The recent surge in prices of specific cryptocurrencies like Bitcoins or Doge Coins have sent the financial world into a tizzy. As people scramble to invest their money in Bitcoins or Doge Coins, it is worthwhile to remember the contribution of technologies that have boosted the popularity of these cryptocurrencies.
If you closely follow the crypto world or have recently enrolled in a cryptocurrency trading course, you might have come across the term blockchain. Initially designed for improving the operational efficiency of cryptocurrencies, the blockchain technology has found many applications outside the financial world including healthcare and cybersecurity.
But what do you mean by blockchain and how is this record-keeping technology aiding the world of cryptocurrencies? Let’s find out!
What do you mean by blockchain?
The blockchain technology might seem complicated but its core concept is quite simple. A blockchain is essentially a huge database, a collection of information that can be stored on a computer system.
Blockchain consists of servers built using thousands of computers having enormous storage capacity and computational power to record every transaction that has ever been made using a specific cryptocurrency. This database is accessible to everyone with their individual keys, thereby taking away control from centralised systems like banks.
What kind of benefits can the blockchain technology provide to cryptocurrencies?
Block chain brings a lot of advantages to the table when it comes to cryptocurrency operations. Here are the prime ones:
- Blockchain can offer structured storage for information: Unlike conventional databases, blockchain provides a structured approach to data storage. The blockchain technology allows the cryptocurrency systems to record the transactions in online ledgers called blocks. Once a block is filled, the overflowing information is filled into a freshly added block that forms a chain of sorts, thus forming a ‘chain of blocks.’ This way, you can store a lot of transaction data including the exact time stamp.
- Blockchain can contribute towards the decentralisation which is key to cryptocurrencies: Cryptocurrencies became popular owing to their decentralised status. This meant that they couldn’t be controlled by one central authority or organisation like a bank which could manipulate or devalue currencies at their will. Blockchain allows cryptocurrency data to be stored in internet ledgers which are accessible to everyone with the right key, thereby aiding the decentralisation process.
- Blockchain can make cryptocurrency transactions more secure: Block chain allows you to store records of your cryptocurrency transactions and amounts in your online ledger which can only be accessed with a unique code known only to you. This way, blockchain can secure cryptocurrency transactions.
If you are interested in becoming a cryptocurrency trader, gaining a thorough expertise in blockchain can help you understand the fundamental concepts behind how these digital currencies operate. This knowledge can also help you make informed trading decisions which can reduce the chances of unexpected losses.
Most cryptocurrency trading programmes delve into the blockchain technology in-depth and don’t require you to have an extensive coding background. Invest in an appropriate cryptocurrency or blockchain course today to become an experienced cryptocurrency trader.