The tables have turned for the economic markets. A recent uproar created by cryptocurrencies and blockchain has challenged the way we have been doing monetary transactions. Some of you may have already boarded the wagon while others are still waiting. We have witnessed huge corporations trying to gain the maximum advantage from this digital revolution in the financial industry.
What is exactly keeping you away from riding the new wave? If the unanswered questions are holding you back, this write-up is a must-read for you.
- What exactly are cryptocurrency and blockchain?
- How exactly is it advantageous?
- How is it different from the current system?
And by the way, if you are planning a blockchain-related app/ICO/website/exchange platform or any similar online business, reach out to Techechelons Infosolutions.
What is cryptocurrency?
Let’s first make sense of what cryptocurrency is and how it is used. Coming around as one of the use cases of revolutionary blockchain technology, cryptocurrency is a digital money. It utilizes cryptography and blockchain to carry out transactions in a highly secure and anonymous manner. Bitcoin is a very well-known unit of cryptocurrency or simply put a currency for digital transactions.
There are many other digital currencies as well in the market. like Litecoin, Ethereum, etc. Cryptocurrencies require work to be produced which is termed as ‘mining’. Mining requires the solution of complex mathematical problems in most cases. This means that computational energy and time are required for mining and the miner receives the specific digital currency as a reward. Miner is a job that is also responsible for transaction verification and fraud prevention. This, in terms, creates a more secure, reliable and faster transaction system.
Do you know the complete history of cryptocurrency?
Bitcoin, the most popular cryptocurrency, was founded by Satoshi Nakamoto (pseudonym). According to him, the maximum number of bitcoins to ever exist will be 21 million. The number of bitcoins that are released every year reduces to 50% every year with a reduction in the number of discoverable blocks by miners as well. This will, thus, caused the Bitcoins to approach its maximum value but never become equal to it. The chances for inflation in bitcoins are, hence, negligible, making it a suitable investment.
The famous cryptocurrency – bitcoin, had a rise from USD 0 to USD 1000 in the initial 5 years.
What is blockchain?
Blockchain was first released in the year 2009, as a way to provide more efficient, cost-effective and secure financial services. The blockchain is basically present to aid the existence and working of cryptocurrency. The purpose of the invention of blockchain was to secure financial transactions in a digital and anonymous manner without any need for verification by the third party.
Master the blockchain art
The actual work done by blockchain is keeping a record of the transactions taking place on a peer-to-peer network and is thus, known as a ‘digital ledger’. Blockchain technology provides asset transfer across the internet without having to rely on a third party. What it actually does is maintain a database of the transaction with the correct data in encrypted form. This database is like a document that is shared with entries dependent on the logical relationship among previous transactions. It provides fraud-free and efficient logging services for the transaction activities, making cryptocurrency a reliable financial option.
Blockchain provides a secure and reliable alternative to bank-based operations which are slower and have become less reliable. It is potentially believed to replace the existing financial systems in terms of better feasibility and efficiency. More work is also being done to make the transactions more efficient, secure and less penetrable by hackers.
Fun fact: In the automotive industry, lamborghini took the initiative of making dealers accept bitcoins as currency.
What is crypto mining?
If you want to board the crypto wagon, you can get them ethically in three ways:
1) Buy them.
2) Receiving them from a client.
Mining is the process where computers with strong computational power add records to the blockchain. Without miners, no blockchain can progress. It keeps the records in the distributed ledgers and these miners can be incentivized with cryptocurrencies and this is how new cryptocurrencies get generated.
The chains of blocks are actually the encrypted transactions that are decrypted by the miners and become part of blockchains. The miners use algorithms like SHA256 for bitcoins to the information of the block. They apply this algorithm to the transaction and convert it into a fixed-length sequence of random digits.
Miners are basically the machines that confirm each transaction and ensure that every transaction is unique and cannot be copied. A race is raging between the miners across the world as to who can mine more. The use very complex software to mine blocks. Whenever a block is decrypted, it means, the miner has created a right hash sequence.
Mining is complicated and competitive. Previously powerful CPU’s were used for mining. Eventually, it changed to FGPAs and then ASICS. The miners moved from the high power consuming farms to the low power-consuming places.
It is a tricky affair as the mining is not limited to just the owners of high computational devices. Cloud mining is the new genre of this revolution. If you are looking for making some quick and regular money on cryptocurrency, mining is the best channel. With mining, you get the least impacted by the drastic rise and drop in cryptocurrency prices.
Every person can buy cloud miner all you need to check is the price per GH/s, service fee apart from hash rate and the time taken to return your investment. With cloud mining, you do not have to own any noisy and power-consuming equipment so you save the
- Installation costs
- No noisy equipment
- No maintenance
Cloud mining comes with some disadvantages too where the mining farms lease out a part of the mining power they own. With cloud mining, you do not have the equipment. So, you just pay for something that you do not own and have to first wait to get the investments out then only you start booking profits.
Summing it up
Mining is a complex and difficult task. As the number of cryptocurrencies is increasing the mining is becoming more complex. The primary purpose of this entire mining fiasco is to facilitate keep the cryptocurrency secure and tamper-resistant.