Blockchain’s popularity has skyrocketed ever since Bitcoin’s inception. There are abundant guides on this topic, but you don’t have to read more than necessary to grasp blockchain technology. If you’re a newbie to cryptocurrency, it’s best to learn the basics of it because this is the only way to comprehend how the economy evolves and be part of the next generation.
This article will teach you about the intangible technology that is connecting people and changing the way money is perceived, thanks to Bitcoin and other cryptocurrencies.
Contents
Blockchain for beginners
Blockchain is a peer-to-peer ledger that enables peers to conduct transactions without the implication of any bank or centralized authority because this kind of network has no central administration. To ensure decentralization, each peer has a copy of the ledger, which can be a complete copy or just the information needed to stay connected to the network.
Consensus methods such as Proof-of-Stake (PoS), Proof-of-Work (PoW), and others are used to ensure transactional consensus and secure transactions. Obviously, the entire technology is designed to benefit from transparency, immutability, and trust, compared to centralized systems that don’t use cryptography to this significant level.
The key components of blockchain’s architecture are as follows:
- Transactions
- Blocks
- Consensus.
Besides the general components, there are three types of blockchain architecture: public, private, and consortium.
Decentralized vs centralized
The centralized vs decentralized debate is hotter than ever and is common in the blockchain world. After all, this technology has the power to make centralized systems outdated. You’d be surprised by the extent to which centralization revolves around you. Google, YouTube, Facebook, and similar popular online platforms are centralized, meaning that a central authority controls your data and the platform’s functions and can decide who can and cannot join the community.
From a technical perspective, the centralized system necessitates third-party intermediaries to verify data, so when you send a message to a friend via Messenger, the platform verifies and transfers the information. Similarly, when you send an email, the service provider has a copy of that data.
Shortly put, you consent to share sensitive data like full name, location, date of birth, etc., with companies. And because these are stored in a centralized location, there is a risk that they will be misused or hacked. One of the most significant data breaches in the world occurred in 2015 when Yahoo was the victim of a group of highly skilled hackers who accessed millions of accounts and private emails, for example.
Bitcoin technology
Bitcoin is the first cryptocurrency created, although previous attempts exist. In 2008, a person or group of developers called Satoshi Nakamoto gave birth to what is today traded on mobile apps – Bitcoin. Their invention and implementation inspired other developers to create other cryptocurrencies, altcoins, non-fungible tokens, and similar digital assets. They’ve realised many existing crypto ideas, and one year later, their work started to be used. This virtual currency is generated and created through mining, which consumes significant energy and requires powerful and expensive computers.
Basically, miners “play a game”, resolve mathematical operations, and are rewarded in digital currency. This is stored and can be used to make purchases in online stores that accept crypto, be traded for fiat money, etc.
Mining isn’t a piece of cake. There are more types of mining crypto:
- ASIC mining
- CPU mining
- GPU mining
- Solo mining
- Cloud mining
- Mining pools.
However, you don’t need to mine to own crypto. All you have to do to enjoy this trend is register on an exchange (preferably the most popular one available in your country) and buy digital currency.
Assuming you’re a newbie, you can go with the most popular virtual coins. Watch the news and check the price charts of the hot crypto at the moment of buying to figure out what other purchases make sense to buy. Traders examine the Bitcoin price USD before investing and then figure out what trading strategy they’ll adopt.
It would be best if you didn’t buy more than you could afford to lose because the crypto market is highly volatile. Instead, invest in more than one cryptocurrency to ensure that when one’s value goes down, you have others that can bring you profits.
Read more: What is STEM Education, and Why Is It Important?
You can take advantage of the movement
Reasons why blockchain’s decentralization is popular
One of the most significant advantages of decentralization is that you can start transactions whenever you want without authorization from a centralized authority. When a network uses consensus methods to verify data, you completely control your actions.
Because of the data structure of blockchain technology, your information cannot be deleted or altered. Cryptography adds an extra layer of security and ensures that data ledgers are safe.
Through decentralization, you will also benefit from less censorship. For example, on centralized platforms like Twitter, the information you expose can be blocked by the platform or the government if it goes against their agenda. This isn’t the case with the blockchain because it allows you to interact directly without having a third party implicated in your business.
Additionally, decentralized systems support development, thanks to their nature and how they operate. Because of the network’s open development environment, excellent tools, services and products are built on top of it.
A blockchain-based world is being built.
Through the mining process, new blocks are added to the chain. Every block is unique and has its own nonce and hash.
Due to the complexity of the process, not everyone can mine. But luckily, you can buy and trade Bitcoin, Ethereum, etc. for momentary profits or use crypto as an investment tool.
News helps you sense where the prices are going, and accurate live charts let you know when it’s time to trade, buy, sell, or hold.
