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A Complete Guide to Cryptocurrency Exchanges for Beginners

So you have heard about cryptocurrencies, especially after the unbelievable market growth it caused worldwide in the last few years and was in news all the time. Whatever the coin may be, the first thing everyone wants is to get knowledge about cryptocurrency and to own it. This trading is done on platform ‘cryptocurrency exchanges’.

Now, choosing a cryptocurrency exchange to purchase can be a formidable and difficult process. Ultimately, there are more than 200 cryptocurrency exchanges today, with 24-hour trade volume in the billions.

And probably the most important tip before you start. Don’t trade with money that you can’t afford to lose! Really. Beginners do a lot of stupid things, like an investment of the whole savings. And the stupidest one is borrowing the money from family and friends and invest that into the bitcoin, litecoin, ripple etc. So please, always think the option that you could lose everything if you don’t know what are you doing.

If you are looking to trade in digital currencies then you should know about top crypto exchanges, list of cryptocurrencies and crypto exchange rates.

1.)What Is A Cryptocurrency Exchange?

A crypto-currency exchange is any mechanism that operates with other assets dependent on the trading of cryptocurrencies. Like a conventional financial exchange, the central function of the cryptocurrency exchange is to enable the purchasing and sale of these, as well as other, digital assets. It is also often known as Digital currency exchange (DCE).

A cryptocurrency exchange, or a digital currency exchange (DCE), is a company that enables clients to swap cryptocurrencies or digital currencies for other properties, such as traditional fiat money or other digital currencies.

2.) Different Types of Exchanges

Fiat – Crypto Exchanges

These exchanges allow you to buy a cryptocurrency directly using your fiat currency (a government-issued currency like US dollar or Pound). These are most popular with new users who are yet to explore the crypto market because it offers easy access to the cryptocurrency of their choice without much difficulty.

The issue with these exchanges is that they have little support and they offer less number of choice of coins. It is used as just an entry point by beginners.

Crypto – Crypto Exchanges

These exchanges allow you to trade a cryptocurrency for another cryptocurrency. It means first you need to buy a cryptocurrency on a fiat–crypto exchange and then transfer it to the wallet of the crypto – crypto exchange and then trade for the coin which you want to buy in the first place.

This is done by experienced traders who are actively trading between coins to profit quickly or want to buy smaller less known coins.

Peer-to-Peer Exchanges

In these exchanges, a buyer is matched with a seller and they exchange currency at their own agreements. Like one of the exchange Local bitcoins, where they match a buyer with a number of sellers, where the buyer has the option to choose the best price of the selection.

Also, they normally offer an escrow service( a financial arrangement where the third party holds and regulates the payment of the funds for two parties involved in a given transaction ) so that there is reduced risk for both buyer and seller.

Brokers

In these exchanges you can buy cryptocurrencies from brokers directly. The brokers set their own prices which could be higher or lower than market price. Here you need to be careful before trading with the

3.) Finding The Best Crypto Exchange

Now you know the different type of exchanges and you have made decision to get into the crypto world,

So it is very much important to find the best exchange to make the most out of this business. Before you start trading , there are some criteria you must check on these platforms to identify the most suitable for you. Let’s go through the most important ones.

Reputation :

Read about exchange reviews online (coinpedia). Check whether they have been ever hacked or have issues transferring the users money. Check if they have suitable trading tools and if other experienced traders trust them. You can also go through independent users comments on sites such as Reddit and BitcoinTalk.

Exchange Rates:

There are different exchange rates for different exchange platforms. This is the conversion rates for fiat currencies. Find those that have reasonable rates to save some money. You can find these fees on the sites’ platforms or from other users’ reviews.

Restrictions:

Some exchanges work only in specific regions or countries. Check if the platform is available to use in your country. You need to choose one that is supported in your country to avoid issues with depositing and withdrawing funds, especially if you plan to use wire transfer.

Limitations:

Check for any limitations on trading. There are some platforms which limit the amount you can trade until you complete the verification process. Then there are few exchanges that allows trade whether or not you have verified your account. Check also the ease and user interface. The highly liquid exchanges are some of the best crypto exchange platforms as many digital coins are available.You can check this info on the exchanges official websites.

Verification:

Most exchanges will ask you to provide identity(Govt issued ID) to exchange crypto on their site. This require you to upload your identity card and location details. For some you to need take photos of yourself holding your identity card. This verification is very important to prevent fraud. It is a way the exchange platforms to protect themselves from fraudulent traders whose aim is to deceit others. Also, the verification protects traders as you only get to interact with verified individuals. It reduces the chances of getting conned.

