In the last few years or a decade, we have seen the growth of multiple technologies. Industrialisation 4.0 managed to defy the traditional norms, opening way for what we call as digital transformation. From artificial intelligence to machine learning, automated bots to driverless cars, technology has kept everyone apprised with the potential. Of these, a term or to be specific several terms, that buzzed around the financial industry were blockchain, cryptocurrency, and Bitcoin.

Each of these has a different definition and a separate meaning, yet the three appear to be linked and work in conjunction.

Thinking how?

Let’s first have a sneak peek at the terminologies of each.

Blockchain

A decentralised ledger of the transactions taking place within a peer to peer network. Blockchain, in its most basic sense, is the chains of blocks. Here, blocks are referred to as the financial transactions or the digital piece of information that are chained together to form a network.

Cryptocurrency

Currency as the term itself proposes is the medium of exchange whereas, crypto as the part of the term cryptography encompasses security measures to accomplish a particular transaction.

Compounding the two, cryptocurrency is an online medium of exchange that undertakes cryptographical functions to facilitate the process of conducting a financial transaction. This cryptocurrency that aids the transparency of blockchain technology. Cryptocurrency App Startup is the new emerging technology of coming time which maybe a future of apps development.

Bitcoin

Bitcoin is like your usable coins that promote buying and selling products with the only exception being this one is electronic cash. Physical coins are the ones that you use every day and Bitcoin is more or less, the 21st-century electronic cash.

As a decentralised currency, Bitcoin can be transferred between users without involving the affirmation of a central authority. The job of validating the above transaction is done by the blockchain technology.

Pretty clean.

We know that a cryptocurrency is a form of digital cash with Bitcoin being one of the most popular forms of cryptocurrency. Transactions that involve the give and take of Bitcoin is done over a peer to peer network, blockchain.

Sounds good? Let’s move ahead to see how these work in the real-time scenario.

Bitcoin+Blockchain+Cryptocurrency

To better understand how these works, you need to be clear on what cryptocurrency is. As stated above, it is a kind of electronic cash that can be sent or received. Suppose, you want to send some money to your friend. You open your banking portal and initiate the transaction, right?

Here, the bank is the central authority that validates the above move and if legit, deducts the amount from your account while crediting it in your friends.

With cryptocurrency, all of this is done in a decentralised manner and this decentralisation is rendered by none other than the blockchain technology.

Consider for example:

Alice wants to pay Bob, X number of Bitcoin. The first thing that needs to be done is to broadcast the information or the transaction details in the entire network. Information shared includes:

  • Amount transferred
  • The public key of the sender
  • The public key of the recipient

After all of the nodes in the network receive this, they independently verify the transaction using a digital signature. After the data has been confirmed by all of the interconnected nodes within the network, the transaction is stored as a block in the blockchain.

Bitcoin Mining

As soon as the transaction is initiated, several computers race to validate the same. To achieve this, users are required to din a very complex code, known as a hash. As soon as one of the intervening computers deduce the code or solved the problem, the transaction is validated. And now, this transaction is stored in the form of a block in the blockchain network.

Every time a computer solves the problem, it is rewarded with a cryptocurrency. So, the transaction has been recorded, stored and also validated. But even now, the process is incomplete. To complete transactions on the Bitcoin network, users also need to run something that we call a wallet.

A wallet is a program that has two different cryptographic keys:

  1. Public key
  2. Private key

A public key is a location where users store their transactions for withdrawing or deposit. It can also be regarded as the digital signature of the user in the blockchain ledger.

In case a user receives a Bitcoin to their public key but does not have the private key, they can never withdraw the above. Though, the public key is the technically reduced version of the private key, retracting the same back from the public key isn’t possible. So, in order to fully access and utilize a Bitcoin, it is important to have both the private as well as the public key.

Is transacting through Bitcoin safe? I guess yes!

The fact that these digital currencies are encrypted and digitally locked, transacting through them is undeniably safe. Also, that transactions done via Bitcoin are managed, monitored and controlled through blockchain, keeping the privacy of your transactions, intact.

Final Word

Without a doubt, cryptocurrency has gained tremendous traction and is one of the most talked-about technology among the top investors, bankers, and financial firms. Where some highly doubt the credibility of such a currency, many have rummaged as the crypto app development company to design, develop and trade the currency, or promote buying and lending of the same.

As said by the US Senator:

“Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.” – Thomas Carper.

Evidently, the applicability of cryptocurrency especially Bitcoin, as of now, stands controversial. This negativity is only because people aren’t aware of what the technology is and how can they benefit from it. Once, this gap has been eradicated totally, we will see greater acceptance of the currency as well as the technology. It would not be wrong to state that with time, the popularity and usage of such a form of currency are only expected to rise.

In case, you happen to be enticed by the technology and wish to deploy a cryptocurrency, you can connect with the cryptocurrency app development company. They will help you design and develop a cryptocurrency so that you too can dive in the sea of digital transactions.

What are you waiting for? Reach out to a crypto app development company today.

Author Profile

Nikhil Bansal is the CEO and Founder of Apptunix, Cryptocurrency Development Company helping businesses in streamlining their processes with powerful and intuitive mobile apps. With extensive experience in iOS app development, he has established himself as a highly-focused Solution Architect and UX expert, the one who is always ready to make efforts in the direction where technology blends with lives.