Blockchain is the technology that Bitcoin uses in order to make transactions more efficient and faster. We all know that Bitcoin has recently surpassed the 50,000 USD mark. Predictions based on existing market trends estimate that Bitcoin may surpass the 100000 USD mark by the end of the year 2021. The value of each bitcoin also depends on the process of mining blocks. So what exactly is a blockchain? And how is mining accomplished? To know more let us leapfrog to a detailed overview.
Traditional ledger vs blockchain ledger
The traditional ledger system is used in banks and similar financial institutions. Here the ledger maintenance is mostly done manually. An account holder making monetary transactions to another account is a process. This process includes a few steps. The bank has to verify the transaction order against the account holder’s net balance so that the transaction is not above the permissible limit. Similarly, the bank in which the recipient has their account also tallies the transaction to ensure the accountability of the transaction. This usually has a long wait time (around 2 days) when transactions are made across borders.
The blockchain is a shared ledger system. In cryptos such as Bitcoin, there is one public ledger that is being accessed and simultaneously being updated by every single computer network (nodes) that constitutes the blockchain. Thus the process of multiple variations can be successfully avoided, which drastically lowers the waiting time even in overseas transactions (can be processed in a matter of minutes). To understand the nuance of the crypto transaction you can visit websites like this Bot that are specifically designed for crypto trading.
How does the blockchain function?
Blockchain is basically a record of transactions. A user with a crypto wallet can approve a transaction by the private passkey that he has. Once the transaction is live, the miners step in. The miners are the people who actually create the block in a blockchain and also generate new crypto coins through mining.
The miners’ task is to audit every transaction. After verification, they store the transaction records of the cryptos exchanged as memory blocks. These memory blocks are what constitute the blockchain. The blockchain is a chain of transaction records that are linked to each other. Thus every cryptocurrency that is in circulation is always accounted for. For the creation of a single block in a crypto platform, the miners are rewarded with new crypto tokens. In this way, new coins are brought into circulation.
The blocks are linked to each other in consequential order. This means the transaction records are completely accurate, as any miscalculation will affect the structural integrity of the entire blockchain. This also prevents any attempt to add counterfeit currencies into circulation. This makes cryptocurrencies more secure and more efficient due to blockchain technology.
Blockchain application
The media is preoccupied with the blockchain and its application in cryptocurrencies. They ignore other useful applications blockchain may have. Other applications of blockchain may include
- Keeping track of supply chains- as mentioned blockchain is an efficient way of monitoring the movement of each cryptocurrency that is in circulation. This technology can be useful in monitoring the movement of products from the industry to the retail. Using blockchain will eliminate the errors that are caused due to manual tracking and management of product circulation that mostly uses paper trail records of business transactions.
- Blockchain can also be useful when it comes to securing digital identities. Microsoft’s latest attempt to amplify security regarding digital identities through the authenticator application attest to the need for better security on digital IDs.
- With the internet network’s global usage, managing software such as programs, videos, songs can be a difficult task. With the blockchain network, it will be possible to track down every data that enters into circulation. This will prevent theft, illegitimate sharing, and online piracy. Blockchain will be instrumental in upholding and administrating intellectual property laws.
Conclusion- when the entire world has gone online and data is the most precious object, it is important to ensure that every data that is being circulated is accounted for. This accountability will prevent abuse and illegal use of commodities. The blockchain is an effective way of making sure the circulatory system of the digital world is more secure, and faster.
