Blockchain and Cryptocurrency: A Comprehensive Overview

None of us are strangers to the phrases “blockchain” or “cryptocurrency”.  You will no doubt have heard them over dinner conversations, maybe on the commute on the way to the office – or an ad or blog article popped up on your search engines. But the details and the tech tends to be lost on some people who might not know their Bitcoin from their Flux price. It’s a very tech-heavy subject full of jargon and to get it wrong could cost you a lot of money. Take a look at our guide to make sure you invest your money wisely.

What is Blockchain?

Blockchain is digital technology that is incredibly sophisticated and has become an incredibly hot topic in recent years.  What was originally a concept, has revolutionised the way some people complete transactions and is used globally.  It allows you to share, store, and record data in a completely safe and secure manner. 

Effectively Blockchain is a sequence of blocks that are linked by what’s known as cryptography.  Each one has its own group of transactions, and once a transaction is created it cannot be changed/amended.  Hence why it has such strong security and such a trusted method of completing transactions. 

What is Cryptocurrency?

Despite what you may think, there is no intrinsic value attached to cryptocurrency; in terms of redeeming it for a commodity such as gold. It is effectively a way to exchange online, and is stored on the blockchain digitally.  This allows funds to be transferred – and this will be algorithmically controlled by the blockchain.

There are lots of different types of crypto coins such as Bitcoin and Flux.  There are different prices attached to each currency, for example there will be a specific Bitcoin price on any given day.  The same goes for all coins. 

Some Fun Facts about Blockchain and Cryptocurrency

Bitcoin was the first cryptocurrency to be implemented as part of blockchain, this is why it’s more widely known than others despite there being so many.  It is so well known, sometimes the phrases “cryptocurrency” and “Bitcoin” are used interchangeably by people.  Its success means there are now literally thousands of different cryptocurrencies. 

Although it is inextricably linked to financial institutions – this isn’t the only sector it is beneficial to, in fact quite the opposite.  It’s been adopted across supply chain management businesses, healthcare, retail and more.  It has fantastic potential to streamline a number of processes – not just financial transactions.

There is no need for any 3rd parties or intermediaries.  This is thanks to Smart Contracts which was first introduced by Etherum.  This means transactions can be made incredibly quickly, in fact in some instances less than seconds.

What are the Advantages of Blockchain and Cryptocurrency?

There are many reasons why individuals and businesses are working with blockchain and cryptocurrency. One of the main advantages to them is that there is no centralisation.  This means that there is no 3rd party, so there is no change of transactions being manipulated and no corruption overall.  

Transparency is also key.  The beauty of blockchain is that everything is completely transparent.  Any transaction is recorded on the network.  As it’s a public ledger – anyone who has access to the network can see it. 

It can also reduce costs.  This is particularly attractive to businesses who are looking to streamline, and trim the fat.  There are no transaction fees associated with it, and furthermore it also removes a lot of the manual activity associated with transactions will also no longer be required and will cut some of the existing outgoings.

We have already touched on this a little, but security is a major pull for personal and business use.  When working across a blockchain network – you can be safe in the knowledge that the end-to-end encryption will keep everything completely safe and secure.  Nobody who is unauthorised will have access to this or can edit it. 

Is there anything you Should be Wary of?

Just like with anything that involves technology, and is a little on the side of unknown – there have been some things that people have raised concerns about when delving into the world of blockchain. 

Scalability could be an issue, depending on the project you are working on.  If there are large volumes of transactions, it could result in the processing of the transactions taking a little longer and transaction fees being higher.  

People can also be a little wary of the regulatory side of things.  The regulations aren’t as clear as what you may expect – and it can mean that people air on the side of caution.  

Price volatility is also a consideration.  If a cryptocurrency is built on a blockchain network, it does mean there is an increased chance of it becoming volatile.  

Although Blockchain has huge potential and can be used for much more than cryptocurrency – its technology can be difficult to adopt.  This is mainly due to its complexity. It’s also not widely accepted by some major financial institutions which can be a bit of a barrier.

If you are interested in blockchain or cryptocurrency, or simply want to know what all the fuss is about, then hopefully our guide and overview will give you a much better idea of what it is, the benefits and the considerations.