Simple Explanation of Blockchain and Cryptocurrency
Currently, the financial system is working underlying that bank is the party to validate the transaction by checking the balance in your bank account and making sure you are legit to perform the transaction. This transaction also comes with a huge amount of money if you transfer money overseas. Sometimes, there is an issue that makes your transaction fail due to technical issues, account hacked, transfer limit, or high transfer fee, etc. This means that all transactions are controlled centrally by banks and the government. The ugly truth about fiat money printed by the government is that the purchasing value of fiat will decrease over time due to inflation.
To solve this problem, blockchain technology is an easy way to enable transactions without having to deal with banks, visas, or third-party applications. The currency which is operated on the blockchain is called cryptocurrency.
For example, Bitcoin (BTC) Ethereum (ETH), Cardano (ADA) are among the famous cryptocurrency running on blockchain technology. A cryptocurrency is a form of digital or virtual currency that is immune to counterfeiting and doesn't require a central authority like banks to validate the transaction. Furthermore, it's protected by strong and complex encryption algorithms.
Blockchain can be defined as a collection of records or ledger in which each block is linked with each other and strongly resistant to alteration with the protection of cryptography. Ledger inside the blockchain is distributed all around the world and everyone can have a copy of it but doesn't the real identity of the person that does the transaction. Performing a transaction in blockchain technology is considered as adding a block to chains in the network that each block represents a transaction. In order to validate the transaction is legit to execute, blockchain uses miner as the main power to do the work. Miner is the computer that uses computation power to solve complex mathematic problems in order to win the chance to add a block that represents the transaction into the network. The miner will receiver a coin as a reward for helping the blockchain community.
WAY MORE TO EXPLAIN, HOPE THIS IS THE SIMPLE ONE.
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SETHA THAY
Software Engineer & Project Manager. I am willing to share IT knowledge, technical experiences and investment to financial freedom. Feel free to ask and contact me.
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