All the markets and organizations across the globe have got shaken up by the popularity of digital currencies. They have sparked the promise to provide economic freedom to all by making it decentralized. Blockchain technology has set the foundation for these cryptocurrencies, making them alluring and has led to bringing insightful innovations amongst the industries, especially the finance industry. One example of this is the stablecoin from MakerDAO, which has been built up of Ethereum blockchain, making it the first digital currency around the world that is unbiased, the main feature that it resists hyperinflation.
In order to understand how cryptocurrencies and blockchain technologies can be advantageous together, we need to understand how are these two connected?
Understanding the correlation between blockchain and Cryptocurrency
A database of transactions that is available on a network consisting of a large number of computers is known as a blockchain. The digital contracts that are enforced upon details, including the crypto type, details about the sender, receiver, and the amount of transaction that have been agreed are known as the cryptocurrency transactions. When a group of transactions is required to be completed, these transactions are gathered into blocks and then recorded into a blockchain ledger that is completely transparent to users worldwide.
The software code on which the blockchain is built is open-source and completely free, which means the other developers can learn from code or even utilize the code to develop more decentralized applications on the blockchain. The open-source code provides many advantages to companies and businesses as all they want to do is build new dapps by using the existing codes that provide ultimate solutions to businesses in carrying out trade through a website like crypto engine.
The mysterious entity that developed Bitcoin currency is the one who invented Blockchain technology named Satoshi Nakamoto. Bitcoin and blockchain were first introduced in 2008, where there was a financial crisis, and people distrusted the government. At that time, people thought that these digital currencies and blockchain technology wouldn’t be able to survive in this competitive world where the government has control over everything.
As of now, for more than a decade, blockchain and bitcoin have gained huge popularity and have gained the interest of the public across the world that this led to the invention of more and more cryptocurrencies. Blockchain and cryptocurrencies collectively provide numerous benefits to individuals and businesses to understand the unique capabilities of blockchain.
What are the rewards or incentives of blockchain technology?
The traditional payment methods or we can say centralized systems have many weaknesses, and people face many challenges while completing the transactions. Customers have to face the consequences of weaknesses in centralized systems. Blockchain has become the only technology that provides a trusted system that is designed in a way to overcome all the challenges and risks associated with data and transactions of users.
In today’s time, also when half of the general public has shifted to cryptocurrencies, some are still dominated by using centralized financial systems because people rely heavily on central authorities to approve the transactions and authenticate the information. But in reality, the centralized entities are susceptible to exploitation by hackers. The blockchain is immutable in nature, which means that it eliminates the chances of any hacker or scammer altering the data or transactions to use them for their benefit.
Blockchain technology is completely decentralized in nature and follows the decentralized framework, which eliminates the need for any government and puts the power of making decisions to users. No central authorities are involved in blockchain technology, and no intermediary has the right to manipulate the system. All the responsibilities are in the hands of users who work with blockchain technology.
Blockchain technology uses cryptographic principles to secure the data and transactions of users, which makes it possible that no fraud takes place and no point of failure happens. Cryptographic principles require hackers to get 51% of computing power in order to alter the transactions, which is nearly impossible.
The nature of blockchain is entirely transparent, which allows all the users to view each transaction that is recorded on the blockchain. Blockchain maintains transparency and anonymity at the same time.