What Tech Powers Virtual Currencies?

You might know the terms Ethereum, Bitcoin, and Cryptocurrency but you might not necessarily understand how they work or what technology powers them. Over the last few years, they’ve experienced a huge surge in popularity.

What do they all mean and what powers them?

What exactly is blockchain technology?

Put simply, blockchain technology is a decentralized ledger of all transactions that are undertaken throughout and across a peer-to-peer network. By using this kind of technology, participants can send and receive currency without any need for a central clearing authority as you would if you made traditional transactions online or in a store.

Blockchain applications include but are not specifically limited to:

• enterprise blockchain applications
• sustainability
• tokenization
• fund transfers
• supply chain tracking

Defining cryptocurrency

Let’s begin with actually looking at what powers these technologies. They’re all founded on something called Blockchain tech which is what forms the bedrock of all the cryptocurrencies as we know them.

Next, there comes Bitcoin, as it’s the most well-known form of cryptocurrency – and incidentally, the currency for which blockchain technology was created. Cryptocurrency is what’s known as the means of exchange (in the same way the US dollar is) but its protocol allows the transfer of funds and it uses cryptographic techniques to control the creation of monetary units. It’s becoming ever more popular online and used for all sorts of transactions.

Other virtual currencies

What cryptocurrencies participate in is the wider virtual currency movement. Yes, crypto is the currency at the front, leading the charge in cultural and financial stock, but there are more.

For instance, we can turn to sweepstake casinos in the US. At these gaming sites, people can play the types of fully recognised casino games you can at typical iGaming platforms. However, sweepstake casinos utilise coins and tokens specifically and only native to that platform. They aren’t worth anything outside of the platform itself. Players win coins and can redeem them for cash prizes.

What crypto does is take virtual currency to a more universal level.

How do we define cryptocurrency?

Cryptocurrency is a medium of exchange and it’s made and stored digitally on the blockchain. It works by using cryptographic techniques that verify and establish the completion of the transfer of funds from one place to another. It also uses an algorithm that controls the creation of monetary units.

The most well-known cryptocurrency is Bitcoin and perhaps the other well-known currency is Ethereum – both are starting to be used more widely across the globe and with the emergence of Web3 technology in the next few years their rise will continue unabated.

Facts about blockchain currencies

Let’s now take a look at some of the facts about blockchain currencies that might make it worth researching and investing in, if you’re particularly interested in its value as a resource.

Firstly, it’s perhaps important to know and realize that blockchain tech and cryptocurrency have no intrinsic value in the real world (at least not at the moment) . They aren’t redeemable for any other commodities such as precious metals or gemstones.

These forms of technology have no physical form – you’ll never have a credit or debit card with them, or physically hold a coin as you would with real-world cash – even though that’s becoming increasingly scarce. Blockchain and cryptocurrency only exist in their own network.

The supply of blockchain tech and crypto is always determined by the protocol. It’s a completely decentralized network and there are no central bitcoin banks or places where you can go and deposit funds – or withdraw them.

The technology used by blockchain also means it has a lot of applications that go far beyond digital assets, like cryptocurrency, NFTs, and blockchain and it’s worth looking at these from the perspective of businesses. It’s helpful to consider blockchain as a form of potential software that could improve business processes over the years.

Blockchain is known as a collaborative technology and it aims to improve business processes that happen from company to company. It also aims to lower something called the cost of trust. Due to this, it might offer higher returns for each investment dollar that’s spent – when compared to traditionally made investments.

Its rise is seemingly unstoppable and over the next few years, it’ll be interesting to note how many companies decide to put their faith in blockchain technology to power their processes.