Cryptocurrency is the latest buzz of the financial market. Bitcoin was the first cryptocurrency to enter the market; many others followed the trend with the success of Bitcoins. It will be not wrong to point out that all great inventions were accidental, so the case with Bitcoins. Satoshi Nakamoto invented Bitcoins cryptocurrency. He was trying to develop an e-cash system under a project in 2008, with no central server, so he devised a decentralized electronic cash system. Cryptocurrency uses a peer-to-peer network to share the information to eliminate the need for the centralized system. Cryptocurrency is not rocket science to understand. They are databases stored in a decentralized ledger which record the transactions that cannot be changed or altered by anyone as Blockchains protect them. Authorized users can only change them if certain conditions are met. Cryptocurrencies are entries of tokens stored in a decentralized database with records of all account balances. Advance cryptography techniques protect the blocks.
How Cryptocurrency Works?
Cryptocurrency data stored in a decentralized public ledger, so the transparency is maintained. This also eliminates the risk of double spending by the user. Nobody owns or controls the ledger, its self-running without any interference of a central authority or a third-party. When a transaction is done in Cryptocurrency, it goes through a verification process. Cryptocurrency miners verify the transactions and add them to the Blockchain powered public ledger. Power supercomputers are used to solve the cryptography mathematics which is the key essence of the verification process.
Cryptocurrency mining is open-source, so anyone can confirm the transaction and the first miner to solve the problem gets to add a block to their transaction ledger. This process of verifying transactions is known as “proof-of-work-system.” Use of digital signatures prevents any forgery. Everyone is allotted a private key and a public key. The keys are protected with 256Bit encryption which is impossible to crack. Blockchain Technology protects the data blocks from any kind of tampering and unauthorized access.
Read also: Blockchain: A New Internet Architecture
Why Use Cryptocurrency?
- For some investors cryptocurrency are high-risk investments, but here are some of the reasons for shifting to cryptocurrencies.
- The most well-known benefit of cryptocurrencies is the lower costs of sending and receiving payments at high speed. The traditional transfer fees for an overseas payment is much higher than what incurred in Cryptocurrencies.
- Cryptocurrencies are censorship resistant. Only the owner of a cryptocurrency wallet has access to his wealth with private keys. No personal Bitcoins wallet can be freeze by authorities. This way it offers an alternate store of wealth for users.
- Initial Coin Offering (ICO) is a new form of fundraising for start-ups for raising capital by selling newly created digital tokens for cryptocurrencies such as Bitcoins and Ethers. It has opened new opportunities for a much broader spectrum of investors.
- Some of the cryptocurrencies enable users to make private transactions. These transactions are made without having to give any explanations to banks or a central authority on the fund transferred.
- More and more countries are adopting Cryptocurrencies on a broader scale. As of now, a total of 96 countries have permitted the use of Bitcoins for transactional purposes. Cryptocurrencies in future will be the global value of exchange.
SARA Analytics as a Cryptocurrency development company offers best, reliable and effective services to the customers as per their requirements across the globe. It is formed in such a way that the all the transactions done in it are 100% secured through encryption, thus offering full privacy and security to its users.