Cryptocurrencies are a form of digital currency that stands out because it is decentralized. Cryptocurrency also stands out because it is based on the blockchain technology. Meaning that users can transact between themselves as in peer-to-peer without worrying about third-party monitoring their transaction. As such, users have maximum control of their transactions, and better security.
If you are wondering whether people are familiar with the blockchain technology or not? Well, with the numerous advantages that come with this technology, we can say that it is popular than you may think. Some people even capitalize on the fluctuation of cryptocurrency prices like bitcoin price as a form of investment to make a profit. Let’s go deeper into the mysteries behind the blockchain technology.
How can we describe the blockchain technology?
Blockchain technology is a DLT (decentralized ledger technology) which saves trades records in what is called blocks. When authenticating a trade, the proprietor uses a digital signature to authorize the trade, which safeguards it from tampering. And because of blockchain’s nature as unalterable, it is a legitimate disruptor for industries like healthcare, cybersecurity, and payments methods.
To understand the blockchain technology better, let’s use the popular word processor, Google Doc. Imagine creating a document on Google Docs and sharing it with a group of people. The file you shared is not being transferred or copied, rather it is being distributed. As such, everyone can have decentralized access to the document at the same time. Meaning no one gets locked out or waits for another party to make changes. Rather, all modifications in the doc are recorded in real-time, which makes changes completely transparent.
Note, blockchain technology is more complicated than Google Docs, however, this analogy aptly explains three critical ideas about blockchain technology. For instance, investors into the popular cryptocurrency Bitcoin, can monitor bitcoin price in real-time because of the high transparency of cryptocurrencies.
What makes the Blockchain technology so popular?
Come to think of it, transfer changers to transfer money abroad is often outrageous. Moreover, there is a long wait and long list of requirements you need before you can send money to people abroad. But the good news is that with blockchain technology, things are cheaper and instant. Below are reasons that contributed to the rise of blockchain technology like the rise of bitcoin prices recently.
● High security
Many people are switching to cryptocurrency like Bitcoin apart from Bitcoin price is its high security. Cryptocurrency uses digital signature to make transactions that is fraud-proof. As such, it is close to impossible for fraudsters to corrupt let alone, change the data without having the specific digital signature.
● Decentralized system
Currencies are conventionally regulated by the bank of government. This places so many restrictions on what users can use their money to buy and not buy, which is sad as also heartbreaking. But with cryptocurrency’s decentralized nature, users can carry out trades faster, more secure and safer.
● Automation capability
The automation capability of cryptocurrency is another major reason it is so popular. Cryptocurrency has the ability to generate programmable actions that are systematic when the criteria are met.
How do cryptocurrency exchanges work?
Today, several people may be aware of cryptocurrencies, but few know how the system works. Moreover, cryptocurrency is making transactions in several facets in business, government, and personal financial activities. Understanding how cryptocurrency exchange works is becoming paramount. Below, we explain terms that will help clear up any confusion about cryptocurrency exchange.
Cryptocurrency exchange starts with a user’s intent to send money. The trade starts by transferring the funds to a public ledger where it awaits confirmation before the exchange will be concluded.
● Public ledger
At the stage, the miners store confirmed transitions. Public ledger functions is to legitimate and also verify the cryptocurrencyhas a real, legitimate owner.
Mining crypto is a process whereby trades are confirmed before they are then transferred to the public ledger blockchain. As such, miners must solve complex puzzles or PoW to prevent the exploitation of cryptocurrency.
To sum things up, the potential of blockchain technology is virtually limitless. Moreover, the popularity of cryptocurrency exchanges now has a much greater impact on the future of finance in the world. And with platforms like Bitvavo, you can easily monitor Bitcoin price, amongst others.