The reason for the great success of Bitcoin Cryptocurrency is its easy and fast transaction across various countries in the world. They act in a distributed fashion, where there are no banks or any controlling authorities to interfere in the bitcoin transaction. The Bitcoin owners are responsible for initiating a transaction for buying and selling goods or services for the exchange of bitcoins. Another important reason for the bit coin’s Immediate Edge App is its blockchain technology, where every transaction is stored block and linked to each other. This article gives a detailed insight into how blockchain technology plays an important role in Bitcoin transactions in the following sections.
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Blockchain technology
Blockchain technology is an emerging technology which is being extensively used in stock markets, and bitcoin is the one first to apply the blockchain technology. Blockchain is a public ledger, where every transaction is stored as blocks and linked to each other. Every block is encrypted for security concerns.
Every block will have the details like the hash code of previous blocks, data related to the transaction, and the timestamp. The main feature of the blockchain is no one can modify the block structure. The miners verify every transaction, and then a new block is created and added to the transaction links. Once added to the transaction chain, no modification can be performed.
Bitcoin software will be run by the communicating nodes that act the transaction initiation. The work of the communicating node is to broadcast the transaction to other nodes in the network. If sender x transacts N bitcoins to the receiver B, this message will be broadcasted by the communicating nodes, to all other nodes in the network and stores this record of the transaction to the blockchain.
How is double-spending prevented in Bitcoins?
Every node in the network will be having its copy of the public ledger or blockchain. For every ten minutes, the transactions will be validated and verified by the miners and stored as blocks in the blockchain. The information about the new block will be broadcasted to all the nodes linked to the network. So if the same amount is spent multiple times (i.e.) if double-spending happens, it will be easily discovered by the bitcoin software. Even in traditional currency, there are lots of issues, regarding double-spending.
Transparency of Blockchain technology
Followed by the success of Bitcoins with blockchain technology, many other cryptocurrencies like Ethereum, Litecoin, and lots more emerged, thereby altering the traditional banking system, with high transaction fees and transaction time. Blockchain technology eliminated the need for intermediary controlling authorities, resulting in a flexible and easier transaction of Bitcoins.
Many of you will be wondering how a user of the bitcoin network, can see the transaction made by some other node connected in the network. The reason for this, the distributed and shared feature of blockchain technology which allows the blockchain to be downloadable by any user of the bitcoin network. Because they are open-source technology, the cost will be reduced to a greater extent. Great challenges in the corporate world can be faced with high efficiency and accessibility with the advent of this technology. The blockchain technology followed in the bitcoin software satisfies the transparency expectation from the consumer side.
Pros of having blockchain technology in bitcoin transaction
The following are the advantages of blockchain technology. They are:
- A transaction will be added to the blockchain, only when the miners have validated the transaction with the hashing algorithm and asymmetric encryption schemes. Therefore, there are no malicious user interference or security threats.
- As the bitcoin network possesses a transparency feature, with blockchain technology, the efficiency of the bitcoin transaction is higher than the traditional currency system.
- The customers can authorize knowledgeable procurements.
- Because of blockchain technology, at present, the government bodies were also able to purchase informed purchases.
- As the blocks are protected by hashing, if an anonymous user tries to access the transaction, the hash code becomes more complex, making the anonymous user perplex. Also, each block’s hash code is generated based on the hash code of the previous blocks. So, even there is a change in one block, every other block users will be intimated about this access.
Thus, this article has given a deep insight into how blockchain technology has made bitcoin and other cryptocurrencies, to grow and emerge successfully.