In the digital world, cryptocurrency has become a sensational concept due to its high-level cryptography and transparency in transactions. You may consider it as a global currency of future that has equal value in every country. It is a virtual currency that doesn’t have any physical existence like banknotes. All transactions are either done with digital wallet of a USB device. These wallets are designed by apps developers who also provide blockchain training for its proper and safe use.
Some people get confused between cryptocurrency and blockchain due to its complicated structure. Others consider bitcoin as the only thing that represents virtual wallets due to the lack of blockchain training guidelines. All these perceptions are wrong because they are different entities. Talking about the bitcoin, it is the first every cryptocurrency that comes to existence in 2009. Nowadays, more than 4000 cryptocurrencies have been developed by blockchain consulting companies worldwide. Cryptocurrencies can be used for worldwide transactions at the same value.
What Is Blockchain Technology?
While talking about blockchain consulting companies, clear one thing in mind that this is not a currency. The blockchain is a kind of digital ledger that is used to manage the cryptocurrency in blocks. It works on decentralised module concept that doesn’t require any central authority like a bank. The blockchain is capable of distributing the information without letting it copied. This is a kind of digital ledger where all transaction records are stored in blocks. Blockchain comprises countless possibilities that are far beyond storing and distributing virtual currency. The features like decentralised network, high-level encryption security and transparency in transactions have made it a great tool for the following purposes:-
1) Distributed cloud storage
2) Smart contracts
3) Decentralised social media
4) Encrypted emails
5) Decentralised internet
Some of these concepts have started working in the real world whereas others are about to come in nearer future. In short, you will see a drastic change in a virtually connected world due to blockchain. Not just monetary transactions, but it will also demolish the monopoly of social media giants that are currently taking control over the personal lives of people.
Understanding Cryptocurrency in Simplified Parts
Now let’s get back to the cryptocurrency and its aspects. First of all, it is important to clarify what cryptocurrency is? It is a bit complicated to understand the cryptocurrency but here you will get a simplified explanation. In easy words, you can consider it as a peer to peer cash system. In Peer to peer (P2P), the term “Peer” stands for computer systems connected to each other with the internet. It doesn’t require any centralised server, means every computer acts as a server as well as a client too. To understand in simplified words, you can take an example of a hotspot sharing app like Shareit. It enables to send and receive data between tow devices whether they are Smartphones, PC, tablet or laptop without requiring any central server.
Satoshi Nakamoto is a genius mind behind the invention of this revolutionary currency. Before him, everybody tried to create virtual currency with centralised server attempts but failed because they are trust-based third-party systems. In the opposite way to traditional attempts, Satoshi made a decentralised network in which no single server controls the whole network. Just like file sharing apps, every computer system acts like an independent server. Nowadays, several blockchain consulting companies are using the same idea to mine virtual currencies.
Major Problem of Double Spending
Double spending is the main flaw that becomes hurdle in the path of succeeding in cryptocurrency formation. It means the same token of digital currency is spending multiple times. The digital tokens are actually digital files that can be duplicated or cloned easily like you copy a file in computer. This occurs due to the missing element of verification authenticity. Once digital money spent on purchasing a bike can be used to buy a laptop from another seller by copying. Here cryptocurrency comes with a unique mechanism of eliminating the problem of double spending.
While using any cryptocurrency to purchase something, miners of blockchain consulting companies approve it and you get the product or service in return. When someone tries to repeat the transaction with the same cryptocurrency, miners detect it and do not verify. It is recommended to wait for at least 6 confirmations done by miners for other transactions. When 6 more blocks are added after your transaction, it cannot be reversed in any way. Blockchain is an immutable ledger where miners continuously work on finalising the transactions by confirming them.
Who Are The Miners?
Cryptocurrencies like bitcoin and there have virtual existence and value just like a typical currency coin. Here mining means generating the cryptocurrency by validating the transactions. All transactions that are done through blockchain are confirmed by people called miners who deeply go through blockchain training sessions. These miners verify the transactions with the help of nodes and add them into a public ledger which is called blockchain. Node is actually a powerful computer system specifically customised to solve complicat4ed mathematical puzzles. The software of mining is available for free of cost but mining process requires a lot of power and storage space in computer system. Every node has an algorithm to solve the mathematical equations which are very difficult.
When someone makes a transaction, the software of all nods automatically starts solving the puzzle to validate it. All this is done to win a block that has different values according to cryptocurrencies. Mining is done in two ways i.e. solo or in a pool. The solo miner can get the whole reward but their chances of winning are less than pool miners. In pool mining, multiple nods work on validating the same transaction. Thus, when their validation is verified, the amount is divided equally according to the resources used.
Hardware Used In Mining
At the initial stage of introducing cryptocurrency, it was easy to mint it with normal computers. As the competition arises, now it requires a lot of electricity and processing speed. The hardware used in mining is called Application Specific Integrated Circuits (ASIC). Hashing power is the major factor that decides the probability of mining and profit ratio. The more hashes you get, the chances of getting reward goes higher. Apart from ASIC, CPU, GPU and FPGA are also required for efficient mining.
Before start mining, make sure that you have all the above-mentioned hardware as well as dedicated software which is available for free of cost. All this knowledge can be gained through blockchain training given by its experts. Almost everyone prefers to join a pool for mining to minimise the risk. A dedicated wallet is required for storing all earned virtual currency securely. For this purpose, various companies provide customised wallets. These wallets work with a private key and a public key. The private key is mathematically related to cryptocurrency address. It is a kind of ticket that allows the user to spend the value of cryptocurrency for purchasing products or services. While making a transaction by paying cryptocurrency like bitcoin, a person uses a private key to surrender the right on currency whereas public key is used by miners to verify that transaction is free from the spam of double spending.
Types of Cryptocurrency Wallets
1) Online wallet
2) Mobile wallet
3) Paper wallet
4) Hardware wallet
5) Desktop Wallet
The online wallet can be used as a cloud service, mobile wallet is meant for smartphone users and desktop wallet is software that can be installed in a PC or laptop to manage the cryptocurrency. Apart from software, the options of hardware include paper wallet as a physical copy of public and private keys generated in QR codes or hardware wallets in the form of USB plugs.
As a frequent cryptocurrency user, you can hire a company like Blockchain Australia to develop a dedicated wallet. This wallet can be used to manage multiple cryptocurrencies like bitcoin, Zcash and ethereum with high grade 256-bit encryption.