The relationship between Bitcoin and Blockchain: Mutually Beneficial ?
The blockchain technology has been an innovation pertinent to our digital age. When most transactions are offering digitally blockchain provides a secure and more efficient way of transacting money e anywhere across the world without any hassle.
What is the application of the blockchain technology in peer-to-peer transactions? How is it used in this new form of digital currency? These are some of the important questions that we should answer in order to understand how the crypto infrastructure works.
Cryptocurrency is powered by a new model of decentralized ledger that is also known as the blockchain. In the current article, we will explore how blockchain and cryptocurrency are related.
Bitcoin and cryptocurrency
Bitcoin is the first cryptocurrency ever developed. In 2009 Satoshi Nakamoto created this new digital currency which would allow users to make transactions without the mediation of any financial institutions.
Bitcoin was the first real-life application of a ledger technology that is known as the blockchain. It was followed by a number of new cryptocurrencies like Ethereum Litecoin, Ripple, etc. today there are thousands of cryptocurrencies that have improvised on the existing infrastructure laid down by Bitcoin. These new cryptocurrencies offer more features and have lower transaction times than their predecessors.
The Bitcoin is considered a better alternative to a fiat currency because:
The ledger system used in Bitcoin is more efficient than the traditional ledger used in banks and other financial institutions.
The blockchain ledger is maintained by smart contract technology, unlike the traditional legacy system which is manually maintained. This decreases the time needed for transactions. Cross-border transactions usually take up to 2 to 3 days through banks. With Bitcoin, it is possible to make a similar transaction in a few minutes.
Because the Bitcoin ledger is maintained by the smart contract technology it is susceptible to accounting errors. does problems like double spending which is a common issue of the traditional ledger system can we avoid it through the blockchain ledger.
it is virtually impossible to influence or tamper with the Bitcoin ledger. This makes it impossible to circulate counterfeit currencies in the system. This makes Bitcoin and other cryptocurrencies much more secure for transactional purposes.
It is, for this reason, several corporations starting from Tesla to PayPal have already invested in cryptocurrencies, to avail a mode of transaction that is faster and more efficient. Crypto is also used as an asset class commodity. New traders are investing in the crypto market through trading platforms.
The blockchain technology was first developed in the 90s by two scientists, named Stuart Haber and W. Scott Stornetta. This innovative technology was used to produce a timestamp on digital assets so that they could not be influenced or tampered with.
By using this technology Satoshi Nakamoto was able to create the first-ever cryptocurrency that is known to us as Bitcoin. In the blockchain, every crypto token is tracked and maintained by nodes of computer networks all over the world. The blockchain ledger is highly encrypted which makes it virtually impossible to alter without unanimous agreement.
Bitcoin and the blockchain technology
Every blockchain transaction is protected by smart contract technology. This means there are certain criteria that are needed to be fulfilled in order to validate and accept a transaction as a legitimate one.
When a user makes a transaction, the group of minors on the Bitcoin network audit it. They solve for the hash value that is required in order to verify the transaction.
Every new transaction after it is audited is added to the ledger on the crypto network. Through this process, new cryptocurrencies are also generated which are used to reward the miners who are maintaining the blockchain.
For the addition of a new block, all the miners on the Bitcoin network have to unanimously verify the legitimacy of the block. This makes the Bitcoin ledger much more safer and secure than the traditional ledger system.
Conclusion: most of the cryptocurrencies that we know today use blockchain technology. However, a lot of new cryptocurrencies are also using acyclic graphs to overcome the scalability issues of blockchain.