The early internet dealt with intangibles. You sent, or received emails, corresponded on forums, read and distributed articles. This modern internet deals with assets, your most valuable immediate items that you can touch and want to protect. These assets are stored in encoded form on a network-to-network chain called the blockchain or ledger, where each participant sees who you do business with. This not only protects your business dealings and prevents theft, but, also, simplifies your affairs, quickens the process, reduces errors, and saves you from hiring a third party, such as a banker or accountant to legitimize your deals.
One of these assets is money, or crypto currency, which is money in digital form. The money is encoded as 16-string signature, which buyer or seller decodes in order to complete the transaction.
The most famous of these digital currencies is Bitcoin, but there are other kinds too, such as Litecoin, Peercoin, and Dogecoin, among others, where you use an electronic coded address to make the transaction.
How Does Cryptocurrency Work?
This digital currency gains its security by being stored on a vast digital ledger, called a blockchain. This blockchain is like a vast public ledger, where all confirmed transactions are included as so-called “blocks”. As each transaction, or block enters the system, it is broadcast to the peer-to-peer computer network of users for validation. In this way, all users are aware of each transaction, which prevents someone stealing your money and also prevents double-spending, where someone spends the same currency twice.
The blockchains are organized and transported by a process called “mining” which also creates more cryptocurrency.
What is Mining?
Mining, or processing, keeps the Bitcoin process secure by chronologically adding new transactions (or blocks) to the chain and keeping them in the que. Blocks are chopped off as each transaction is finalized, codes decoded, and bitcoins passed or exchanged.
Miners can also generate new bitcoins by using special software to solve cryptographic problems. This provides a smart way to issue the currency and also provides an incentive for people to mine.
The Future of Fintech
This decentralized blockchain system is going to change your life from the way you transact business or manage assets, to the way you use your machines, vote, rent a car, and even prove who you are. Along the way, it will transform banks and other financial institutions, hospitals, companies, and governments among others. Experts predict the blockchain could become a powerful tool for improving business, conducting fair trade, democratizing the global economy, and helping support more open and fair societies.