The Concept of Blockchain

Like most other cryptocurrencies, bitcoin also relies on Blockchain technology to complete its secure transactions. The idea is to make exchanges virtually unhackable, but in this process, the cost of verifying all transfers have become quite expensive as compared to the central bank systems.

Note that cryptocurrency transactions take place directly between two individuals instead of following a typical channel through banks. Whenever a person needs to make a transaction with these digital currencies, he/she simply need to transfer funds stores in his crypto wallet to the wallet of another person. This transaction between two persons is noted in a digital ledger named as Blockchain. On this digital platform, every currency has its personal blockchain and computers perform lengthy calculations to maintain all updates to these data tables.

When a person completes a specific number of transactions by using a certain type of cryptocurrency; the complex algorithms on a computer group them into a block. The formation of this block and addition of all blockchain transactions including the monetary rewards is completed with the help of complex mathematical formulas that are named as cryptographic functions in the digital world.

In real terms, the cryptographic equation can be considered something like a block or pumpkin that is thrown off a building to showcase the specific splatter pattern. In order to match the splatter pattern and to transfer the block, people need to toss the pumpkin bunches from building themselves. The same concept is used of cryptocurrency mining where computers smash unlimited blocks to identify the winning pumpkin with accurate splatter to validate the target block.

Whenever a computer solves the complicated maths problem and successfully adds the transaction block to the blockchain; it receives a monetary reward: This process is named as Mining of crypto. The process continues for a long run as every computer connected on the network keep on adding new blocks to the digital ledger named as blockchain.

Earlier bitcoin was not involved in the centralized banking system, and it was not bound by government legislation; but with time, it has gained value as national, centrally banked currency in many corners of the world. Moreover, blockchain is a highly secure platform that allows transaction verification at a reduced cost so that banks can easily consider it in their system. With time, bitcoin is gaining popularity as a major exchange medium on international grounds, and soon it will be considered as a globally accepted digital currency.