The two terms Blockchain and Cryptocurrency are very famous now. At least a few of us are not having any idea of what they are how these things work. This article is for them (like me). It is the current trend and we should at least have some basic knowledge even if we do not want to be active on Cryptocurrency and all. To understand about Cryptocurrency, it is a must to know about Blockchain as well. Hence we are starting with Blockchain here.
Conventional Databases and Blockchain
All of us are familiar with different types of databases, where data is stored in a structured or unstructured way, retrieved for many purposes. The conventional databases, structures data into different tables, one or many rows in these tables and the rows themselves contain fields or columns. On the contrary, a Blockchain collects information together in groups known as “Blocks” which hold different sets of information.
These Blocks have certain storage capacity. When a Block is filled, it is closed and linked to a previously filled Block. It thus forms a Chain (Blockchain) of Data or Information. A new Block is created and new information is added to it, which then will also be linked to the Chain once filled. Different types of information can be stored on a Blockchain. The common use so far is as a Ledger of Transactions, which cannot be altered, deleted or destroyed. Blockchains are hence known as Distributed Ledger Technology (DLT).
Blockchain is a distributed database. It is shared among the Nodes of a Computer Network. Blockchain stores information Electronically, in Digital Format. Blockchains are used for maintaining a Secure and Decentralized Record of Transactions. They are best known for their crucial role in the Cryptocurrency Systems like Bitcoin. Blockchain guarantees the Fidelity and Security of a Record of Data and/or Information and generates a Trust without the need for a Trusted Third-Party.
You can read more about Blockchains at Investopedia
Next, let us touch on the topic of Cryptocurrency. A Cryptocurrency, as the name indicates is a form of Digital, Encrypted Virtual Currency. It is Secured by high level of Encryption called Cryptography which makes it nearly impossible to counterfiet or double-spend. Cryptocurrencies are decentralized networks based on Blockchain Technology. They are not issued by a Central Authority (like Central Banks of different countries).
Cryptocurrency is a Digital Asset. The decentralized structure of Blockchain allows Cryptocurrencies to exist outside the control of Governments and Central Authorities. Cryptocurrencies have portability, divisibility, inflation resistance and Transparency. But they are sometimes used for illegal activities and have exchange rate volatility as well as vulnerabilities of the underlying infrastructure. The first Blockchain based Cryptocurrency is “Bitcoin” but there are many others today.
Read more about Cryptocurrencies at Investopedia
Hope you have got at least a basic idea of what is Blockchain and Cryptocurrency.
Disclaimer: The information provided here is only for public awareness and deal with Blockchain and Cryptocurrencies on your own responsibility, knowing its pros and cons. Source of information: Investopedia