Fees:

Check the fees in the exchange. Ensure you carry out a required search on these as some exchanges have hidden fees. You must identify their deposit, trading and withdrawal fees. Keep an eye as there are some platforms that have unbelievable low fees such sites could be operated by conman just to lure you and get your money. On all the exchange official websites Information about fees is freely available.

Payment Methods:

Different exchanges support different payment methods. Some exchanges support debit and credit card transactions, bank wire transfer, PayPal, and others. Check the various options available in the exchange and their fees so you can choose from them. The more the payment options, it will be easy for you to choose.

Customer Support:

It is very important to have quick and helpful customer support. An exchange that has especially a chat that is available for 24/7 is the best since you can ask anything regarding your transactions at any time. Using emails can be helpful only if they are responded to on time.

How do Crypto Exchanges work?

Crypto swaps set currency prices, both coins, and tokens. The pricing of a cryptocurrency typically depends on seller’s and buyers’ behavior, although there are other variables that can influence the price.

Different crypto exchanges will have different choices and functions. Others are made for traders and others are designed for the prompt trading of crypto-fiat. Crypto exchanges, which are designed for daily traders, allow you to purchase crypto and sell it with fewer commissions than on crypto-fiat exchanges. Trading platforms also demand fees for cash withdrawal from the portfolio.

Crypto exchanges basically operate similarly to standard stock exchanges. The difference is that traders buy and sell assets, shares or futures, at a stock exchange to benefit from their changing prices, whereas traders use cryptocurrency pairs to benefit from the extremely volatile currency rates on cryptocurrency exchanges.

4.) Basic Functions of Exchange

Basically, a crypto exchange consists of following functions: Register/Login, Exchange market, Deposit and withdrawal, News and announcement section and support.

First you need to register yourself with valid email id.

Depositing Funds

If you want to sell Bitcoins online, you first need to deposit your funds in the particular exchange you wish to sell.

1) Go to the deposit page-> click on deposit beside the coin you wish to deposit.

2.) Next, click ‘Generate address’ and copy the address.

3.) Go to your personal wallet -> then input this address as withdrawal address on your wallet. Remember every coin has different address, if you deposit a coin to other coin’s address, you will lose all your funds.

After the transaction, go to the exchange site and check the amount you deposited.

Withdrawing funds

If you are selling Bitcoins online, you need to face the problem of withdrawing funds. The most common way is international wire transfer and top exchanges support this method. Recently, some exchanges have started to accept credit and debit card withdrawals.

Also, money can be transferred via SEPA(Single European Payments Area). It is a system designed to make international transfers easy between members of the European Union.

However, both of these systems have some glitches. Usually, depending on the country transfers take a very long time and also the amount of money being transferred, it can go up to four days to be processed. Moreover, both these systems attract additional charges.

1) Go to the withdrawal page-> click on withdrawal beside the coin you wish to withdraw.

2.) Next, enter address of the wallet where you wish to withdraw and quantity.

3.) After the transaction to your wallet -> check whether the coins are withdrawn or not.

Check bank charges before withdrawing. So, if you’re opening a bank account specifically for withdrawing money made on Bitcoin sales, you need to do your research and chose the bank that best suits your needs.

Differences Between Centralized and Decentralized Exchanges

Centralized exchanges can be used for fiat-to-crypto currency or vice-versa trades. They can be used to do trades between two separate cryptocurrencies as well. Although this may seem to cover all possible forms of transactions, there is also a need for another form of cryptocurrency exchange.

Decentralized exchanges are an alternative; they cut out the middle man, creating what is sometimes perceived as an atmosphere of “trustlessness.” Those kinds of exchanges act as peer-to-peer exchanges. An escrow service never retains properties and the trades are made solely on the basis of smart contracts and atomic swaps.

The main difference between centralized and decentralized exchanges is whether or not there is a middle man. Decentralized exchanges are less common than centralized exchanges and less popular.

What are the cryptocurrency pairs?

When trading a cryptocurrency on an exchange you will be using a trading pair. In most cases, people will be using BTC to trade against, but there are actually many trading pairs that you could use. Cryptocurrency trading pairs work by comparing the cost of one cryptocurrency for another.

