Blockchain: One of History's greatest inventions!

Today, most people know about Bitcoin and cryptocurrency, but blockchain is the underlying technology that makes them all possible. 

Blockchain is said to be the largest potential set we can envision over the next decade or so which can vastly improve the efficiency of anything that is conceived of as a supply chain whether its people, numbers, data or money.

Today, most technologies tend to automate workers on the periphery doing mundane and menial tasks, however blockchains automate the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.

The goal of blockchain is to allow digital information to be recorded and distributed, but not edited. So, a blockchain serves as the basis for immutable ledgers of transactions that cannot be changed, deleted, or destroyed. A blockchain is a distributed database or ledger that is shared by all of the nodes in a computer and stores information electronically in digital format. 

A blockchain's uniqueness is that it guarantees security, accuracy and fidelity of a data record without the need for a reliable third party. 

The way the data is organised and structured in a blockchain differs significantly from how it is typically structured in a database. A blockchain collects information in groups called blocks, that hold sets of information. Blocks have specific storage capabilities, and when filled, they are sealed and linked to the previously filled block, creating a data chain known as the blockchain. 

Blockchains are best known for their role in cryptocurrency systems, such as Bitcoin, for establishing a secure and decentralised record of transactions.

With the increasing trend of online transactions, there is also a significant rise in online payments as technology is evolving towards contactless payments. Companies and consumers don’t prefer cash anymore, which can be seen by the sudden surge of Paytm and RazorPay users. 

When consumers can make payments at the click of a button, why would they prefer to go through the lengthy process of making physical payments? 

There have been several failed attempts at creating a digital currency during the 90s like DigiCash, Flooz, and Beenz. There exist several reasons for their failures, such as fraudulent transactions and financial difficulties. 

Cryptocurrency, a brand-new system of payment is on the rise which with the help of blockchain addresses the shortcomings of digital currencies. 

Cryptocurrency, the new black is a digital or virtual currency that serves as a medium of exchange. It uses cryptography to safeguard and validate transactions as well as regulate the creation of new units of a specific cryptocurrency. These are mainly limited entries in a database that no one can change without meeting certain conditions. 

Research suggests that most people have heard of it but only a few understand the whole mechanism behind it.

In advanced terms, cryptocurrencies use blockchain technology (a public ledger of all transactions that have ever taken place within the network) to achieve decentralization (with no server or central control authority) and transparency (everyone on the network can see the balance of each account) and immutability (every single transaction is irreversible).

In other words, suppose, we start using a shared communal ledger to keep track of payments with our friends. But, as our trust on our friends and the world decreases and if we are shrewd enough to bring in a few tools of cryptography to help circumvent the need for trust, we end up with what’s called a “cryptocurrency”.
Ledger - Trust + Cryptography = Cryptocurrency

One of the successful Cryptocurrency we all must have heard of is the Bitcoin

BitCoin: The ultimate inflation hedge
In early 2009, Satoshi Nakamoto, an anonymous programmer or group of programmers under the pseudonym, introduced BitCoin- ‘A Peer-to-Peer E-Cash System’. The backbone underlying this is not a bank validating transactions, but a sophisticated, clever system of decentralized trustless verification based on some of the math used in cryptography. It is viewed as the first modern cryptocurrency, a medium of exchange that combines decentralised control, user secrecy and record keeping on a blockchain. Bitcoin offers lower transaction costs than traditional online payment mechanisms and, unlike government-issued currencies, is operated by a decentralised authority. 

A significant amount of computational power examines each transaction. 

While Bitcoin is not the legal tender, it has garnered immense value and with it, has spurred the emergence of a wide variety of cryptocurrencies known as altcoins. 

As the name suggests, an Altcoin is a cryptocurrency or a virtual currency alternative to Bitcoin which itself was the only crypto coin at one point in time. Early on, Bitcoin became the name whenever anyone talked about digital currencies and it dominated the field so much, that it was Bitcoin and everything else. Whatever was not Bitcoin was called altcoins. Each Altcoin operated according to its own rules. Using a private key, one can send a payment from one’s digital wallet to another user’s wallet. Some popular altcoins include Ethereum, Ripple, Litecoin, Dash, and Monero.

While they provide competition to BitCoin in terms of their lower transaction fees and improvement of some of BitCoin’s inherent flaws, their disadvantages include the high potential for scams and frauds as well as their volatile value.

Cryptocurrencies are the rage, but how secure is the money?
Cryptocurrencies are generally created using blockchain technology, wherein the transactions are recorded in "blocks" and sealed over time. In addition, all transactions require a two-factor authentication process.

While all of these procedures are available, it cannot be fully guaranteed with absolute security and is by no means completely impossible to hack. You have to be fully informed about the functional mechanism of cryptocurrencies and should only invest through secure platforms to ensure the safety of your transactions.

Cryptocurrency is a risky business, make sure to do - 

1) PROPER RESEARCH
Before investing, do thorough research on cryptocurrency exchanges and how they work. Get in touch with experienced investors, gain their knowledge and check their applicability before proceeding.

2) WHERE TO STORE DIGITAL CURRENCY?
When you buy cryptocurrency, you can store it on an exchange or in a digital "wallet". Carefully weigh the pros and cons of all types of wallets or exchanges before storing your cryptocurrency in them.

3) MAKE DIVERSE INVESTMENTS
Like investing in shares, one must maintain a diversified portfolio, similarly, while you’re investing in cryptocurrency, try and regulate between BitCoin and Altcoin till you find the right combination of both.

4) BE MENTALLY PREPARED FOR LOSSES
Cryptocurrency is always fluctuating, therefore one must be mentally prepared to handle the ups and downs. If you can’t handle the dramatic changes in the prices and prefer stability, chances are, cryptocurrency might not be the right choice for you.

LATEST DEVELOPMENTS
On May 19, 2021, the cryptocurrency market saw a significant correction as the prices of major currencies including BitCoin, Ethereum, BNB, and others fell by up to 30% in 24 hours. This was a direct result of China's decision to ban financing Institutions and payment companies to provide services related to cryptocurrency transactions. While China's announcement was the last straw, BitCoin and Ethereum have been in decline since last week when Elon Musk, CEO of Tesla, announced that his organization would no longer accept BitCoin as a payment option.

WHAT'S NEXT?
While a sudden dip in the prices seems to have created havoc among the users, long-term value investors see the lowered prices as a buying opportunity. Many investors also claim this crash to be a short-term correction.

The world is gradually waking up to the fact that every form of money that exists today, with the exception of blockchain-based Bitcoin and other altcoins, can be manipulated and weaponized by the political class and centralised institutions to further their interests and extreme totalitarianism.

As a conclusion, Blockchain and cryptocurrency are here to stay and still have a long way to go to change the world. Globally, people are investing in it to protect themselves against the devaluation of their national currency. While cryptocurrency seems like a passport to our future, we must note that currently, cryptocurrencies have a long way to go before they are recognized as a legitimate currency on par with the U.S. dollar, the Euro, or the Pound.

Either get rich or die mining!