It’s the same every bear market: the sceptics roll in, trying to convince you why Blockchain technology is a scam and Bitcoin is announced (once again) as dead. We've been around long enough to repeatedly see these same people be proven wrong when the market improves, but for many of you newcomers, this chatter can be unsettling.
Reverting to the fundamentals is always a wise idea when in doubt. Let's examine how Bitcoin, and the Blockchain technology it runs on, functions and why it is genuinely poised to revolutionise society.
WHAT IS BLOCKCHAIN TECHNOLOGY?
Blockchain is the technology that enables the existence of cryptocurrency (among other things!). It’s a structure that stores transactional records, also known as blocks, in several parts, and when connected forms a “chain,” in a network of peer-to-peer nodes. This storage is referred to as a ‘digital ledger.’ Every transaction in this ledger is authorised by the digital signature of the owner, which authenticates the transaction and safeguards it from tampering. This makes the information the digital ledger contains highly secure.
Let's break this down into clearer terms since it can be a little hard to understand. The digital ledger is like a Google spreadsheet, in which transactional records are stored based on actual purchases. A network of computers uses the spreadsheet in conjunction with one another. The great thing is that anybody can see the data, but they can’t corrupt it.
HOW DOES THE BITCOIN BLOCKCHAIN WORK?
The Bitcoin blockchain is a database of transactions secured by encryption and validated by peers. Here's how it works. The blockchain is dispersed across numerous computers and systems inside the network; it is not kept in a single location. These systems are called nodes. Each node has a copy of the blockchain, and each copy is updated each time a change to the blockchain is confirmed.
The blockchain consists of blocks, which store data about transactions, previous blocks, addresses, and the code that executes the transactions and runs the blockchain.
WHY IS IT SO IMPORTANT?
There are a lot of advantages to using the blockchain network. Let’s take a look:
Accuracy of the chain - Transactions that are part of the blockchain have to be approved by thousands of computers. This removes all human involvement in the verification process, which means there are fewer human errors, as well as a more accurate record of information. What happens if one of the computers in the network makes a mistake? The error would only be in one copy of the blockchain and for it to spread, at least 51% of the network would need to have the same mistake, which is highly unlikely. The incorrect entry would then simply be discarded and the consensus ledger would continue.
Eliminating the need for third-party verifiers - Blockchain data is decentralised, which means that it is not stored in a central location but instead copied and spread across a vast network of computers. This makes it very hard for anyone to tamper with the data as they would need access to all of the networks to fully compromise it.
No access to identifying information - although anyone with an internet connection can see the list of the network's transaction history and access details about transactions, no one can access identifying information about the users that are making those transactions.
HOW IS BITCOIN CHANGING THE WORLD?
Ownership - Bitcoin and cryptocurrencies are a decentralised form of value, meaning they are not at the control of a single individual or institution. There is no need for a middleman such as a bank or government, making it a completely peer-to-peer electronic cash system. It’s decentralised nature makes it globally inclusive, enabling millions of people around the world to take control of their financial future. You don’t have to rely on a third party service to give you access to your funds, and there is no entity that can lock you out or limit what you can do. You have complete ownership over your assets.
Accessibility - Bitcoin allows any bank, business or individual to securely send and receive payments anywhere at any time, with or without a bank account. For many, the idea of not using a bank seems unimaginable, but there are places around the world where proximity or political situations make banking not an option. Take for example El Salvador, where roughly 70% of its people do not own a bank account or credit card. In such places, out of necessity, the concept of digital currency has been accepted more readily. El Salvador has recently become the first country in the world to adopt bitcoin as legal tender after Congress approved President Nayib Bukele’s proposal to embrace the cryptocurrency. This move will help El Salvador’s residents save, invest and obtain profits in a place with little access to bank branches.
Transparency - Unlike fiat currency, which is backed by a central authority (the U.S. government for the U.S. dollar, the EU for the euro), bitcoin is backed by a widely distributed network. The transparency of this network is fundamental to the success of Bitcoin as a safe alternative to the standard banking system. Since Bitcoin transactions require verification and authentication, offering a permanent record of every transaction ever made, the use of Bitcoin is safe, secure, and actually offers more transparency about how funds are managed than regular, closed-off banking systems, where decision making is done behind closed doors.
That’s reason enough for us to back Bitcoin & Blockchain technology all the way!
With cryptocurrency, you can own your hard-earned money rather than leaving it to the mercy of a financial institution. And here at Coinstop, we want to help you secure your future! That’s why we stock the very best in digital security. From hardware wallets to recovery seed phrase storage devices, our products will help you to become your own bank. Cryptocurrency is the future, and it’s time to start securing yours!