Offering cryptocurrency or cryptocurrency pairing at this point is more popular for a centralized exchange. This will allow customers to transact for ether tokens, for example, bitcoin. Fewer exchanges sell fiat currency / crypto-currency pairs, which would make, say, USD exchanges for bitcoin.

Conclusion

A centralized exchange is still the most common way of doing so for investors looking to access the crypto-currency space. When choosing an exchange, it’s crucial to bear in mind the number of variables that will affect user experience, including which pairs are exchanged, how high the amount of trading is, and the exchanges whose security measures have been implemented to protect their clients.

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When will Satoshi Nakamoto reveal himself? Is he even real?

The crypto-space has developed into such a wide universe. The technology of blockchain has evoked creativity, apprehension, uncertainty, and curiosity. These views are as much for fans as for critics. The crypto world today has seen so much while so much remains unknown. There are some of the unknowns like who is Satoshi Nakamoto?

The emphasis is on trying to solve the biggest mystery behind the most common cryptocurrency, Bitcoin.

In this article, we will cover the complete details on who exactly is Satoshi Nakamoto? Let us look into this review in detail now.

Who is Satoshi Nakamoto?

Satoshi Nakamoto is the name used by the assumed pseudonymous individual or individuals who invented bitcoin, wrote the white paper on bitcoin, and produced and implemented the initial implementation of reference for bitcoin.

Nakamoto also invented the first blockchain database as part of the implementation. Nakamoto continued to be involved in bitcoin development until December 2010. Many people claimed to be or were pretending to be Satoshi Nakamoto.

Development of Bitcoin

The first move in establishing Bitcoin occurred in 2007, where Satoshi Nakamoto wrote the Bitcoin Code. In 2008 the founder of Bitcoin published a white paper via an online domain Open source P2P money. Satoshi explains in the paper how Bitcoin can operate using computer networks. The purpose of the digital transactions was to end third parties. Bitcoin was published to the public in 2009.

Hal Finney became the first Bitcoin miner to download a blockchain. He later mined ten Bitcoins which made him one of Bitcoin’s earliest users. Wei Dai, Nick Szabo, and Gavin Andresen were among the other early Bitcoin enthusiasts.

Possible Reasons to Choose Anonymity

1) Government Risk: Challenging the institutions of government is difficult. It can leave you vulnerable to all kinds of attacks. Hence Satoshi Nakamoto realized this problem as a visionary. Therefore he preferred to remain anonymous for his own benefit.

2) Caution: There were many attempts to build digital currencies before Bitcoin and the people involved were always getting into a bind with authorities. Many networks were shut down, and terrorist funding theories swirled around. These reasons might have made the real Satoshi Nakamoto want their identity to be covered under a pseudonym.

3) Decentralized nature: Bitcoin’s development has paved the way for decentralized economic structures. One of Bitcoin’s most important developments has been the possibility of peer-to-peer transactions with the absence of any intermediates. Thus, Nakamoto handed over the Bitcoin source code to other developers.

4) Privacy: Satoshi Nakamoto may have been one of those who enjoyed a peaceful life. Attention aims only to bring suffering to their lives. But he decided to stay in the anonymity enclosure. It did not matter the popularity and publicity which came with it. It didn’t matter whether he was to be praised or not, as long as the revolution was happening.

Top Candidates to be Satoshi Nakamoto

Nick Szabo

Nick Szabo is a decentralized currency enthusiast and has written a paper on “bit gold,” one of bitcoin’s precursors. He is known to have used many of the pseudonyms. Nick Szabo has repeatedly rejected the associations that find him to be Satoshi Nakamoto.

But, when examined, his writing on ‘bit gold’ reveals similarities with the original white paper on Bitcoin. In addition, being among the first to test Bitcoin, positions him behind Satoshi Nakamoto as a top contender to face.

Hal Finney

Hal Finney was a cryptographic pre-bitcoin aspirant, and the first person to use the application, file bug reports, and make improvements.

Exactly the same day they were released, Harold Finney mined the first ten Bitcoins. He may just as well be Bitcoin’s founder doing business by himself. Moreover, the fact that he only proposed progress on Bitcoin after Satoshi Nakamoto is somewhat evidence. Hal Finney possibly may also turn out to be Nakamoto.

