Cryptocurrencies and blockchain are two terms widely used and less understood. Cryptocurrencies and its integration with the blockchain technology is vast spectrum to explore as it is a combination of proven technologies, virtual values, and the internet.
Blockchain is a decentralized technology which is controlled by no centralized authority and runs publicly while it stores all the transactions processed in its chain in the form of digital ledger. The transactions carried on this technology have a denomination of a particular value which is computerized and is referred to as ‘cryptocurrencies’.
Let’s understand this in a simpler form, Bitcoin [BTC] the most known term of the cryptocurrency world is a digital form of money. It runs on the blockchain technology and all the transactions of BTC are stored on the blockchain which is available openly.
Example: When A transacts $100 worth of BTC to B, the history of the particular transaction is recorded and stored in the ledger on the blockchain. Every block stores a particular amount of data and is connected to the next block in the chain. There are nodes [computers] that validate the transaction, they check if A has $100 to send to B and if the transaction is valid by solving a mathematical puzzle that allows it to validate.
Further, the transaction is validated and completed as it is stored on the blockchain. The transaction approved cannot be tampered or changed because it would indicate that the transactions carried after would have to be re-done.
This $100 BTC transaction between A and B can be viewed by anyone, although no name, age, location or any personal details of the participants will be displayed on the network apart from their wallet addresses.
The blockchain is also utilized and is being explored by Fintech, Banking, Agricultural and many more industries for multiple use cases. Besides transacting value to the users, Bitcoin can also be used to buy, sell and trade goods/commodities.
As many companies were inspired by the technology of Bitcoin, they themselves found their own cryptocurrencies and lead the game further. A few examples of cryptocurrencies in the market are Ethereum [ETH], XRP [XRP], Bitcoin Cash [BCH], Stellar Lumens [XLM] etc. These cryptocurrencies are based on their own technology which is mimicked from Bitcoin’s blockchain.
The cryptocurrency market chart keeps changing due to the volatility of cryptocurrencies, and regular day sort of looks like this:
Every cryptocurrency holds a particular value based on the principles of economics. Their price keeps fluctuating according to their demand and supply ratio. The lesser the demand the lower the price falls the higher the demand the more the prices rise. The demand depends upon various factors of economics, as observed in cryptocurrencies the demand factors are a bit different from the conventional. Factors such as popularity, media influence, technological progress, political advertising, security, social adoption etc play a major role.
It is humanly impossible to take into account all the factors affecting demand and analyze the recorded charts for investment purposes. So people depend upon several insight providers and portfolio managers or just rely on their own understanding of the market.
Well, this is what the fuss is about. Got any questions that I could answer? Hit me up on any of my social networking accounts.
Signing off, hope y’all had a great read!
What are cryptocurrencies and blockchain exactly about? LET’S UNDERSTAND THE FUSS! was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.