With Bitcoin and other cryptocurrencies hitting new highs every other month, more people are starting to get curious about blockchains.
Understanding blockchain technology can get confusing as you have one blockchain like Bitcoin and others like Ethereum that consist of several blockchains. The basis of blockchains is that they are where the transactions happen when you utilize these platforms.
Here is everything you need to know to completely understand blockchains and the technology they possess.
What Is a Blockchain?
A blockchain is a system built for the purpose of executing transactions in a linear manner. Every time new transactions occur on a blockchain, a new block is added to the chain, hence the name, blockchain.
The blockchain philosophy bases itself around decentralized finance. It’s also based around the method of no one having too much power in a blockchain. Rather than utilizing big servers and other networks, it focuses on peer-to-peer methods of transferring tokens.
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If you hold a token of a blockchain, you are becoming a part of the network by confirming transactions that occur on the network. You verify when a transaction takes place and help approve or reject the work done.
What Are the Pros of Blockchain?
The pros of blockchain technology it is decentralized. It takes the power out of centralized financial institutions that handle the data and puts the power back into the user’s hands.
There is an increase in security thanks to the permanent nature of blockchains. Once a transaction block has been added, there is no way to go back and change it.
There are multiple different blockchains out there. So if you decide that one is too slow or you dislike the fees, you can always decide to change.
For those looking to join the Bitcoin blockchain and buy some, check out https://virgocx.ca/en-buy-bitcoin/.
What Are the Cons of Blockchain Technology?
Blockchains are still under development to be used effectively. Cryptocurrencies like Bitcoin and Ethereum have experienced rapid growth. Because of this, they have dealt with high “gas fees”.
These fees stem from miners needing to be paid, as they often contribute a big portion towards processing transactions.
The other negative of blockchains currently is the increase in power consumption from mining farms.
Mining farms need to power thousands to hundreds of thousands of graphics cards to help process transactions. The faster they are at processing, the more likely the chance of receiving a block reward.
Understanding Blockchain: Key Takeaways
The most important thing to take away from understanding blockchain technology is the fact that it puts power into the people’s hands.
They now have the option to verify transactions and help out others across the globe, rather than relying on big companies to do that work. You also can get rewarded for helping process transactions.
Also Read: HOW TO BUY BITCOIN IN GHANA WITH MOBILE MONEY
If you want to learn more about decentralized finance and crypto, then be sure to check out the rest of our blog. If you know someone interested in blockchain technology, send this article with them so you can get started together.