In 2009, a mysterious entity known as Satoshi Nakamoto introduced us to a new digital currency known as Bitcoin. Along with Bitcoin, a new term or technology was introduced to the general public known as Blockchain. Since blockchain technology has been introduced, it is one of the best technologies known after the internet’s birth. Blockchain technology has provided the financial world with a medium of exchange by eliminating intermediaries like financial institutions or banks.
As compared to fiat currencies, blockchain completes and manages a transaction differently. We can understand the difference between a transaction using blockchain and without blockchain through an example. A transaction is executed through three options that include:
Involvement of any intermediary that will stay neutral to other parties
Making a transaction successful involves a third party to solve the issue or declare a party as the winner and another as a loser. The third-party or intermediary may charge fees for involving between two parties and being a mediator. If the two parties don’t find a solution, they pay an extra amount to third parties to solve the matter.
Trust on each other
Both parties can choose to trust each other to manage or make the transaction successful. Trusting each other means one is a winner and the other the loser, which means the loser must pay money or a fixed amount to the winner.
Turning the bet into a contract
Another option is that users can choose to turn the bet into a contract, which requires both parties to pay each other. In a contract, both the users have to pay additional expenses and carry out the contract properly.
Trusting and turning a bet into a contract isn’t the appropriate solution, which requires an explanation. This is where blockchain technology comes into existence which provides a new and cheaper way to make payments that also eliminates the need for intermediaries. Users can trade cryptocurrencies that are based on blockchain technology.
Let us learn more about blockchain technology and learn about its idea and system. Bitcoin was the first application of blockchain technology, and now we will learn about bitcoin’s blockchain.
Basics of Bitcoin’s Blockchain
Bitcoin is the most discussed and popular application that is based on blockchain technology. Bitcoin has been in existence for more than ten years, and it has become prevalent that it is said to replace fiat currencies one day. Bitcoin is a decentralized digital currency that is built on a peer-to-peer network. It is a medium of exchange that can be exchanged for goods and services without the involvement of any intermediaries. For more information, you can visit Bitcoin News Trader APP
It is a virtual digital currency that records all its transactions on blockchain technology without being dependent on central authorities. There is no particular or fixed value of bitcoin, and its value is determined by its users who agree to pay for it to exchange goods and services. Bitcoin is based on blockchain technology which means bitcoin uses the distributed public ledger or blockchain ledger to record all its digital transaction and make it viewable to the general public.
Blockchain is a public ledger, and each bitcoin user can keep track of wallet addresses that hold the number of bitcoins. This also maintains anonymity and provides transparency at the same time. No real identity of users is shown or taken by wallet providers for completion of transactions. The blockchain ledger is a public ledger, and it isn’t stored at any particular location or server. There are thousands of computers, also known as nodes in the blockchain, that holds and shares data. In simple words, blockchain data is maintained by an extensive network of computers containing a copy of the ledger.
Each bitcoin holder must have a bitcoin wallet to initiate transactions. A bitcoin wallet is software that technically stores the digital tokens, and by using the digital keys, users can send and receive bitcoins and other cryptocurrencies.
Is blockchain ledger safe?
Blockchain ledger works using cryptographic principles, which makes blockchain utmost safe. It is impossible to hack or attack blockchain because thousands of computers contain a copy of the data. If any hacker even tries to manipulate the data, it gets automatically corrected as per the set equation of all computers.