Cryptocurrency is based on blockchain technology, which is used for other applications beyond the financial market. There has been an increase in the number of cryptocurrencies available for trading, online transactions and gaming. The rapid growth of the crypto market has been attributed to the need to have a form of currency that is boundaryless and not regulated by any central bank.
What is blockchain?
A blockchain is a distributed ledger or database that is shared across several nodes of a computer network. Since it is a database, the blockchain stores the information in electronic storage in digital format. This technology is best known for its role in enhancing cryptocurrency transactions, where it maintains a decentralized record of transactions.
One of the advantages of blockchain technology is that it provides data security and fidelity. This, in turn, generates trust among the parties without needing a third party to check the legitimacy of the information.
The data structure in a blockchain
A blockchain has a different data structure than that of a typical database. The blockchain collects the information in groups known as blocks. Each block holds a set of information. Additionally, every block has a specific amount of data and capacity that, when filled, is closed and linked to a previously filled block. When several blocks are filled and linked together, the data chain is called a blockchain. The new information is added to a new block and added to the chain. This chain continues as long as there are transactions.
A conventional database structures its data in the form of tables, which is different from the chunks or blocks where data is stored in a blockchain and then strung together. In a conventional database, it is possible to change data when there are changes in the source files. This difference is the major advantage of blockchain technology.
However, the data structure of a blockchain creates an irreversible timeline in a decentralised structure. The data in a block is set in stone and cannot be changed. Each block even gets a timestamp to show when it was added to the chain.
Another feature that makes the blockchain different from other databases is its decentralised nature. In contrast to a conventional database, no one owns the data stored in a blockchain. All users retain control of the database collectively. Therefore, it is not possible to break a block from the data or try to change the contents, as they do not have full control.
- Cryptocurrencies use blockchain technology to store transaction information
- A blockchain is a shared database where data is stored in blocks and linked together using cryptocurrency. The blocks in the chain are linked in chronological order, where every new block is connected to the previous one.
- Decentralised blockchains are fully immutable. The data that you enter into them cannot be changed. In cryptocurrency, every transaction is permanently recorded and viewable to everyone interested in the transaction.
- Decentralisation ensures that no one has full control of the data; therefore, no one can change the data as they wish.
Cryptocurrency transaction process
When a transaction is entered, it is transmitted to a network of peer-to-peer computers located in different parts of the world. The network of computers solves equations that confirm if the transaction is valid. Once the transaction is confirmed to be legitimate, it is added to a cluster of transactions that were also legit and put into a block. This block is then chained to other blocks whose transactions have been completed, creating a long history of all permanent transactions.
The attributes of cryptocurrency
As explained earlier, blockchain technology can be used to store the transaction history of other trades, such as product inventories or legal contracts. Here are the attributes of cryptocurrency that make it different from fiat currency:
- It has No Physical Form
Cryptocurrencies have no physical form, as they only exist in immutable blockchains. Since it cannot be carried around in a physical wallet, users use special software called crypto wallets. These wallets store the code that shows the value of the currency you hold.
- It has a Total Supply
Every cryptocurrency has a total number of coins that can circulate at any time. The maximum number is usually determined by the members of the decentralised network or the originators of the cryptocurrency. This differs from fiat currency, where the central bank determines the total number of notes in circulation.
- It Has Demand-Driven Intrinsic Value
Cryptocurrency has an instinctive value that is driven by the demand for money. If more people buy the coins and use them to make transactions, the demand increases, increasing the currency’s value against fiat forms. Well-known cryptocurrencies such as Bitcoin, Ethereum and Litecoin have high value against some of the major fiat currencies in the world.
- It is Secure
Cryptocurrency is very secure. Unlike wiring cash online, blockchain technology ensures that the transaction data is available to every user and cannot be altered, deleted or added. Each block contains a hash code of the previous block. If a hacker altered the information in a block, it would be rejected from the chain as it would change its hash code. This makes it hard to modify any completed transaction.
Uses of cryptocurrency
Cryptocurrency can be used in different applications around the world. However, the main uses include completing buying transactions and their usage on gambling platforms. Several merchants around the world now accept major cryptocurrencies for on-site transactions.
On the other hand, several crypto gambling sites accept a host of these coins. These casinos offer a combination of security, anonymity and many available games. Players who want to take advantage of these benefits can sign up at any of these gambling sites and begin playing with cryptocurrency.