HomeNewsTech NewsWindows

Cryptocurrency & Blockchain Wallet

Cryptocurrency & Blockchain Wallet are digital, decentralized currencies based on Blockchain technology that is developing at a rapid rate with the support of many developers. Compared to tangible cash. And you can take it with you anywhere, cryptocurrency is actually a digital asset that can be exchanged. This money does not have a physical existence and its existence is digital. The word “encrypted” actually refers to the cryptographic structure used in transactions to enhance security and authentication on the network.

The use of cryptocurrency in exchanges instead of cash for transactions does not require the existence of any intermediary institution such as a bank. This feature can reduce or eliminate the amounts of fees that financial institutions receive for performing various operations.

Cryptocurrency transactions are processed and performed on a network called Blockchain. The blockchain is designed to act as a decentralized network, and on the other hand, it also causes you to be a procrastinator. One of the criticisms that Bitcoin has always received from the beginning is the time it takes to complete a transaction.

Cryptocurrency transactions are placed inside a block on the Blockchain. Computers on this network have to solve complex mathematical problems. After one of these computers solves the problem, the answer is displayed to the others on the network. If the whole network reaches a consensus that the answer is correct, that block will be added to the blockchain and the transaction will be successful. The network is frequently validating and verifying the last block on the Blockchain and adds it to the chain.

Blockchain plays a major role in the popularity of cryptocurrencies, and its flexibility has led to the creation of different digital currencies and the expansion of the industry. In fact, the decentralized nature of this network has much higher security than a centralized network and has caused large businesses with very valuable assets to be interested in cryptocurrency and the use of Chinese blockchain technology.

The Main Features Of Cryptocurrency:

Here are seven key pointers in moving forward with each cryptocurrency.

1) Being digital:

Cryptocurrency, as its name implies, exists only on computer systems and is digitally available. Therefore, there are no reserves for cryptocurrency in banks.

2) Decentralization:

The cryptocurrency is not controlled by a server or central computer and is distributed on a network of thousands of computers called nodes. Networks without a central server are known as decentralized networks.

3) Peer-to-Peer:

Cryptocurrency is traded online and among individuals. In this way, users exchange with each other directly. In fact, banks and financial institutions are intermediaries that you trust by giving them your personal information. But in the cryptocurrency, these intermediaries do not exist

4) Anonymity:

You do not need to provide your personal information to have and use cryptocurrency. There is no rule as to who can own or use the cryptocurrency.

5) No need for third-party trust:

There is no need to trust an intermediary like banks. Full-time users have full control over their money and information.

6) Using cryptographic algorithm:

Each user has their own code that prevents other users from accessing your assets. This is called encryption and is almost unhackable.

7) International inclusiveness:

Countries have their own currencies, which are offered in cash. Sending these currencies around the world is a difficult task. But cryptocurrency can be easily sent to all parts of the world. In fact, digital currencies have no boundaries.

History of Cryptocurrency

In the early 1990s, most people did not understand the Internet. However, some people understood the potential of the Internet. A number of people in this group believed that governments and financial institutions have a lot of power and control over our lives. They wanted to give the world more freedom of action through the Internet.

Cryptocurrency & Blockchain Wallet
History of Cryptocurrency

The group used cryptography to provide a platform on the Internet for users to control their money and information. In fact, the group wanted to eliminate intermediaries such as banks, financial institutions, and government institutions. The group’s first priority was to create digital money. DigiCash and Cybercash both tried to design and build systems for digital money but failed, and in the late 1990s, both projects failed.

Before Bitcoin, few attempts were made to create similar digital currencies, but these efforts did not yield many results and could not gain popularity among the people. Both B-money and BitGold were created before the basic concepts of cryptocurrency were developed. The BeatGold proposal, written by Nick Szabo, included a decentralized system

However, the first to create the basic concept of cryptocurrency today was Bitcoin. The story of their emergence began in 2009; When a person named Satoshi Nakamoto created bitcoin and came up with the idea, Nakamoto’s identity is still unknown. Some believe he is an individual and some say he is a pseudonym for a group. In the same year, bitcoin software was released to the public, which allowed people to extract bitcoins and create the first bitcoin block.

Bitcoin digital currency was considered an emerging phenomenon in the early years. Bitcoin emerged in 2010 as a phenomenon that can be used as a currency and exchange; When someone paid 10,000 BTC to buy two pizzas. At present, the price of 10,000 bitcoins is equivalent to more than $ 80 million.

After the advent of bitcoin, other people and foundations began to think about using blockchain technology and making other digital currencies known as Altcoin. Litecoin, for example, was created in 2011 to speed up transactions, and Dogecoin was introduced in 2013, which currently has more than $ 300 million in working capital.

Bitcoin is becoming more popular and well-known over time. Bitcoin price record goes back to the end of 2019; When in the middle of this year, each unit was worth less than $4,000, and in May of this year 2022, the price of each bitcoin unit reached $ 40,000. It should be noted that since then, Bitcoin has not been able to reach this price again.

Below shows How Do Cryptocurrencies Work?

Cryptocurrency & Blockchain Wallet
How Does The Cryptocurrency Work

Blockchain Technology:

All digital currencies use Distributed General Ledger (DLT) technology to remove intermediaries from the system. The distributed general ledger is actually a database in which transaction information is recorded. The general ledger used by most digital currencies is called the Chinese blockchain. The first blockchain was designed for Bitcoin by Satoshi Nakamoto.

Blockchain is a database of all transactions and their information for a specific cryptocurrency. Groups of information, known as blocks, are added to the database one by one. So blockchain is a linear chain of blocks. Once information is added to the blockchain, it can no longer be deleted or changed, it stays on the Blockchain forever, and everyone can see it.