Dorian Prentice

With this birth name as Satoshi Nakamoto, Significant media attention has been drawn to Dorian Prentice. His history as a libertarian and physicist puts him in a position to become the Satoshi Nakamoto

Goodman pointed to a variety of details that circumstantially suggested that he was the bitcoin inventor, in addition to his name. He was trained at Cal Poly University in Pomona as a physicist. He has further worked as a system engineer and as a computer engineer on defense projects for financial information services companies.

Craig Wright

An individual pretending to be working on Bitcoin has expelled the computer scientist. The anonymous tip claimed that Craig Wright is Bitcoin’s founder in the email sent to Gizmodo.

Craig Wright further said he was the Satoshi Nakamoto in 2016. The Australian Government, however, responded with a raid on his house. Craig retracted its comment after that. The proof evidence he said he had retracted.

Conclusion

In closing, there remains a mystery surrounding Bitcoin’s founder and creation. Satoshi Nakamoto will, at least for now, remain unanswered. Nonetheless, certain aspects remain so simple in all the confusion that Bitcoin technology is a formidable development.

Bitcoin has developed into the revolutionary concept it was imagined to be over the years. It has created a global forum in the Bitcoin world. A network that is fast, scalable, reliable, and safe for your online transactions. Furthermore, the creator’s identity might not be as important as Bitcoin’s future research. Enthusiasts argue that the opportunity is huge with the blockchain increasing.

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Is it wise to invest time in learning about blockchain now?

Think Smart, Learn Blockchain Before Investing in it

By the end of this article, you will understand Blockchain Technology – Cryptocurrency and the other necessary factors that are connected to this ecosystem. You will also know topics that are very important for any beginner or pro who is interested in Blockchain and Cryptocurrency.

In this contemporary and fast swelling world of the internet, gathering knowledge on the latest trending technologies is becoming imminent. And if the technology enables you to invest your funds, then having a deep knowledge is mandatory and primitive. We will have a detailed study of one such technology which has accumulated much traction in recent times.

2020 has been a year for the blockchain industry, New technological use cases, Smart contracts, Defi, and the aggressively growing Interest of millennials.

Is Blockchain, Bitcoin, Cryptocurrency on your mind? Are you struggling to understand how Blockchain operates? Are you looking for core information about this ecosystem that will help your investment ideas? You’ve been on the right Page and at the right time.

Blockchain! A Term that is surfacing on the Internet, Social media, News, and grabbing high volume of attention globally for more than a decade now.

Blockchain & It’s Working

Blockchain technology is referred to as ‘Distributed Ledger Technology’ or ‘DLT’ is a technology that allows digital information to be distributed but not copied. In this technology, the digital information is transferred in the form of ‘Blocks’ which is stored in the public database called ‘Chain’.

Blocks in the blockchain are specifically made up of digital information like transaction date, participant details, etc. Each block stores a unique code called ‘Hash’ which distinguishes each block from one another.

How does the blockchain Operate?

Consider a spreadsheet that can be easily shared with a network of computers where-in thousands of duplicates can be created. You update any data in your spreadsheet and it gets updated on all the computers within the network. Blockchain works similarly.

Whenever a new transaction is requested on the blockchain network, a new block is created with the details of the transaction. This block is given a unique Id called ‘Hash’. The block is sent to all nodes in the network for the confirmation of the transaction.

The nodes validate the transaction and share their Proof-of-Work. Nodes receive a reward for a successful proof of work. The transaction is completed by adding the block to the existing chain.

Why is Blockchain Untampered and Untraceable?

Every block contains three main information: – Data, Previous Hash value, and current Hash value.

When a person called A has to transfer $100 to a person B. A block is created with the details of the transaction and a unique hash value. Further, if person B transfers $50 to person C, a new block is created with the previous hash value and the new hash value is calculated and stored.

As we can see, every new block carries the Hash value of the previous block. And for this reason, the possibilities of any illegal activities would be nullified. If in any case the transaction is altered, the hash values are not replaced but the new block is created with a new hash value.

Find it Interesting -> Read more about the Blockchain technology features, applications, drawbacks, Recent updates, the future, and much more.

Blockchain technology revolutionized the banking and finance markets, cybersecurity space, supply chain management, artificial intelligence, etc. It has been seen that since after its launch it began disrupting many industries through its technological features.

Among all such Use cases of Blockchain Technology, Cryptocurrency (Finance) is the First and Majorly used domain.

Let’s Read about

The First Cryptocurrency – Bitcoin, Built on Blockchain Technology

Bitcoin is the first-ever invented Cryptocurrency built on Blockchain Technology. It operates in a decentralized, Peer-to-peer network system with no central authority or bank to manage funds or transactions. BTC is the Symbol of Bitcoin identification.

