Cryptocurrency has become a byword in 2021. Though many still don’t understand it completely, most people have some idea of what it is. Another term that has been said almost in the same breath as cryptocurrency is “blockchain.” This term may even be less understood than cryptocurrency. Read on for a simplified explanation of what a blockchain is and what it’s used for in the cryptocurrency space.
The blockchain is an unchangeable distributed digital ledger. It is a decentralized database of transactions that all network users share across a peer-to-peer network. Participants can confirm transactions with a need for a central clearing authority and they can also verify and audit the system. Blockchain technology makes cryptocurrency work.
Once data is locked on the blockchain, it cannot be deleted, moved, or altered in any way. Miners are the ones who create the blocks that store all the transactions occurring as well as verify them. Using their computers, miners work out whether the transaction is valid and they solve a computational problem in order to link the block of transactions to the correct place in the open ledger. Miners are rewarded with crypto for the work they do.
Benefits of blockchain
Blockchain enables automated trusted transaction between parties who do not know each other. Transactions are completed only when programmed conditions are met by both parties.
Once programmed conditions are met, the transaction goes through. It cannot be undone, changed, or stopped.
Records on the blockchain are unchangeable.
It is decentralized. There is no single entity that maintains the network. Decisions are based on consensus.
Blockchain eliminates third parties to process transactions. Only the two parties involved will be able to execute and complete the proceedings.
Drawbacks of blockchains
Blockchain networks use a lot of energy that can lead to environmental concerns.
It entails great personal responsibility. Mining and/or buying cryptocurrencies gives you the power to be your own bank, but if you lose your seed phrase and are unable to access your crypto wallet, you lose the money as well.
Most blockchains are not completely anonymous. While users are identified by a string of letters and numbers (termed as public address), the public ledgers on the blockchain show every account balance and history. One can easily search the blockchain for any address and transaction and if linked with your personal identity, it can be a safety risk.
The Monero blockchain
Just like other cryptocurrencies, Monero has a decentralized ledger. Unlike other cryptocurrencies, Monero uses cryptographic techniques that enable transactions to be completed without revealing the sender, recipient, and transaction amount. The network is able to validate a transaction by determining if they have enough balance for the transaction without having to know exactly how much balance a sender has. Monero users get to enjoy the benefits of a blockchains without the drawbacks on privacy and security. Network decentralization, secured finances, financial privacy, and fungibility are all guaranteed by the Monero network. Monero’s resistance of ASICs in mining also makes Monero mining more environmental friendly than other cryptocurrencies.
Monero’s guarantee of privacy goes hand-in-hand with a secure and private web-based XMR wallet. XMRWallet is an open-source and free Monero wallet that allows you to send and receive XMR instantly on the blockchain while remaining in complete control of your coins and your keys. XMRWallet is absolutely free including importing previous transactions from another wallet. You do not need to download any software and has multiple language support. Registration is not a requirement. Create an XMRWallet.com account now. Using XMRWallet expands the privacy and anonymity that the Monero blockchain provides.