Blockchain

Blockchain and Cryptocurrency

Blockchain and Cryptocurrency

The discussion of blockchain cannot be complete without talking about cryptocurrencies. There are conversations about cryptocurrencies globally and Twitter is full of tweets like this one by Elon Musk - “Doge barking at the moon”. The tweet, apparently, improved the price of the Dogecoin cryptocurrency. But what exactly is cryptocurrency? It is a unit of exchange or a digital payment method that is cryptographically secured and can be used in online transactions for buying goods. They are based on blockchain technology and people can buy and store them in their blockchain Wallet.

Blockchain Wallet

A digital wallet that is used to manage cryptocurrencies. It is usually a software program that lets the users sell, buy, exchange or monitor their Bitcoins, Ethereum or any other digital currency. The blockchain wallet works on public and private key combinations. These are provided when a new wallet is created and functions like a username and password on any digital account. There are 3 levels of security in a blockchain wallet.   

There are different types of wallets as some are web-based or mobile and desktop based. Even hardware wallets embedded with security features are available. Some of them support single currency while others are good for multiple currencies. Some of the popular multi currency wallets are Zebpay, Coinbase, Ledger Nano S, Exodus, Atomic Wallet, Binance Wallet, BuyU.

You need one of these wallets for everything related to cryptocurrency management, including participation in an initial coin offering (ICO) for any cryptocurrency.

Initial Coin Offering

There are thousands of cryptocurrencies now and new ones are always coming to the market. When a new digital currency is launched, money is raised through Initial Coin Offering (ICO), a variant of Initial Public Offering (IPO) for company stocks. ICOs are considered highly risky as there is no regulation, leaving a lot of room for scams. The launch of a new cryptocurrency is only limited by the technology required. If a person or organisation can put the technology in place, they can launch their own cryptocurrency and its ICO.   

Bitcoin Mining

Bitcoin is the first cryptocurrency based on blockchain. Bitcoin is a decentralized ledger that we discussed earlier in the article. The specialised ledger stores transactional data about the amount transferred from one party to another. The bitcoins are mined using the consensus protocol of Proof of Work which is dependent on the computing power of the nodes. The consumption of electricity in mining is too high, and the electricity required to mine one Bitcoin is estimated to be 72 Terawatts. The high cost affected its popularity and use as it was originally intended. The idea behind Bitcoin was to find an alternative payment system that would be low-cost and independent of intermediaries like banks. But instead of being popular as a mainstream payment system, its popularity is much more as a digital asset. There has been significant interest in investing in popular cryptocurrencies like Bitcoin, Ethereum and Dogecoin. But a lot of investors consider it as just speculation without any real value.