Elon Musk has taken it upon himself to create tidal waves in the crypto market with new comments on new cryptocurrencies every day. Bitcoin prices showed substantially when his company invested a staggering 1.5 billion US dollars in Bitcoin. He declared himself a Dogecoin enthusiast. His recent comments regarding the negative environmental impact of Bitcoin mining, since the Bitcoin network uses a lot of nature’s nonrenewable sources of energy, may have adversely affected the value of Bitcoin. The value of a single Bitcoin dropped from 60000 US dollars to below 50000 US dollars.
There is ambivalence regarding the role of cryptocurrency in the improvement of the standard of transaction process across the world. While several countries like China and India have questioned the role of cryptocurrency as actually contributing to the progress of the nation. Bitcoin and other cryptocurrencies because they grant the users with enormity have been abused in conducting illegal transactions. Cryptocurrencies have been linked to the famous silk route which is a hub for illegal trading of drugs and ammunition.
However, countries like America and Canada hold crypto trading and investment legal. These governments allow cryptocurrencies to exist as a venture that has the potential to improve the national market. To understand whether cryptocurrencies like bitcoin are secure for transactions we have to understand how the blockchain network works in various cryptocurrencies
What is Bitcoin?
Bitcoin uses the revolutionary blockchain technology which allows the ledger to be accessed at various points all over the world at the same time. This blockchain technology enables the decentralized ledger which makes Bitcoin faster and more efficient than the currency that is circulated by the normal banking system.
. The blockchain was initially designed for secure record maintenance. The blockchain was designed to track the movement of a particular commodity or a token that is registered with the blockchain network.
It is believed that the blockchain makes cryptocurrency much safer, more secure, and efficient as a currency than the traditional Fiat money that is issued and regulated by the government.
When a transaction is made using bitcoin it is the responsibility of the Miner to audit the transaction. When a transaction order is placed by a user through a crypto wallet (there are various crypto wallets, click here), the miners tally the order against the number of Bitcoin that is possessed by the account holder. If the transaction order is in place it is approved in a couple of minutes. After the completion of the transaction, it is recorded and added to the blockchain network. Once the transaction history is entered into the blockchain as a new block it cannot be altered. This makes cryptocurrency much safer and more accountable than the currency that is used by the banking system.
The ledger system that is used by Bitcoin is a decentralized one. This means there is a public ledger that is accessible by all the computers that are registered to the Bitcoin network across the world. Each Bitcoin computer network is known as a node. The miners have mining rigs which are high-powered computers that have very high graphics processing units that can be used to solve complex mathematical questions. Through the solving of these questions, it is possible to approve a transaction.
The blockchain uses smart contract technology. This means that there is a basic contract that binds the transactional process in a bitcoin network. For a transaction to be approved it has to agree with the conditions of the smart contract. It is, for this reason, it is very difficult to produce counterfeit bitcoins or carry out transactions that cannot be accounted for by the blockchain network.
Bitcoin also uses Turing encryption code. Because of its high encryption it is impossible to alter the blockchain structure without a consensus from the miners. These are the reasons why Bitcoin is considered safer and more secure than traditional currency.
Conclusion– financial services like banks and online payment platforms can use blockchain technology to make transactions safer and more secure. Banks like JP Morgan have invested in Bitcoin to make cross-border transactions much safer and faster. PayPal is also an online platform that has a crypto trading license which will allow any PayPal account holder to trade and invest in Bitcoin and other cryptocurrencies.
Financial services need to help commercialize Bitcoin and other cryptocurrencies. Bitcoin still lacks daily usage because of its non-commercial nature. The trading time of a couple of minutes is also so high compared to normal transactions using traditional money while shopping and other regular activities. It is only through popular uses that Bitcoin can finally find proper application in day-to-day use as well.