Understanding the concepts of Cryptocurrency and Blockchain
A lot of people get to think that bitcoin or cryptocurrency is one sort of business, company, or even a Ponzi scheme. However, none of these are true about these concepts. I know you can’t wait; so let us dive in already to understand what they truly are:
CRYPTOCURRENCY (MEANING)
While the word “crypto” – short for “cryptography” has to do with hiding, concealing information, cryptocurrencies, in general, are open, transparent and verifiable.
Currency, on its own means “money in use”. However, cryptocurrencies vary in function, other than just a peer-to-peer means of payment. The reason they are called cryptocurrencies is because they are all digital assets that make use of cryptography to secure financial transactions, control the creation of additional units of the currency, and verify the transfer of assets.
Bitcoin was the first decentralized cryptocurrency to be created as open-source software in 2009 by unknown developer/ group of developers hiding under the name “Satoshi Nakamoto”. Since then, over 3000 cryptocurrencies have been created; these are known as “Altcoins”.
After the release of the bitcoin whitepaper on October 31st, 2008, the first bitcoin transaction was performed on January 12th, 2009, when “Satoshi Nakamoto” sent 10 BTC to US software developer Hal Finney. This gave rise to the robust use of the bitcoin network we see today.
BLOCKCHAIN (MEANING)
If you have any background in computer science, you should know what a database is. It is simply an organized collection of data, stored and accessed electronically from a computer.
Blockchain is a distributed database that enables transparent, secure and permanent storage of data. Blockchain is the technology on which cryptocurrencies run. Its function is to record transactions and keep information secure on the network. The fact that no government or central authority controls cryptocurrencies like bitcoin makes people wonder if the network is secure enough; however, this is where blockchain comes into function. It is an efficient, transparent, secure, and permanent database for verifying digital transactions.
Blockchain does not only serve cryptocurrencies or the financial industry. Lately, many other industries like Agriculture, Supply chain, Insurance, etc, are developing their own blockchain to serve specific purposes.