Bitcoin was created in 2008 by an anonymous person whose identity remains a mystery for over a decade. It is rumored that a Pseudonym named “Satoshi Nakamoto” ( A person or group of people) is believed to be the creator.

It was officially released in 2009 with a Whitepaper( A Document contains structural, functional, and organizational details) as an alternative to the existing fiat money banking system.

There are only 21 Million Bitcoins (21,000,000) ever created, so this is the Maximum supply of bitcoin. Bitcoin transactions are processed using a method called “Bitcoin Mining” wherein a global network of computers use complex mathematical algorithms to verify each BTC transaction to execute the blocks and are rewarded for successful mining.

Today, We have over 7.1 million active Bitcoin users globally who are able to easily store and exchange it easily in multiple forms over multiple platforms under the ecosystem. Just like and more than the normal Fiat currency does.

Bitcoin today is trading at $ 50,109.0000

Bitcoin is not a complex term to understand, it’s Simple and Worth. Read more about Bitcoin working, history, purpose, advantages / Disadvantages.

As of 2020, we record more than 6000 + active cryptocurrencies like bitcoin, which may have different technical setups but all function the same way.

These different cryptocurrencies other bitcoin are called Altcoins ( alternate coins) and are built on Standard blockchain or a blockchain ledger system of their own.

Some of the Popular altcoins are Etheruem(ETH), Ripple(XRP), Litecoin(LTC)……. Altcoins built on Ethereum

The whole blockchain network is depending upon the block confirmations done by the miners(discussed below). And the miners use concepts like Proof-of-Work and Proof-of-Stake to compete among themselves. Let's know more about these concepts.

Proof-of-Work and Proof-of-Stake

Proof-of-Work(PoW) is an original consensus algorithm in a blockchain network. This algorithm is used to confirm transactions and add up new blocks to the blockchain. With PoW miners compete with each other to complete the transactions so that they receive the rewards.

Basically, miners solve a puzzle to form a new block on the blockchain. The complexity of the puzzle depends on the number of users, the current power, and the network load. The most famous application of PoW is Bitcoin. Here the puzzle is the Hashcash and the average time taken for PoW and to create a new block is 10 minutes. The other cryptocurrencies also follow a similar system.

Proof-of-Stake(PoS) concept gives more mining power to the person with more coins. In simple words, if a miner has more bitcoin or any altcoin, he/she can mine or validate more block transactions.

Crypto mining requires immense computing power to solve different puzzles which are nothing but cryptographic calculations. The computing power consumes huge amounts of electric resources. Sometimes, miners sell off their rewards in order to combat the electricity bills.

Therefore PoS attributes the miners according to their holding with an aim to address this issue. For an instance, if a miner possesses 3 percent of the Bitcoin available then he can mine only 3 percent of blocks.

Initial Exchange Offering(IEO)

In an IEO, the cryptocurrency exchange raises funds on behalf of the start-ups. Unlike ICO, the IEO audience is limited to the users of that particular exchange. IEO allows users of the platform to acquire shares in the form of tokens.

IEO is considered a more secure platform to invest as they are carried out with the help of a third party. All the projects that wish to launch an IEO have been examined thoroughly as the exchange reputation might get a pullback with scam projects being listed for raising funds.

Cryptocurrency Exchanges

Cryptocurrency exchanges are online platforms just like the stock market trading sites where buyers and sellers are connected to exchange Cryptocurrencies for other Cryptocurrencies or regular fiat currencies with the current market price.

Cryptocurrencies Are The Hot Topic Of This Century And Quite An Intimidating And Intrigued Topic That Everyone Wants To Learn About. Now If You Are A Beginner Then It Is Strictly Advised That Do Not Perform Any Kind Of Trading Or Exchanges Without Having Complete Knowledge About The Exchanges.

Cryptocurrency exchanges are online platforms just like the stock market trading sites where buyers and sellers are connected to exchange Cryptocurrencies for other Cryptocurrencies or regular fiat currencies with the current market price.

These exchanges are generally owned by a team or a person, but they also come from Decentralized exchanges that operate without any central authority in a decentralized peer-to-peer system.

The Exchange platform offers multiple methods of exchanging cryptocurrencies.

There are 2 main types of Exchanges

· Centralized exchanges(CEX)

Centralized usually means an authority keeping a close eye on the transactions and also securing the assets on behalf of the buyer and seller. Therefore,a Centralized exchange is a place where the trade of cryptocurrencies takes place within the monitored environment. The transactions are not recorded on the blockchain.

The customers are also required to submit and verify their identity details in order to trade on this platform. The more details the user provides to the exchange, the more benefits are provided including high withdrawal limits.

Eg of Centralized exchanges are Coinbase, Binance, LocalBitcoins, etc

· Decentralized Exchanges(DEX)

Decentralized exchange, on the contrary, works the same as the centralized exchange but without any interference from third parties. The trader is not required to verify himself, he can keep his identity anonymous and trade.

Unlike the CEX, DEX does not charge any fees for using the platform without having any possibility of a hack. However, DEX is considered more volatile as the control is in the hands of users rather than any platform. All the transactions are recorded on the blockchain.

Cryptocurrency Wallet

A cryptocurrency wallet is a virtual device or physical medium that is used to store and secure cryptocurrencies. The Wallets also allow you to Send and Receive coins to a similar address.

Crypto wallets function on Cryptographically encrypted Public and Private keys that Identify, store, and protect your assets. A wallet can support multiple currencies, each identified by its Unique address.

There are basically two types of crypto wallets

· Hot Wallets or Online Wallets

Hot wallets are virtual devices that are used to store cryptocurrencies. As it is connected to the internet, it is easy to set up and access. But at the same time, it has more chances to get infiltrated or hacked.

The hot wallets are provided by the centralized exchanges also. User can open their account on the exchanges and store the cryptos.

· Cold Wallets or Offline Wallets

Cold wallets as the name suggests are the external devices used to store cryptocurrencies. It works similarly to any USB device. But it is considered the most secure way to store your cryptocurrencies.

However, cold wallets cannot be accessed at your fingertips to carry out any immediate transactions. The most trusted offline wallets are Tresor Wallet.

Cryptocurrency Mining

Cryptocurrency mining is a process of verifying the transactions on the blockchain and adding it to the ledger. This is done by programmed computers(miners) by solving some complex equations.

Each transaction initiated on the blockchain must be verified by multiple computers in the mining network to complete the transaction and then add these records to the Blockchain ledger called Proof-of-Work ( POW).

The mining process is basically new coins in exponential value which is the reward for miners on each successful verification.

Bitcoin mining, altcoin mining, or Cryptocurrency mining has been a very popular term since the time of the invention of bitcoin, it involves interesting factors like halving, Pool, Schemes.

Follow our detailed guide in Cryptocurrency mining to understand more about mining and how to start your own mining setup

What is Defi – The Decentralized Finance

Defi – Decentralized finance is a financial application of the decentralized ecosystem, where-in one can get access to a wide range of Defi features like staking, lending of cryptos, etc. Generally built on Smart Contracts – Blockchain, Defi module can be used to develop a decentralized alternative to any existing financial services.

Defi has emerged to be the most prominent use case of blockchain technology, as all the financial services can now have easy access to decentralize themselves for an untampered, no-hackable, Wide, and high return generating revenue model.

As in decentralized exchange, Defi also has no room for a third party. The buying or selling or lending happens between the two parties and all the terms and conditions are mentioned in a ‘Smart Contract’. The smart contract would be considered as completed only when the conditions in the contract are completed.

[dipteshblogger]

What is Blockchain?

Unless you have been on a long nomadic trip or, have been living under a rock, you would have come across a term called Crypto-currency, the likes of Bitcoin, and Ethereum. The Transactions of these crypto-currencies are carried out digitally since these are virtual currencies. This is where Blockchain technology comes into play.

Blockchain is a decentralized, distributed ledger technology that records the origin and existence of digital assets using a peer-to-peer network.

In simple words, a large set of a database that permanently records all the Digital currency transactions. Transactions take place on a peer-to-peer basis unlike on centralized data systems of banks. These data blocks are added only after all the other nodes authenticate the transactions and reach a common consensus.

It is sometimes referred to as Distributed Ledger Technology(DLT), which aids the distribution of digital asset transactions (not copied or transferred). This revolutionary technology is a saviour, which the digital assets rely on for transparency. Blockchain reduces the risk of fraud and dependence on third-party verification.

Block consists of data related to digital asset transactions, a unique hash number, and a Unique Blockheader. The succeeding block consists of the hash number previously formed block. These blocks are connected such that it becomes a chain of blocks. Hence named Blockchain.

Let’s consider an Analogy:

Blockchains can be considered as a large set of Data storing structures that are identical to spreadsheets, but you cannot edit the data once that enters, and any changes to that data should constitute a new block, or append!!

These sets of data are not stored in one single centralized server but on a lot of its user’s devices, hence distributed. Of course, there are more functionalities to the blockchain, but this must give you a very simple idea to define this not so easily definable technology.

History of Blockchain

The idea of blockchain protocol was first proposed by Cryptographer David Chaum in his 1982 dissertation “Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups.

However, the year 1991 was regarded as important for the blockchain, when computer scientists Stuart Haber and W Scott Stornetta introduced a practical solution for timestamping digital documents so that they could not tamper.

The technology or the system uses the secured chain of Blocks backed by the cryptography method to store the timestamp documents. MERKLE TREE in 1992 came up with the Blockchain’s Design to make it more efficient by allowing several documents to be collected and stored in one block.

But unfortunately, the patent lapsed in the year 2004. After this, Stefan Konst published his theory of cryptographically secured chains, plus ideas for implementation. Computer scientist Nick Szabo works on ‘bit gold’, a decentralized digital currency. Hal Finney, a computer scientist, and Cryptographic analyst introduced the Reusable proof of work (R PoW). It can be considered as the earliest prototype for Blockchain technology.

However, it took almost three decades to see the first blockchain implementation in the real world by a person (or group of people) known as Satoshi Nakamoto in 2008. Nakamoto significantly improved the design using a Hashcash-like method to timestamp blocks without requiring them to be signed by a trusted party.

Types of Blockchain

There are at least four main types of blockchains that are in use: Public blockchains, Private blockchains, Hybrid blockchain & Sidechain.

1. Public blockchains

As the name suggests, these types of blockchains have no access restrictions. These are usually open-source and are transparent to everybody with Internet access. Anybody can take part in the process of validation to submit the proof of work and maybe incentivized proportionately!!

Another very important feature of a public blockchain is that it is designed to be not owned by an organization or an individual, hence completely decentralized.

Ex: Bitcoin blockchain, Ethereum blockchain, etc.

2. Private blockchains

Private blockchains, also called permissioned blockchains, unlike public blockchains, have restrictions on who can access the network. These are administered by an administrator, who approves the access of users in the ecosystem.

Primary users may include individuals or companies who want their transactions or data to be secure and only accessible by the selected few, Hence centralized. The advantage of private blockchain over the public blockchain is that the consensus or verification mechanism takes less time.

The similarities between blockchain are that these perform similar functions :

· Both function as an append-only ledger- where no data can be altered or edited once validated.

· Both blockchains types have a complete set of transaction ledgers on each node, Hence distributed over peer-to-peer.

· Validation is only approved after the majority of the nodes reach a consensus.

Examples: Ripple (XRP) and Hyperledger

3. Hybrid blockchain

Hybrid blockchains are a combination of public and private blockchain systems depending on the needs of the users and the applications. These types are best for companies that are working on some secret projects hosted on a private blockchain, but also have a product that needs to be used by their customers, hence should be a public blockchain.

4. Sidechain

Sidechains can be classified to be blockchain ledgers that can run in parallel with the primary blockchain. Entries from primary sources can be stored and linked if needed, with a different algorithm. It could be used as a backup blockchain.

How does Blockchain work?

Blockchain is a distributed, decentralized public ledger which is a continuously appending list of records that are stored in the form of blocks. These blocks in a blockchain are secured through cryptography, which keeps the confidentiality of the transactions intact.

A blockchain is a time-stamped series of immutable (tamper-proof) records of data that is not managed by a central authority but managed by a cluster of computers, called nodes.

So imagine, John wants to invest in digital assets, so he has to carry out transactions, and he does that on an electronic device! When John requests blockchain for a transaction, he gets connected to a person directly without the interference of any third party like a bank. This is called a peer-to-peer system.

A Block is initiated for storing the transaction details. The data formed at this level is sent throughout the network to identify the transaction’s authenticity. The first Device(node) that verifies the transaction gets awarded.

When John’s transaction gets verified, it becomes a part of this database permanently that stores all the transactions. This database is used additionally to validate other such transactions on a peer-to-peer network, if necessary.

