What is Cryptocurrency and Blockchain?
Let’s talk about cryptocurrency and blockchain
What is Cryptocurrency?
It’s a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units and verify the transfer of assets. Cryptocurrencies use decentralized control as opposed to centralized digital currency and central banking systems.
How does it work?
Transactions are sent between peers using a software called “cryptocurrency wallets.” The person creating the transaction uses the wallet software to transfer balances from one account (public address) to another. To transfer funds, knowledge of a password (private key) associated with the account is needed. Transactions made between peers are encrypted and then broadcast to the cryptocurrency’s network and queued up to be added to the public ledger.
What is Blockchain
Blockchain is a growing list of records and a distributed ledger called blocks which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp and transaction data.
How does it work?
Imagine two entities (eg. banks) that need to update their own user account balances when there is a request to transfer money from one customer to another. They need to spend a tremendous (and costly) amount of time and effort for coordination, synchronization, messaging and checking to ensure that each transaction happens exactly as it should. Typically, the money being transferred is held by the originator until it can be confirmed that it was received by the recipient. With the blockchain, a single ledger of transaction entries that both parties have access to can simplify the coordination and validation efforts because there is always a single version of records, not two disparate databases.
The uses of Cryptocurrency and Blockchain are borderless, not only that it caters cross border payments in a cheaper way, but it also allows potential applications that might make humanities daily living more easier. Day by day there are lots of lots of blockchain projects dealing with different sectors, not only technology and finance, but also agriculture, real estate, education and etc. Truly an innovation which can disrupt the existing system.