With the introduction of the first-ever cryptocurrency, Bitcoin trading plaform, in 2009 by Satoshi Nakamoto, another terminology that came into public consciousness was blockchain. After noticing the tremendous downfall in the economic system all around the globe, Nakamoto felt the importance of introducing some way to improve the financial market. Hence, came bitcoin, the first ever cryptocurrencies introduced in the trade market. It all started with a new hype among the modern gen z folks. It was described as a digital currency that was based on decentralized blockchain technology.
It is where all transaction data is verified and stored and its structure is such that while it allows data to be accessed, no data once stored can be deleted or changed making it one of the safest methods of financial transactions. This feature of blockchain guarantees the security of each transaction detail that is stored on this ledger.
Why must you have a fundamental knowledge of blockchain technology?
Seeing the increasing number of investors in the crypto market, if you decide to invest your money in Bitcoin, it is important that you first have a basic knowledge of how Bitcoin transactions work. For that, an understanding of blockchain technology on which the functioning of Bitcoin is based is essential. You must know where your digital assets are stored, the ways to send and receive funds during a transaction, and how to access your coins with your private key that you own exclusively and must not share with anyone else. Since all this involves the blockchain, learning as much as possible about this technology will be beneficial for you in the long term as a Bitcoin investor.
To become a Bitcoin investor, you can avail the services of a reputed crypto platform such as a crypto exchange, a brokerage, or a crypto trading app that enables you to start your investment journey. However, you need to open an account as the first step toward crypto investing. One reliable app that has helped numerous traders and investors to make profitable investments in the crypto market is the bitcoinequaliser website.
What is blockchain technology?
Blockchain can be defined as a ledger that is shared among the nodes of an extensive network that extends to all parts of the globe. All Bitcoin transactions that occur in any part of the world are stored digitally on the blockchain.
Each block has a specific capacity till which data can be stored. Once that capacity is full, the block is shut and connected to the preceding block. A new block is then added which stores the new transaction details till it is full and connected to the previous block. Hence, subsequent blocks are connected in a sequence to form a chain and thus, this technology of storing data is called blockchain technology. Each block when closed is time stamped and since the blocks are in a sequence, a timeline is created which cannot be reversed.
Blockchain technology was first conceptualized in 1991 but it was only in 2009, with the introduction of Bitcoin that blockchain became a term that people became familiar with. However, over time with newer innovations and the creation of new cryptocurrencies with better blockchain infrastructure and functionality, blockchain usage has grown by leaps and bounds. Today it is not just limited to cryptocurrencies but has extended beyond boundaries and is extensively used in decentralized finance (DeFi) apps, non-fungible tokens (NFTs), and smart contracts.
The features of blockchain technology
The blockchain technology used in Bitcoin has the following features:
Bitcoin was introduced as a currency that was to be an alternative to the fiat currency that is controlled by financial institutions and governments. So, decentralization is its main feature which is carried out on the blockchain. Here, all transactions are executed with no intervention from a central regulatory body. They are all peer-to-peer transfers.
All transactions are stored in the blockchain only after verification by the nodes that are connected to computers worldwide. This is done through a consensus method. Also, the encrypted data can be accessed but cannot be changed or deleted.
Faster and cheaper transactions
Due to the absence of third-party intervention, verification and execution of all transactions including cross-border transactions are done within minutes. The fee charged is minimal as it does not include bank charges.
The concept of blockchain has revolutionized the world of financial transactions with its multiple features that have made sending and receiving of funds safer and more convenient.