The cryptocurrency has an interesting relationship with the Blockchain which makes transactions so easy. It leverages the blockchain to create, store and enable the trading of coins. The blockchain is free and was created by Satoshi Nakamoto to help the operation of the Bitcoin.
It is defined as an ever growing list of records or blocks. The blocks are linked to each other by what is called cryptography. Each block contains a timestamp, transactional data, and cryptographic hash. Blockchain can be used in many areas, but the most popular use of this technology is the cryptocurrency industry, acting as a distributed public ledger.
The Blockchain has been designed to provide a record of transactions between two parties permanently. Data recorded are resistant to any form of hacking or modification.
The name “cryptocurrency” comes from the concept of cryptography to secure transaction and create new coins on the blockchain. One interesting thing about cryptocurrency is that they do not move around as the traditional currencies. Cryptocurrencies are fixed on the blockchain. With respect to this, an attempt to send a cryptocurrency to someone does not mean a coin has been changed in hands. We do not exchange cryptocurrency, we just change ownership.
Looking at the purchasing of cryptocurrency on the exchange websites provide a good ground for such an explanation. When someone exchanges cash for a cryptocurrency on an exchange platform, he takes control of the right to access the cryptocurrency on the blockchain. There is nothing moving in this kind of transaction.
It can also be explained as “Buying cryptocurrency simply has to do with exchanging rights over the control of the digital asset. The new holder reserves the right to convert the digital asset to cash, convert it to any other cryptocurrency or hold it.”
The Blockchain Gives Value to Cryptocurrency
The blockchain helps to prevent cryptocurrency fraud. It has been the backbone of cryptocurrency and has been the reason behind its unique features. The blockchain has a way to prevent anyone from spending a coin belonging to someone else. Ownership of coins are visible on the public ledger and any attempt to engage in double spending will be infertile. Usually, double spending is impossible because the network keeps updating the ledger up to date.
The relationship between the Blockchain and Bitcoin is very effective as they combine to produce a more efficient, secure and decentralized transaction.