What is cryptocurrency?

 Cryptocurrency

You have probably heard of Bitcoin. At the end of 2017, an enthusiasm in the market has made many people very rich. In a few weeks the price of a single bitcoin has risen from about 2 32,300 to about, 15,000 (3 3,000 to, 19,300). Some people who already own bitcoins have become millionaires. Others try to scrap the savings together to make quick profits. However, what is Bitcoin?

This is definitely not something you can hold or keep in your purse. You cannot use it in a supermarket and no one is physically pulling bitcoins. Because it is a digital currency, and one that can be 'mined' using computers to solve mathematical puzzles. It is all possible thanks to a technology called blockchain, which is changing the way businesses and people around the world work. Bitcoin may be the title, but cryptocurrency is only available for blockchain. Let us find out how it works.

Cryptocurrency

Building block

We will start with the blockchain because it is the foundation on which cryptocurrencies are built. There are many different uses for blockchain and cryptocurrencies like Bitcoin are just one. A blockchain is a digital entity. It allows people and businesses to record transactions and resource assets, and records are stored securely on all multiple devices. A ‘resource’ can be anything from a car or a home to a patented or copyrighted logo. The blockchain itself is shared between multiple users and is updated for everyone at the same time when a new transaction occurs. Each transaction is logged and tracked across the entire network of connected users, so you cannot adjust anything later; the information is recorded for good.

But why is it useful? To understand, let's use blockchain when buying a home. Lots of people are involved in the process. It starts with the builder, who bought the land from someone. The builder obtains planning permission, places a house on the site and registers the address with the phone to communicate with the water, gas and electricity supply. Then, when it’s over, the manufacturer finds a buyer. Ownership is transferred in exchange formoney.

With the exception of blockchain, all information from land ownership details to final prices and utility information needs to be recorded by individual companies - for example electricity, gas and water companies. So, it will all be in a separate place and it can be all difficult and time consuming for the buyer to hold it. Also, if there is a mistake in the method, it can create problems later because everyone tries to work where the error occurred.

Now, let’s think about how blockchain can improve the process. At each point in the chain a new block will be created in the blockchain and added to the previous blocks. The builder can add land registry information, plan documents and utility details. They can also add useful legal information, such as who is responsible for fixing a fence if it falls down, then, when the house is finished, the buyer can access the blockchain and see all the necessary information about the house in one safe place.

In this way, a single chain of data can be created and easily shared with those who need it. If the buyer decides to sell the house later, they will have all the information they need and the person who bought it from them knows for a fact that all the information is correct and legal because blockchain cannot be edited or changed. It's secure, and it makes every step of the process quick and easy.

This is just a small example, but when you think about what it might mean for a big business, where ordering parts or selling electronic products is a new phenomenon, you will see why it changes the way people work.

Finally, like all transfers made through blockchain, it is not possible to edit or reverse a transaction once it has been completed. In fact, the only way to undo a transaction is to fulfill the same transaction from the opposite side. In that case, both transactions will be fully tracked in the chain for everyone to see. This makes cryptocurrencies like Bitcoin a highly secure way of doing business.

There are many types of cryptocurrencies but Bitcoin is certainly the largest and it is not the only use of blockchain, it is certainly the most well known. However, blockchain technology has huge potential and many businesses are already using it to make fast, secure transactions. It remains to be seen whether it has become something that ordinary people use every day, but it certainly has the potential to change our lives.