Finance

What the Blockchain Does for Bitcoin

If you’ve been reading about Bitcoin in either the financial papers or the technology blogs, and it’s hard to avoid doing so in both instances, it’s possible that you’ve been caught up in the stories about how it made a lot of people who became involved early with the digital currency very rich. Or perhaps you’ve been focused on the tug of war between the technology and the banks and governments that would prefer to squash it because of the threat it poses to their dominance of personal finance. Maybe what you should be concentrating on is the ingenuity of blockchain technology and how it makes Bitcoin the special creation that it is.

Blockchain Does for Bitcoin

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Bitcoin would be impossible without the blockchain since that is what gives the coins the special characteristics that entice so many people. It’s the main reason why Bitcoin has seduced investors in such a way that many crypto robots in the manner of Bitcoin Code are being utilized. For those who haven’t yet been initiated into the world of Bitcoin and other forms of cryptocurrency, perhaps a little tutorial on how the blockchain makes Bitcoin so unique is in order. After reading that, all of the other news about it will seem like unnecessary noise.

The Chain

Each time someone makes some sort of transaction utilizing Bitcoin, a legion of so-called “miners” are called upon to verify it. They do this by solving a complicated mathematical problem which then puts a digital stamp upon that transaction. In doing so, the miners receive a certain amount of Bitcoin of their own for their trouble. That is how new coins are “mined” in the digital world, as opposed to when people mine for diamonds or gold in the physical world.

No Doubt

When the miners perform this act, they are making it so that the transaction is forever etched in the digital world and can’t be erased. This is useful because it prevents things like double-charges and fraud that might be perpetrated in the world of credit cards and the like. It also ensures that the identities of the users stay completely hidden and that only the money needed to make the transaction changes hands.

What It All Means

When you get right down to it, the blockchain, with each transaction forming a brand-new link, is destined to provide the ultimate experience for those buying and selling Bitcoin. No identity theft is possible, nor do customers have to worry about someone somehow hacking the entirety of their financial information. And the amazing thing is that all of this is done via a decentralized network, which means that there aren’t any banks or credit card companies profiting from a transaction that has nothing to do with them. Bitcoin might get the headlines, but the blockchain is what deserves the credit for this innovation.

The next time you hear someone blathering on about Bitcoin, ask them if they understand how the blockchain is what’s responsible for it. That knowledge is the only way that anyone can understand Bitcoin’s true potential.

About the author

Kevin Bennett

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