Cryptocurrency is a virtual electronic money that has spread its efflorescence in the public domain. It has designed innovatively for transactions of digital money in the network. As contrasting to centralized digital currency and central banking system, it is decentralized, i.e. it has no centralized administrator or no centralized data storage.
This is not the first time that the concept of so-called cryptocurrency was developed. During 1990 digital technology found its new heights, during that period many attempts were made and accomplished in creating digital currency, some of them are Flooz, Beenz, Digicash. But they failed to conquer the market for many diverse reasons such as it created a platform for the financial fraudulent, misdemeanor, problems aroused due to the centralization of powers which lead to dissatisfaction creating disharmony among employees, companies, and bosses.
Cryptocurrency has a term called ‘public ledger’ or ‘blockchain’, It is a chain of blocks which digitally stores the transaction details and also keeps track of the previous records without allowing to modify them and helps in prognosticating and planning for the future actions. It is broadcasted in the crypto network so that it is made visible to all the peer users without having a centralized monitoring system and helps to utilize it fairly.
A software called ‘hash function’ is used to check for the modifications of the previous records. When certain input string is made to pass through the hash function it generates a fixed length unique code called hash. This function is irreversible in nature i.e. we don’t get back the input string from the hash. If we try to change a bit from the input string the hash function results in another hash. So, each block along with the transaction details also contain the hash of the previous block which helps in maintaining high security and prevents block infringement.
Each transactions contains certain information such as ‘the number of transacted crypto coins, the time of broadcasting the transaction, receivers unique identification code which is the public key of the receiver announced publicly, sender’s unique identification code which is the private key and is known only to himself and a hash of this transaction’.
Suppose a user has purchased a crypto coin by exchanging with the currency and might want to invest it, then he uses software called crypto wallet which creates a transaction and transfers the crypto-coin from his account to another’s an account by providing his private key and receivers public key. Now the created transaction is not verified and so it is unofficial and is queued up to be added in the blockchain.
The miner verifies the transaction and cracks the hash function so that the transaction is added to the new block in the blockchain. Any miner can verify the transaction, to do so they use a powerful computer to solve and the first miner to crack gets the reward.
(Source – A bitcoin mining operation near Moscow, Russia. (Nikiforaw77/shutterstock))
Intelligent miners need to keep sophisticated and fast computing machine, which consumes very high electricity. A research stated that a mining consumes the electricity as much as Ireland uses for one year. Another research stated that mining cost nearly twice as to mine any rare earth material.
“Before espousing any new technology, we should understand its impact on the ecology“.
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Dr. Manjula Shanbhog
Associate Professor- CSE