Bitcoin is a cryptocurrency and the cryptocurrency works on the very core principle that the system is decentralized. Satoshi Nakamoto invented cryptocurrency as a digital asset. Its decentralized structure enables them to remain outside the jurisdiction of governments and higher authorities. Hence, it is a decentralized system that offers complete transparency.
Blockchain has come out as a different concept altogether. In this article, we will take up blockchains and bitcoins as a concept.
The working mechanism of blockchains
At its core, bitcoins can be a good investment strategy and it’s likely to produce huge profits in the long run. It’s a very good portfolio diversification as well.
Looking at a real-life example, we interact and transfer value in the form of information or money. When we do this trade of value, we need a middle man, for example, we need Uber to book a cab. These companies build trust between two individuals directly transacting with each other. Since these central parties may be corrupted, a better way to go about it is to be able to transfer value over the internet directly through blockchains.
The platforms that are free of costs like Facebook or Instagram monetize our data and pop up relevant advertisements based on our search history and make money out of it. A very well-known statement in the tech world, “If a very good product is free for you then you are the product” explains the scenario well.
On the contrary, Mozilla Corporation’s former CEO, Brendan Eich developed the ‘Brave browser’ that does not store your data and you will get paid for seeing advertisements.
The crypto associated with such decentralized applications is anticipated to grow. The Internet allows the transfer of data from one point to another. Contrarily, in blockchains, you can access data and react to it securely. Bitcoins work on a proof of work consensus mechanism. Blockchain is a series of blocks and blocks consisting of data within it.
Bitcoin is mainly focused on being a store of value. Furthermore, it can be a payment system and an investment vehicle as well in the current scenario. The main purpose of Ethereum coin was to project these contracts that have no middle men further creating a complete realm of products or services that are absolutely decentralised to maintain the transparency of the systeen.
It will also ensure that the potential data is not breached. All of these factors did get noticed by various authorities, governments and big private entities. This peculiar blockchain system and its decentralized manner has attracted a massive population of potential investors giving in to the already existing popularity of cryptocurrencies.
Let’s look at a simple example to understand how bitcoin’s decentralized system works. It’s nothing but just a queue of transactions. Suppose Person A sitting in India sent Y bitcoin to Person S in Canada and Person T received X bitcoin from PErson S and so on and so forth.
All these transactions are confirmed and it can be studied where a particular trader stands. Another peculiar thing about bitcoin’s flow of transactions is that there is a possibility that the transaction was not made by a human or to a human.
The Bitcoin system can be accessed by anything regardless of the fact that it is living or non living allowing artificial intelligence to hop into the picture. The bitcoin network is absolutely unbiased. Your gender, religion, culture, nationality, political background does not matter and will not appear as a blocking factor.
This would create or invite a large pool of possibilities of innovative inventions on the internet in a few years. In the coming years, systems where self-driving taxis are there can emerge. They can work over the principles of cryptocurrency very well. These self-driving or auto vehicles can own their separate wallets on blockchains.
Whenever someone accesses the vehicle, the passenger will have to pay through crypto or altcoins and the vehicle will not start until and unless the payment is made. The vehicle will have a proper system installed into it wherein it will be able to assess when and how much fuel it would require over intervals of time or after every ride and that amount would get deducted from the wallet from time to time.
Blockchains are also known distributed ledger because the blockchain is distributed. Simply put, it is publicly available to everyone and can be accessed easily by anyone who wishes to access it. It can be downloaded completely. This also facilitates people to cross check and confirm transactions and that’s where mining hops into the picture.
Since, there is no central authority concerned for checking and confirming transactions.It’s the people who do this job by verifying the data.
The ownership of bitcoin is prominently shared by two sectors, a public key and a private key. The basic analogy behind it is that the public key is a username and the private key is it’s passcode. An address is a hash of the public key that is projected on the blockchain. The use of hash is to add an additional layer of security in order to maintain the decentralized system.
It’s enough for you to know the particular address to send or receive a bitcoin. The public key originates from the private key. This is a prerequisite in order to send or receive bitcoins. It is easy to receive bitcoins in the system. However, a verification is required for identification purposes in order to send it across.
You need a set of keys that is a wallet to be able to access bitcoin.Third party applications do offer such services like insurance and debit cards as well as these can take different forms like QR codes. Create account in bitcoin equaliser login and start investing in Bitcoin.
This article gave insights about how bitcoin functions and explicated concepts related to it such as the decentralized system of blockchains. It also elaborated the criteria of the ownership of bitcoins mentioning the prerequisites needed to access bitcoins.