In the times of digitalization, online payments have taken grip. With payment gateways already in progress and working very well, latest technologies have brought new payments too. But the most well known digital currency is cryptocurrency, which works hand in hand with blockchain technology. Let us explore more about the various aspects and models of cryptocurrency using blockchain technology.
What is cryptocurrency?
Crypto currency is a medium of exchange, created and stored electronically in the blockchain, using encryption techniques to control the creation of monetary units and to verify the transfer of the funds. It has no physical form and exists in networks only. Cryptocurrency has no real value that is why it is not redeemable for other goods, such as gold. Its supply is not governed by a central bank, the network is completely decentralized.
Understanding the concept of Cryptocurrency
Concept of Cryptocurrency using the blockchain technology is like a system that permits for secure payments online which are designated in terms of virtual "tokens," which are represented by ledger entries internal to the system. "Crypto" refers to the various encryption algorithms and cryptographic techniques that safeguard these entries.
Types of Cryptocurrency
The first blockchain-based cryptocurrency was Bitcoin, it remains the most popular and most valuable till date. There are thousands of alternate cryptocurrencies with various functions and specifications available today.
Blockchain technology can be simply defined as a decentralized, distributed ledger that records the origin of a digital asset. By inherent design, the data on a blockchain is incapable of being modified, which makes it a genuine disruptor for industries like payments, cybersecurity and healthcare. Cryptocurrency using blockchain technology was the first major application in this domain.
This technology is the infrastructure that allows cryptocurrency to be stored and for tokens on the network to change hands.
How does blockchain technology work?
*Peer-to-Peer (P2P) – The practice of sharing information on a particular network between two parties directly, without the need of a server through which data can pass.
*Node – A computer on the network which conducts a copy of the blockchain ledger. Nodes are scattered around the network, helping it keep its decentralized form.
*Ledger – A digital log of all of the transactions which took place on a particular blockchain network. Copies of the ledger are stored across the network and are constantly updated to match each other, making the transactions be verified by anyone on the network.
Most Famous of Cryptocurrency using Blockchain technology
Ethereum Cryptocurrency using Blockchain technology
Launched in 2015, Ethereum is an open-source, blockchain-based, decentralized software platform used for its own cryptocurrency, ether. It allows SmartContracts and Distributed Applications (ĐApps) to be built and run without any downtime, fraud, control, or interference from the third party.
This cryptocurrency is not just a platform but also a programming language called Turing complete, which runs on a blockchain, assisting developers to build and publish distributed applications.
Like all other cryptocurrency using blockchain technology, Ethereum too works on the same grounds. It is distributed such that everyone contributing in the Ethereum network holds an identical copy of this ledger, allowing them to see all past transactions. It is decentralized in that the network is not operated or managed by any centralized entity—rather, it is managed by all of the distributed ledger holders.
People use computers to “mine,” or solve complicated mathematical equations that confirm each transaction on the network and add new blocks to the blockchain that is at the heart of the system. Contestants are rewarded with cryptocurrency tokens. In the Ethereum system, these tokens are called Ether (ETH).
Ether can be used to purchase and sell goods and services, like Bitcoin. It has also seen rapid gains in price over recent years, making it a risky investment. But something unique about Ethereum is that users can build applications that run on the blockchain like software runs on a computer. These applications can further store and transfer personal data or operate complex financial operations making the most of this cryptocurrency using blockchain technology.
Litecoin Cryptocurrency using Blockchain technology
Litecoin (LTC) is a peer-to-peer (P2P) cryptocurrency that was set up by a former Google employee in 2011. This cryptocurrency using blockchain technology shares many similarities with bitcoin and is based on bitcoin’s original source code. Like bitcoin, Litecoin is a type of digital money. Using blockchain technology, Litecoin can be used to transfer funds between individuals or businesses directly. This ensures that a public ledger of all transactions is documented and allows the currency to carry out a decentralized payment system free from government control or censorship.
Litecoin involves the creation and transfer of digital coins via an open source called the cryptographic protocol. This uses blockchain technology to keep track of a decentralized, public ledger of all transactions.