Without equivocation, Bitcoin as one of the existing digital coins requires blockchain technology to function effectively. As a matter of emphasis, this technology emerged or manifested, primarily to underpin bitcoin. This, however, proves the fact that there would be no bitcoin without the presence of blockchain technology. This technology is not peculiar by bitcoin alone, all other forms of existing digital coins cannot also do without it. This article reveals the various ways through which blockchain technology aids the operations of digital currencies, particularly bitcoin.
The blockchain technology was first described in 1991. And developed in 2008 as an avenue to stock and retrieve digitally oriented data. Accordingly, its popularity came through following the upsurge in the prices and values of bitcoin. A bitcoin’s blockchain technology otherwise referred to as a distributed ledger remains public. This, thus means it remains accessed or downloaded, with its transaction records already intact. It, however, possesses an open ledger that allows access to scores of investors. This technology remains a ledger oriented peer to peer mechanism and each existing peer possesses a ledger copy. According to IBM, each transaction record becomes a unique block and the connection of these blocks into a line of records ferments a blockchain.
Bitcoin on the other hand remains one of the indisputable digital currencies, with a decentralized model. This, thus makes it feasible to store all transactions in a distributed ledger, identified as blockchain technology. Whenever the processed transaction emerged successfully, the blocks become incorporated into the blockchain records. Without further ado, the roles of blockchain technology in aiding the effectiveness and efficiency of bitcoin activities cannot be overestimated.
Digital Coins: Roles of Blockchain Technology in Bitcoin Operations
To begin with, blockchain technology aids the operations of bitcoin by fostering the verification and most times traceability of multiple transactions. This, however, helps to reduce the cost implications associated with compliance, secure processed transactions and accelerate data transfer. The blockchain has an encryption feature that makes it possible to safeguard processed transactions and makes it grossly transparent.
Furthermore, blockchain technology aids bitcoin by making mining possible. Mining as defined is a technique that creates and sustain a trustless ledger. Those who subscribe and trade the bitcoin are a group of miners and thus stock their transactions on the blockchain. Miners usually get rewards in bitcoin whenever they validate transactions and stock them in a public ledger. In an attempt to avert fraudulent transactions on the block, bitcoin designs its software to make mining difficult and perhaps time-consuming. By virtue of this, transactions capable of making other investors bankrupt and scammed remains averted.
In addition, blockchain technology enhances accountability in all bitcoin oriented operations. The technology achieves this by aiding the data integrity of its transactions, streamlining the operations and declining all associated risks. Accordingly, blockchain technology enhances transaction oversights in a bid to secure objective and uniformed bitcoin transactions
More so, the presence of blockchain technology decentralizes the bitcoin crypto network. By this, none of its contents, transactions or records get censored. Its server remains intact all the time as no central person is controlling the network. Although applications using bitcoin may shut down, all data or records remain intact on the blockchain. This thus means participants keep tabs on their transactions and record themselves through consistent creation and verification of every block enveloped in a transaction.
Given all the aforementioned, it is obvious that the impacts of blockchain technology in the efficient operations of the bitcoin network are not farfetched and more so, overwhelming. The situation is not different from every other form of digital currency. Blockchain technology is as important to prevalent digital coins, just as a nucleus is to a cell.