This database is stored on a network of thousands of computers or so-called nodes. New information can only be added to the blockchain if more than half of the nodes agree on its validity. This process is called consensus. The idea of ​​the consensus algorithm is one of the obvious differences between the banking system and digital currencies.

Cryptocurrency and Blockchain Wallet
how blockchain works

In the banking system, transaction information is stored inside the bank. Bank employees make sure that invalid transactions are not made. This is called validation.

For example, suppose Mohammad Reza owes Ehsan and Hassan $ 10. But Mohammad Reza only has $ 10 in his account. He tries to send $ 10 to Ehsan and $ 10 to Hassan at the same time. The bank employees find out that Mohammad Reza wants to send money that he does not have in his account and they prevent this operation. In fact, it prevents Mohammad Reza Bank from carrying out double payment operations, which is one of the methods of fraud.

Banks are spending millions of dollars to eliminate this problem. But what does cryptocurrency do in the face of the problem of double payment? How are cryptocurrency transactions validated and verified? The answer to these questions is the extraction operation described earlier. In fact, people contribute to the validation and security of the network by performing extraction operations, and in return receive a cryptocurrency as a reward from the network.

The Concept Of Mining Digital Currencies:

Mining may be the first thing on your mind when you hear cryptocurrency mining, but in reality, it’s more like accounting. Extractors are nodes that make transactions possible by doing specific things. Let’s illustrate this with an example on the Bitcoin network:

  1. Mohammad Reza owes $ 10 to Ehsan. Mohammad Reza tells the Bitcoin network that he intends to send $ 10 to Ehsan.
  2. Miners receive and encrypt information. This operation is called hashing. So the information is collected and hashed to a degree that is sufficient to create a block.
  3. Miners compete to guess and find the encrypted code to be given to the new block. An extractor who guesses the correct code adds the block to the Blockchain and receives a reward in return.
  4. Now all nodes on the information block validate and validate the transaction on the new block. They examine the entire Blockchain to confirm that the new block is compatible with the structure. If this happens, the new block is valid and the winning miner can add this block to the Blockchain. This is called “approving”.
  5. Ehsan receives $ 10 from Mohammad Reza.

Mining cryptocurrencies requires a lot of energy and high processing power of the computer, so miners are rewarded for their extraction operations.

Advantages And Disadvantages Of Cryptocurrencies:

Advantages:

Here I want to tell you some useful advantages of Cryptocurrency.

  • Easy To Use: To create a simple bank account, you need different documents, and if you do not have these documents, the bank will prevent you from opening an account. But in cryptocurrency, you only need a device to connect to the Internet. Then you can have your digital wallet and use it whenever and wherever you want.
  • Decentralization: It is not controlled or influenced by any central organization or institution.
  • International usability: There are no geographical or temporal restrictions on transactions in cryptocurrencies. You can send cryptocurrencies anywhere in the world.
  • Low operating costs: Transferring money through banking portals costs money and the bank charges a percentage of the transaction amount as a fee. In cryptocurrency, the amount of commission is much less and the buyer pays this amount.
  • No restrictions on transactions: With cryptocurrency, you can send money to anyone, anytime, anywhere with your digital wallet. Transactions are not controlled or stopped by anyone.
  • High-speed transactions: With blockchain technology, delays, approvals, and third-party fees are eliminated and you do not have to wait several days to complete a transaction.
  • Information transparency: In digital currencies, all transactions are recorded and stored on the Chinese block.
  • Anonymity: In digital currencies, you can create an infinite number of wallets without a name, address, or any other information.
  • High security: The use of cryptocurrency provides a high level of security for users so that it is impossible for anyone other than the owner of the digital wallet to perform transactions.
  • Absence of Inflation: In digital currencies, coins are limited in use and extraction and are not interfered with by political powers or companies. Therefore, it is not possible to cause inflation in this system

Disadvantages:

Here I want to tell you some disadvantages.

  • High fluctuations: From the first days of the emergence of digital currencies until now, their market has fluctuated a lot. Some businesses are reluctant to trade with money that fluctuates widely.
  • High risk of investing in digital currencies: Investing in digital currencies is associated with high risk due to high fluctuations and the lack of a central entity.
  • Widespread rejection: The cryptocurrency is not yet legally accepted in some countries and websites, so it can be a little difficult to use.
  • Impossibility of refund: If you mistakenly send the cryptocurrency to someone, it is not possible to get it back. The only thing you can do is ask that person to return the money, but if that person does not respond to your request, you should forget about your money.
  • Storage of cryptocurrency: If you have stored your cryptocurrency on your computer or mobile phone, it is better not to forget your password and not lose your mobile phone. If you lose your coins, it is not possible to return them. That’s why most people use hardware wallets.

Digital Currency Popularity:

According to Google Trends, the popularity of the term “cryptocurrency” peaked in late 2017 and early 2018. This popularity has increased the demand in these time periods and the price of most digital currencies have experienced significant growth in this time period

Cryptocurrency storage method:

You must use digital wallets to store digital currencies. There are several types of wallets, including:

1: Hardware wallets like (Trezor, and Ledger Nano S)
2: Web wallets like (BitGo and BTC.com)
3: Software wallets such as( Atomic, Electrum, Jaxx)
4: Mobile wallets like (Coinomi and Mycelium)

5πŸ™Paper wallets)

Conclusion

Cryptocurrency & Blockchain Wallet is a new digital currency that is introduced internationally every day. Given the world today, where politics and inflation permeate much of the economy, digital currencies as a resilient tool can be a good option for investors. However, even if you are not interested in investing in this market, interesting concepts and innovations of this market in the future can attract more people to this field and invest in it.

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker