What is Cryptocurrency, Blockchain, Nodes, Cryptography

 

What is Cryptocurrency, Blockchain, Nodes, Cryptography 

 

 

Cryptocurrency is a digital or virtual currency that can’t be seen or touched but has a certain value attached to them. There is no physical coin or note. It is a medium of exchange and is traded online for goods and services.  Let’s take an example to understand cryptocurrency. Think of a casino where you have to buy tokens or chips to play a game. You’ll need to exchange real currency for the tokens or chips. In the same way, many companies have issued their own cryptocurrency currencies and you need real currency to buy them. 

Cryptocurrency is a digital payment system that doesn’t rely on banks or any central authority to verify transactions. Cryptocurrencies typically use decentralized control as opposed to centralized digital currency and central banking systems. Each cryptocurrency works through distributed ledger technology, generally blockchain technology, that serves as a public transaction database. Cryptocurrency payments are purely digital transections to an online database that describe specific transactions.

 

Cryptography:-

Cryptocurrency is secured by cryptography, which makes it almost impossible to counterfeit.  Cryptography is the science or process of keeping information safe and secret by changing it in codes so that only the sender and intended recipient of the information can view its contents. Thus a currency that uses cryptography is known as cryptocurrency. The term is arrived from the Greek word kryptos, which means hidden. It is similar to encryption, which is the act of changing ordinary text into what’s known as ciphertext and then changing again  it into ordinary text upon arrival.

 

Blockchain:-

Blockchain is a type of database. It is different from a typical database. it stores information or data in blocks that are then chained together. When a piece of new information or data comes, it is entered into a new block. When the block is filled with information or data it is chained onto the last block, which makes the information or data chained together in chronological order.

 

Centralized:-

If a cryptocurrency is created or minted (Known as mining) or issued by a single issuer, it considered a centralized cryptocurrency. Suppose if a company has a server comprised of 100 computers with a database holding all of its client's account information and transaction information. Suppose this company has one or more warehouses having all of these computers and has full control over each of these computers and all the information or data stored within them. Then it is called a centralized system. It's mean if the data stored in the system is altered by the company or a hacker, there is no way to know the alteration. If there is a backup they may easily alter the backup also. These types of cryptocurrencies are called private, centralized blockchains-based cryptocurrency.

 

Nodes:-

Cryptocurrency uses thousands of computers to store its transactions data, if each computer or group of computers which hold its data is in a different geographic location and all are operated by separate individuals of people then these computers’ networks are called nodes.

 

Decentralization:-

In a decentralized blockchain, each node has a full record of the information or data since its inception. If one node has an error in its data it can use the other thousands of available nodes as a reference point to correct its data or information. Because there are thousands of nodes within the network, so no one can alter information held within it. Because alter the information one needs to hack at least 51% of nodes. If anyone tries to tampers with any data, other nodes would cross-verify each other and easily pinpoint that the node with the incorrect information. This is the reason, decentralized blockchains are unbackable, it means the data entered is irreversible and cannot be changed.

Written by Akash Tiwari

Word Cunt - 630

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