Cryptocurrency

26Jun, 2018

Cryptocurrency is a purely digital currency, founded on computational code breaking” was modemized by
Satoshi Nakamoto and proposed “Bitcoin”. It is “a digital medium of exchange that has been designed to act like cash”. What made Bitcoin special was its ability to bypass reliance on any centralized mint replacing trust with cryptographic validity.

A cryptographic signature is allotted to each Bitcoin and its user, allowing the “entire chain of custody” to be known at any given time. Every transaction is “timestamped” and signed cryptographically by participants involved. The message, regarding the transaction, is converted into a distinctive “hash value ” through specific calculations. The network through which the transactions take place follows the Bitcoin protocol.

Transactions, then, are amalgamated into a “block”, collectively forming a “blockchain”. Hence, each time a block enters into the blockchain, the transaction is deemed as “settled”, eventually becoming a “permanent record”. This decentralized process of validation is termed as “mining”.

Nevertheless, Bitcoin, as a currency, is only as valhble as other people think it is. Despite being a growing technology, Bitcoin has not become the universal economic solvent. Firstly, it is because of high latency that transaction follows-it can take more than an hour for Larger transactions to clear. Secondly, it is virtually invisible and includes a process that is not particularly straightforward.

Thirdly, even if one has access to Bitcoin currency, it is tiresome to locate merchants who might be willing to accept them. Fourthly, the privacy of concerned parties also stands at a risk. Finally, when the mining operations are concentrated “in the hands of a very small number of people”, the threat of “radical degree of recentralization becomes inevitable.