Many of us have increasingly become used to making transactions using digital wallets and online payment systems. We are also exhorted to never share our PIN numbers and passwords to prevent hackers and fraudsters from breaking into out account and stealing money. So, while the transactions are digital, the fears are pretty analog, akin to having our pocket picked or property burgled. Such worries though are largely non-existent in the world of cryptocurrency for all the talk of the unsavory ways in which they are used. That is because of the blockchain technology underlying cryptocurrencies, which ensure that it is terribly difficult to tamper with records or get away with unauthorized transactions.
WHAT IS THE BLOCKCHAIN?
It’s a combination of two words ‘block’ and ‘chain’, and the meaning is quite direct. To begin with, what you need to know is that Bitcoin — the earliest and the most valuable cryptocurrency — records transactions in tranches known as ‘blocks’, and then adds such one block to another in a continuing ‘chain’ of all transactions. Much like a ledger or an account book, where entries are listed one below the other. Except that here there is no single person who records the entries but everybody who owns the cryptocurrency gets to play an active role in the upkeep and fidelity of the account book.
WHY WAS THE BLOCKCHAIN CREATED?
Any cryptocurrency is a digital token. That is, say you own 10 Bitcoins, you don’t actually hold them in your hands. Your crypto assets will exist as lines of code on a computer and any transaction you make will have to be digitally executed and verified.
Now, to have a purely digital currency, which exists only as code, can be more complicated than physical money. That is because with physical money, if you have a Rs 10 note and you gave it to a shopkeeper to buy a pen, you will not be able to use the same note again because you have lost, or exchanged, custody of the Rs 10 note for the item you bought. However, with a digital currency there is a problem that the same line of code, which represents a set monetary value, can be sent to multiple people. How would they know that one hasn’t already spent the money that is being offered afresh?
Continue reading: https://www.news18.com/news/explainers/explained-why-the-best-thing-about-cryptocurrency-may-be-the-blockchain-tech-that-anchors-it-4098050.html
WHAT IS THE BLOCKCHAIN?
It’s a combination of two words ‘block’ and ‘chain’, and the meaning is quite direct. To begin with, what you need to know is that Bitcoin — the earliest and the most valuable cryptocurrency — records transactions in tranches known as ‘blocks’, and then adds such one block to another in a continuing ‘chain’ of all transactions. Much like a ledger or an account book, where entries are listed one below the other. Except that here there is no single person who records the entries but everybody who owns the cryptocurrency gets to play an active role in the upkeep and fidelity of the account book.
WHY WAS THE BLOCKCHAIN CREATED?
Any cryptocurrency is a digital token. That is, say you own 10 Bitcoins, you don’t actually hold them in your hands. Your crypto assets will exist as lines of code on a computer and any transaction you make will have to be digitally executed and verified.
Now, to have a purely digital currency, which exists only as code, can be more complicated than physical money. That is because with physical money, if you have a Rs 10 note and you gave it to a shopkeeper to buy a pen, you will not be able to use the same note again because you have lost, or exchanged, custody of the Rs 10 note for the item you bought. However, with a digital currency there is a problem that the same line of code, which represents a set monetary value, can be sent to multiple people. How would they know that one hasn’t already spent the money that is being offered afresh?
Continue reading: https://www.news18.com/news/explainers/explained-why-the-best-thing-about-cryptocurrency-may-be-the-blockchain-tech-that-anchors-it-4098050.html