If John wants to sell his digital assets to another person, the original block created while he purchased the digital assets, will remain the same. To record the new transaction between John and the buyer, a new Block will be created on the Blockchain network with another unique number.

Let’s consider an example: A Scientific Research Lab, that is conducting trials for a vaccine against a deadly virus! Every iteration of the vaccine trial is to be recorded to observe the progress! If the data of vaccine trials are saved on a server database, there are chances that the data stored may get formatted, deleted or can be erased/manipulated by Hackers.

But in Blockchain, one can neither erase the data that is once stored nor can they manipulate it. It is so safe, that it has not been hacked despite all the efforts. Any changes to the data result in the creation of a new block, and the previous version of that data remains in its original form. Mainly, this data can be accessed from any part of the world, if the system is connected with the blockchain platform.

Also, the transaction when completed produces data related to transactions and will be stored in blocks, which are chained together with the help of the Hash number of the previous block.

Regarding safety, the network is decentralized, no single person can alter the asset according to their specific needs but has to be validated by the majority of the nodes. As long as a single organization or a person owns the majority of the assets over the blockchain network, the assets on the network cannot be modified or altered. Hence it is safe.

Evolution of the Blockchain technology

All the inventions need timely upgrades to solve the issues related to the previous version and for better performance, blockchain technology also has been modernized over time and requirements.

Bitcoin/Currency

Cryptocurrency, mainly Bitcoin, is the first use case of blockchain technology. It allows financial transactions based on DLT.

Smart Contracts

After the blockchain technology was separated from bitcoin to discover more use cases, the Ethereum blockchain came into existence aiming to execute smart contracts. It is intended to reduce the cost of verification, execution, and fraud prevention. Smart contracts are the predefined computer programs that contain the terms and conditions of the agreements between the two parties. They cannot be altered or changed.

Dapps

DApps or decentralized applications work similar to other normal applications but, the only difference is that Dapps work on peer-to-peer networks such as blockchain.

Blockchain for Business

Blockchain 4.0 aims at implementing blockchain 3.0 in real-life commercial usage. Some of the real-life use cases are supply chain management, financial sectors, and healthcare.

Different types of consensus protocols are used for validating transactions on the blockchain

A consensus algorithm is a procedure through which all the peers of the Blockchain network reach a common agreement about the present state of the distributed ledger. In this way, consensus algorithms achieve reliability in the Blockchain network and establish trust between unknown peers in a distributed computing environment. New blocks in the blockchains are added only after the transaction details are verified and the consensus is reached.

Here are some of the algorithms designed:

1. Proof of Work (PoW)

2. Proof of Stake (PoS)

3. Delegated proof-of-stake

4. Proof-of-Authority(PoA)

5. Proof-of-Elapsed-Time(PoET)

Benefits Of Blockchain in Cryptocurrency

· The need for a physical or trust-based validation process is eliminated.

· Better speed of transactions.

· Better connectivity in a peer-to-peer system.

· Transactions may be carried out irrespective of time, location, unlike banking processes.

· Accessible from anywhere in the world.

· Lower transaction charges. Lower transaction failure risks.

· No risk of double-spending.

· Less fear of account suspensions.

· No need to secure a minimum balance to carry out transactions.

Future of Blockchain

Blockchain has advanced over years and has proved its trustworthy technology. It is easily scalable as a data structure. Blockchain can be used by banking sectors, as Card payment transaction ledgers, in stock markets for keeping a record of stock delivery and verify with ease.

Blockchain enables us to perform more transactions digitally and reduces the risks involved in the present system. The current financial system works on the trustworthiness of the financial institutions or the governments.

The Blockchain system reduces the transaction charges significantly since the verification is done by algorithms in a matter of minutes. without third parties such as banks and financial institutions.

Possible use case scenarios of Blockchains in the Future:

· Maintaining medical records of the patients in hospitals

· Payments or asset transfers around any part of the world

· Real-time IoT operating systems

· Personal identity security

· Anti-money laundering tracking system

· Supply chain management and logistics monitoring

· The voting mechanism for democratic countries

· Keeping records of governance or history

· Advertising insights Original content creation

· Cryptocurrency exchange

· The real estate processing platform

Final Thoughts:

Blockchain, since its inception in 2008, has proved its worth over the current systems in place which is less efficient. Understanding the importance of technology, many central banks and governments have shown interest to study and adopt blockchain for good.

Although there is room for improvement, it is to be observed how technology will be implemented by various beneficiary industries!!