Since the successful inception of cryptocurrency trading in the year 2009, there has been a steep rise in its popularity which in turn has forced it to continue its activity mainstreamed with a growing number of its variant regularly increasing in number.
Since witnessing the gaining popularity of this digital transaction Mr Satoshi Nakamoto, the founder felt the urge to secure each and every transaction in the best possible way.
Thus he invented the idea of blockchain adding up a public transaction ledger as a transparent method to carry out the transactions so that each and every individual associated with this trading system can witness the transaction from their end without slightest of the doubt.
This process has simply made wonders to the cryptocurrency business nullifying the risk of any threat of hacking or interface from any outside sources.
Today hereby, we briefly try to sketch out what blockchain is all about stressing on the importance of how it works for simplifying the cryptocurrency trading and its procedure involved.
What is Blockchain?
A blockchain is a digitized, decentralized, public ledger for all cryptocurrency transactions. It is constantly growing as what they call “completed” denoting the most recent transactions. These recorded are added in chronological order.
It helps the traders and the trading houses to simply keep a detailed track of all the transactions made in cryptocurrency without keeping record centrally. Each of the computer connected to the network that is popularly known as “node” gets a blockchain copy which is automatically downloaded.
This well-known process was first introduced by Satoshi Nakamoto in the year 2008 to help the accounting process as transparent as much as possible to all its users worldwide. This innovative concept is purely based on decentralizing the Bitcoin, a well-known variant with the use of a simple method of accounts popularly known as distributed ledger technology or DLT in short.
The technology helps to easily verify the transactions of cryptocurrencies creating a record that cannot be changed any further. Any individual trader sitting in any part of the world can access it anytime they want and can also check with the authenticity of the transaction if any doubts.
The unique process of cryptocurrency trading has just nullified any human involvement in processing a particular deal curtailing and minimizing any fraudulent activities.
The blockchain database is not stored in any single location which reduces the risk of it being getting hacked. Rather the information is hosted by thousand and thousands of computers working simultaneously which helps the data to be accessed by anybody around the globe at any given time.
In short, we can say that with the help of this mechanism there is no risk of any misused transactions, machine or human errors without the consent of parties can take place.
Today, the global computing network uses blockchain technologically to manage the Bitcoin transaction as well as manages the database simultaneously. The core operation stands on the conception of decentralization and thus works on a peer-to-peer or end-to-end basis.
How it works?
The blockchain works on a decentralized process and is not controlled by anyone central authority, but works on a chain basis around the globe to which every individual has the right to access. The technology is purely based on what they call “block” or a single spreadsheet.
These single blocks combine with another of its kind to form a chain. Now each “node” or computers associated with this transaction is provided with a copy of this chain system to bring transparency to the process.
Once a certain amount of approval is reached by the block then a new block is formed. The process is done automatically and keeps itself updating from time to time. No alteration can be done to this automatic process once the spreadsheet or the ledger is updated.
Each and every transaction generates a hash or a string of numbers or letters as an identity mark. This occurs according to the order in which they are placed. Similarly, any change or alteration in the transaction could lead to the formation of a new hash.
Now to carry out the transaction one must need two things, the digital wallet, and a public key. The digital wallet is a string of numbers and letters which act as an address that will appear in various blocks when the transaction takes place.
No visible record of the transaction by any means can be obtained keeping it a top-secret for the sake of the trade. The address of each particular wallet is known as the public key.
Once anybody decides to send coins to someone, it is mandatory for them to sign the message containing the transaction with their private key or a code that is paired with the public key. With the combination of two keys, the process can be finalized.
Once the message is sent it is instantly broadcast on the network. Nodes then specifically work out on the message to make sure that the transaction is validated by every means. The most important aspect related to this whole process of blockchain is that it is transparent in nature from beginning till the completion without any interference by any means and with no margin of error.
It can be concluded that since the introduction of the blockchain system the digital transaction has been blessed with an error-free decentralized transaction that needs no intervention from any outer sources.
In turn, made the system more unique and transparent encouraging more and more individual around the globe to invest their time and money into this business. This simplified process with a layers security system has evidently eradicated any signs or symptom of the blocks getting faked.
More and more scientific implementation is expected in the coming days in relation to making the process more convenient for use and hopefully in the days to come. The blockchain is and will remain a true tool for a hassle-free cryptocurrency transaction