Cryptocurrency and Bitcoin

Cryptocurrency is a form of digital currency or an asset which uses cryptography (oxford dictionary; the art of writing or solving codes) so as to make a transaction secure and anonymous. It is widely regarded as a revolution in itself, which is will pave the way for greater application of “Blockchain” in near future.

Blockchain, invented by a mysterious man known by the name Satoshi Nakamoto whose real identity is not known till date. It is a growing list of blocks/nodes which are interconnected and secured using cryptography. Each nodes contains specific information which is cryptic and unique in nature. The most amazing fundamental feature of Blockchain is that it is not easy to be manipulated.

Bitcoin, the first and most popular cryptocurrency was created by Satoshi Nakamoto in the year 2009. The major reason behind the popularity of Bitcoin (or cryptocurrency) is the decentralized nature of it i.e. it is independent of any Government or Financial Institute’s regulation. Any monetary transaction (between two entities) in todays’ world in the current form of currency is directly or indirectly dependent on some banking authority. Cryptocurrency is independent of such monitoring.

The transactional records in Bitcoin is kept in a ledger. However it is not confined to a single ledger. A large community of people called “miners” keep track of any new entry (transaction) and validates it at the same time. Every transaction is in a form of the mathematical puzzle which has to be solved in order to validate or add it to the existing records. A miner solves a mathematical problem for monetary gains. Every time a problem is solved, some amount of Bitcoin is rewarded to the miner and the record of the transaction is updated in every single ledger. The distributed ledger is what makes Bitcoin decentralized and difficult for miscreants to hack/manipulate.

The decentralized nature of Bitcoin which makes it so powerful, unique and popular is also the reason why Government and other financial institute oppose it. Bitcoin can be easily used for money laundering, drug trafficking, illegal arms supply etc. The paradox being if it is regulated to check illegal activities then it loses its identity and essence. The era of blockchain has just started and cryptocurrency is just a part of it. Whether it is a revolution or just another technology only time will tell.

Photo Credits Photo by André François McKenzie on Unsplash