Currently, the blockchain technology is taking the internet by storm. It is known to be the newest technology on the virtual platform. However, blockchain technology is anything but new. In fact, it is a combination of technologies and theories proven in the past. Initially, it was the brainchild of a group of people who are more popularly known as Satoshi Nakamoto.
This is a technology that is used to transfer digital currencies and properties from user to user. This is the best way to allow a transaction to take place without any intermediaries delving into the matter.
What is a cryptocurrency?
A cryptocurrency is a type of a digital currency which has very stringent and unique encryption techniques. A bitcoin is one of the popular cryptocurrencies.
- A cryptocurrency has no intrinsic value. This means it cannot be redeemed against other commodities.
- The currency does not have any physical value or existence or form. Its presence is only on the virtual network.
- No central bank or any public authority manages the transactions taking place. The network is thus very distant from any regulatory authority.
How does the Blockchain technology work?
The Blockchain technology in cyrptocurrency transaction is brought into effect by a number of different steps and measures. But, what exactly is a verified transaction? This involves an exchange of cryptocurrencies, contracts, or any sort of record or related information. Let us see how the process works.
- It starts with a user on the virtual platform requesting a transaction. This transaction is to take place over the exchange of bitcoins or other such online currencies.
- This transaction request is then transferred to a P2P network. This network consists of several computers and servers, known as nodes.
- It is this set of nodes that validates the transaction request from the user based on a series of algorithms.
- Once the transaction has been approved and verified, it is then made to combine with a number of other transactions. In effect, a new block of information is created in the ledger.
- Thereafter, this block is then introduced into an already existing blockchain. In here, the information or data cannot be penetrated into and moves absolutely untouched.
- Once the data transfer is complete, the whole transaction is deemed complete and successful.
Thus, the blockchain moves in these few easy steps. Since it is incorruptible, economic transactions can be safely conducted through the online channel here.