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Understanding Blockchain, Bitcoin and Cryptocurrency

 

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In 2008, the Bitcoin whitepaper was released to a mailing list of cryptographers, and thus the first cryptocurrency and blockchain were born. In this article, we’ll explain these related concepts.

What is Blockchain Technology?

Blockchain is a digital ledger. You can think of it like a special type of database that allows you to store information. Usually, this data comes from transaction activities, so the data stored in it includes the date, time, amount, and the party who made the transaction.

https://academy.binance.com/en/articles/what-is-blockchain-technology-a-comprehensive-guide-for-beginners

Blockchain is a network: Each of these data is represented in a virtual block. A block will be interconnected with other blocks (through cryptography) to form a chain of transactions.

Blockchain is public. This serves as a public record of the truth, meaning that anyone can access it and view the transaction records in it.

Blockchain transactions are Immutable. transactions based on blockchain technology are also relatively safe because users cannot immediately edit all the records contained in them. (sybil attack)

Blockchain is decentralized: One of the core features of the blockchain is that it is decentralized. Many of the functions previously listed can already be performed by database. But databases have a centralized source of control and hence failure. The blockchain is a peer-to-peer network. If any node goes down, other members can still communicate with each other. Furthermore, control is not centralized on the blockchain; it is not directly controlled by any government.

Understanding Blockchain, Bitcoin and Cryptocurrency, Pluang

Apart from it, there are two other important components in the blockchain, namely miners and nodes. Miners are those who create transaction blocks while nodes are devices that miners use to take advantage of blockchain technology as well as verify all transaction blocks that will be recorded in it.

Transactions on the blockchain usually use a medium of exchange that functions like fiat money in real life. This medium of exchange is also known as cryptocurrency.

What is Cryptocurrency?

Cryptocurrency is a digital representation of value that serves as a medium of exchange for goods and services, a unit of account, or a store of value on a blockchain network.Just like a payment network like Gopay allows users to transfer rupiah to each other, the blockchain network allows users to send bitcoin to each other.

Just like blockchain, cryptocurrencies are decentralized. This means that there is no single authority overseeing its circulation or intervenes with a series of policies. These factors make cryptocurrency less recognized as an official medium of exchange in various global jurisdictions.

What is Bitcoin?

The first cryptocurrency that was widely circulated was called Bitcoin. This coin was created by a person named Satoshi Nakamoto in 2009.

Initially, Nakamoto intended to make Bitcoin an alternative to fiat money for payment transactions in the digital space. However, now, Bitcoin has recently been better known as a store of value instrument.

The reason is that the supply of Bitcoin is limited to only 21 million pieces. Meanwhile, the production of Bitcoin chips will also decrease over time due to a mechanism known as the Bitcoin halving. Halving is a condition when the reward for Bitcoin miners (block reward) is reduced by half after mining 210,000 blocks, which usually occurs every four years.

Because the production of Bitcoin is increasingly difficult and cannot be done in large quantities, many people think that the price of Bitcoin is very difficult to be influenced by inflation. So, it is not surprising that many have pinned Bitcoin to the status of store of value.

After Bitcoin was launched, it turned out that many alternative cryptocurrencies were trying to follow in the footsteps of Bitcoin, which were later called altcoins. But in the midst of the mushrooming altcoins, Bitcoin still dominates the crypto asset scene in terms of market capitalization.