March 23, 2019: At their heart, cryptocurrencies make up the fancy databases. Bitcoin, for instance, is a humungous database of who owns how much of the asset, and what all transaction happens between the owners’ parties.
Intrinsically, the bitcoin system differs from a conventional bank, which is basically just a big database of who owns what legal tender and what transactions occur between those owners. But the specific distinction between a bank and a cryptocurrency network is that no central authority or server controls cryptocurrencies’ big fancy database. The responsibility to manage and oversee the activities of the network remains with a distributed team of users who see to it that the basic rules of the network are ever enforced.
The concept of the blockchain is the bedrock of all cryptocurrencies. It can be seen as the decentralised record of changes in the ownership of the asset, be it either spending a bitcoin or carrying a complex “smart contract” as done in one of the second-generation cryptocurrencies such as Ethereum. Just as a cryptocurrency transaction occurs, its details are relayed to the entire network by default so as to ensure that everyone-precisely the miners-has an up-to-date record of ownership. At stipulated intervals, all the recent changes in the network get bundled together into one “block” and added to the linear historical record. The blockchain serves as a secure and dynamic record of who owns what on the network.
Every 10 minutes or so, one miner from the network gets to verify a set amount of transaction transactions and bundle them up into one block of transactions, which is then added to the chain. In return for doing the work, the miner is rewarded with some new bitcoin. Anyone can be a miner but the catch is that it’s tricky to emerge as a profitable miner.
Even though Bitcoin has been quite volatile over years, users predict 94% of all bitcoins will have been released by 2024 because as a matter of fact the total number of bitcoins that will ever be present in the 21 million. Hence it is speculated that the profits miners once made creating new blocks will reduce drastically till it becomes almost negligible at least theoretically. To balance the thing, the transaction fees may rise as more bitcoins comes into circulation
Many cryptocurrency critics refer to it as the next “bubble”. Let’s identify and understand the drawbacks and obstacles that hinder the mainstream adoption of these technologies.
Check out the following infographic on 33 Cryptocurrencies described in four words or less, developed by Mrbtc.org.
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