blockchain Technology,” which is mistaken as “Bitcoin.” They are just related as Bitcoin had been the first-ever application of blockchain. In layman’s terms, Blockchain is a type of ledger that records collections of all types of transactions. As it is accountable for all the transactions involved, it acts as “Bitcoin’s ledger.”
The most important feature of Blockchain is that it is decentralised, i.e., it doesn’t have any governing authority or a particular individual looking after the framework. It distributes and disperses power to every single user to become one of the network’s many payment processors. Blockchain can transfer anything from currencies, records, and contracts to property rights of stocks. It can easily adapt to changes and cater to different industries.
Here comes the crypto’s moment.
While feeling helpless about myself being on lockdown, I write this up. A massive global fight is going on around. A global pandemic is continuously changing the world. As predicted from the after-effects of “Coronavirus,” the global downturn and depression are going to stay longer than the virus itself, making the situations worse and chances of survival tougher.
Globalization has failed. This sudden rampage, panic, and fear has decayed the entire mechanism and is proving how weak our economic systems are.
As Max Keiser termed bitcoin as the currency of “resistance,” it’s high time to start buying small amounts for the future. Because these digital currencies have the capacity to transform global payments using imperative and exciting modes. With millions and millions of cross-border transactions happening every day, we can really look into the vision of improvising bitcoin and blockchain technology in order to make people’s lives easier. Fund transfers, setting trades, voting rights, and many more could be controlled through this technology.
How blockchain technology works?
A person requests a transaction which is then broadcasted to a worldwide P2P (Peer-to-peer) network consisting of computers (nodes). This network of nodes validates the transaction and the user’s status using known algorithms, i.e., cryptographic hash function. A hash function is an algorithm that takes an input of any arbitrary size and turns it into a fixed size output. Computers that were specifically designed to solve SHA-256 hash problems take around 10 minutes to guess the solution to each one. That means they are churning through billions of guesses before they get it correct. Once validated and verified, the transaction is then combined with other transactions to create a new block of data for ledger, which is then added to the existing blockchain, in a way that is permanent and unalterable, thus completing a transaction. These people who keep a track of the ledger are known as miners. They use special software to solve math problems and get issued with a certain number of bitcoins while keeping the entire network stable and safe. As the process involves a chain of blocks, hence it is named “Blockchain”.
Here’s a link to know more about Mining and how it is carried out.
What is Bitcoin Mining and How Does it Work? (2020 Updated)
Well, what do they get from all this maintenance of blockchain? Is it just community service?!!
Bitcoins have a built-in system to reward. Every time you add a block to the blockchain, 12.5 new bitcoins are rewarded to your account. Using this technology, people can confirm transactions without any central certifying authority, thereby increasing transparency and tracking information accurately. Digital strategies like Blockchain technology and cryptocurrency can help the world in stepping up for a better future.
