The world is advancing at such a pace that users have to find secure alternatives every day; in such a network-based and vulnerable market, you must be able to keep your data safe. Cryptocurrencies and blockchain are the base of this revolution. People hear that cryptocurrency is changing the perspective of money and the economy, but they still fail to understand how it works.
So basic working of blockchain would be discussed in this article and then discuss crypto transactions and understand why they are irreversible. BitcoinsUP is a secure platform which allows users to trade in cryptocurrency with secure implementation of block chain.
What Is A Blockchain?
Blockchain is an entirely new concept, so it would be easier if we tried to visualise it and then finish it with the technical details. When we communicate or send a message over a network, that message is first converted into a binary code. Then that binary code is deciphered at the other end, and the final result is obtained. Identically blockchain is the new technique for sharing information over the internet. The blockchain consists of data blocks containing the address of the data stored in them; these blocks are entirely decentralised, ensuring that any third party in the network cannot access them.
You can compare a blockchain to a database with blocks that store a certain amount of information and address it to the other block, creating a secure chain.
How Does Blockchain Work?
Cryptocurrency is on a boom, and people think that the crypto market is similar to that of the share market. Still, there is a comprehensive line of difference between the two because the crypto market isn’t a market of the asset but a demanding market. In the crypto market, the value of cryptocurrency depends on its current value and its demand, which makes it a highly volatile currency. Still, there have been very few real-life examples of the same.
The cryptocurrency is a token or a derivative of the core idea, blockchain. When a user has to make a transaction, he lists his transaction, and then certain people called miners who look for the task of finding an empty block where you can store information. Using a peer-to-peer network, the information of this new transaction is stored in the directory and shared across the network. The miner solves the lengthy equation, the hash code of the equation is obtained, and the block becomes accessible.
When the information is encrypted and sent to the block then it can be accessed using only those keys and a chain of blocks is created.
So now that we have understood how blockchain works, it would be a naïve idea to say that they are limited just to some tokens as you can use this idea to store documents and make promises or state ownership like NFTs(Non-Fungible Tokens).
Types Of Blockchain
There are two types of blockchain, and they are differentiated based on the access and permissions provided to the users. The first one is a public blockchain that allows users to access it and join the network by creating a node in the network. For making such a public blockchain much safer various policies like Proof of Work and Proof of Stake are used.
The second one is a private blockchain; you cannot access this blockchain directly by any node, firstly, you are supposed to send a request to the server, and when that request is approved, you become part of the network.
Advantages Of Cryptocurrency
Cryptocurrency is a significant investment, and there are various reasons which support the statement.
- It works on a Decentralised method, so there is no central system that can monitor or validate a transaction which ensures privacy.
- It is highly secure because these blocks are secured with 24 random digit numbers and hash codes that are impossible to hack or break into, making them a great choice.
- Data Fidelity is another core benefit of cryptocurrency as if one user makes changes to the transaction information or any other data. It won’t be reflected in data stored on other systems.
- Irreversible transactions are the best security policy stated in the whitepaper of Bitcoin because it allows users to stay safe from fraudulent acts.
You would have understood the working of blockchain, and cryptocurrencies are tokens that work on this particular technique, so their working is not too different from the blockchain itself. The cryptocurrency transactions involve a digital wallet where users can store their cryptocurrencies. When they need to make a transaction, they can look for a block, and a miner can provide it based on a commission. When the block is allotted, transaction info and cryptocurrency info are stored on it and shared with the buyer. When confirmation of buyer and seller is received, the transaction is considered complete.
Irreversibility Of Cryptocurrency Transactions
The primary reason for the irreversibility of these cryptocurrency transactions is the absence of a central body which leaves both buyer and seller with equal powers. In a centralised system, the users send a request for a transaction, and when that request is verified, the transaction is initiated by the central system.
But in cryptocurrency transactions, it is a decentralised system in which the transaction occurs with the consent of the buyer and the seller, so if a wrong transaction occurs, then it can’t be refunded until the buyer’s end confirms too.
Blockchain brings a lot more opportunities for people, and this can be seen as now even hospitals are planning to adopt them as a measure to store all the medical information of their users. It will become easier to access a patient’s entire medical record in just one click, and even property contracts are getting stored on such blocks that are secure and state the ownership of the person over a particular asset.
So in this article, we discussed blockchain and its working, which made it easier to understand why crypto transactions are irreversible.