The new currency that most people feel sceptical adopting. Bitcoin is a digital currency that backers/investors of the cryptocurrency hope it will soon replace the traditional currency . A scare to Central banks.
Bitcoin is used in online payment and transactions are recorded in a public ledger called a Blockchain which was originally developed as the accounting method for the virtual currency.
A block records some or all of the recent transactions then goes into the blockchain as a permanent database. After a block is completed a new block is generated. The blocks would be in a chronological order .
The blockchain would have addresses and user transactions stored in the blocks from the first block to the latest block added to the chain. The blocks are added through cryptography making it hard to be altered and the transactions cannot be deleted. ( No more corruption) .
Relating to the real world, block chains are like a full history of the financial institutions’ transactions and each block represent a financial statement for a user.
Blockchains use distributed ledger technology (DLT) . This simply means transactions are verified by other users. Copies of the transactions are sent to different users to be verified. This makes it more difficult for a hack to happen as it would have to hack all the copies of the transaction not only one.
The verification of the transactions brings me to the next important thing to know, bitcoin mining.
Bitcoin mining is the process by which transactions are verified and added to the public ledger – the block chain. Mining involves compiling the transactions into blocks and solving computational puzzles, the first user to solve the puzzle gets to place the block on the block chain and gets a reward.
The reward is the transaction fees associated with the transactions compiled in the blocks and also users can receive newly released bitcoin. Sounds like a good business to venture in, keeping in mind that one bitcoin = 798,139 kenyan shillings or $7,950 As of now writing this article.
The value of bitcoin has been on a downward trend, this may be due to IMF’s head, Christine Lagarde urging on regulators around the world to crack down on cryptocurrencies citing that it may be a major vehicle in money laundering and financing of terrorism. Google then went on to ban ads for cryptocurrencies.
Let’s see how the cryptocurrency will be faring these coming weeks.
Later on techies 🙌👋