Blockchain and Cryptocurrency
One of the very popular and emerging concept of the present is blockchain technology and it becomes imperative to understand what’s and why’s of the same to remain abreast with the trends.
Blockchain technology works on the concept of distributed ledger. As against a classic ledger in the books of accounts, a distributed ledger is a public record keeping system that is spread across various computer systems for verifying the transaction.
These hundreds of computers are connected to each other in a peer to peer network, i.e. there is no committed server and each computer system is both a server (stores information) as a client (processes data). Each such computer system is called node and nodes keep adding information giving it a style of “chain” that cannot be edited. For entering any new transaction, a “block” of information is added to the existing chain. This completely eliminates the role of any central clearing authority.
In other words, each block contains information regarding transaction and when a block is “mined”, it is added to the chain of prior transactions. Mining refers to the process of verification by the nodes in the network using crypto-graphic calculations.
Since it is in the public domain and cannot be altered, it offers great confidence with respect to verifiability and inspection.
Blockchain is the mother-technology to the presence of cryptocurrency. Bitcoin is the most popular example of cryptocurrency.
Cryptocurrency is a medium of exchange in digital form that uses encryption techniques for creation of money and verification of fund transfer. In layman terms, it is the newest form of currency that uses digital modes and techniques of coding for creation and transfer of money. It is also called as virtual currency, digital currency, crypto and even “digital gold”.
It uses cryptography, i.e. algorithms and protocols to record and authenticate the information in a coded or encrypted manner. Hence, solving mathematical problems based on cryptography produces and transfers cryptocurrency.
Any transaction that involves buying, selling, investing, exchange or other monetary aspects of cryptocurrency uses the technology of blockchain as tokens or sub-tokens. These are counted in number of bytes used for data entry.
Currently no government insight is associated with cryptocurrency across the globe. The Government of India and the Reserve Bank of India have a negative opinion on the use of the same which is evident from the regular prohibitive guidelines issued by them through public releases as caution in general interest.
The blockchain technology has far more scope beyond cryptocurrencies alone. Another famous use is the Etherum project for smart contracts and development of “dapps” (decentralised applications).