The function of Blockchains in Bitcoin economy

Business

The digital unit of currency being used in 21st century for exchange of goods, is Bitcoins. And digital ledger keeping track of all digital currency transactions is Blockchains. Hence, the relation between money and accounting, is the relation between bitcoins and blockchains.

For a technological concept, blockchains can sometimes be quite imaginative and abstract. Blockchain is an ever evolving list of digital records. In terms of design Blockchains prevent any data modification. This is why it is extremely difficult to tamper with records, and infiltrate corruption. Blockchain is an open distributed ledger recording transactions between two parties. These records are maintained efficiently, verifiably and permanently. The term blockchain is derived from the concept, that each record entry is maintained in a block. And, each blocks are linked to each other in a chain system.

Each of these blocks are linked to each other by the use of cryptographic algorithms. These cryptographic algorithms, maps the original size of record data into a compact and smaller size. This process of mapping the data, is known as cryptographic hash function, and, this function never yields to inversion. The blocks are also attached with a time stamp -a time entry for the data. This timestamp is permanent in nature; even the owner of the document cannot change it. Both the cryptographic links and timestamps together, never lets the integrity of blockchain to be compromised.

Why are Bitcoins safer?

Money in general is unsafe because of fraudulence and corruption. Both of these aspects are primarily possible by tampering of records. Physical records, are guarded by physical security measures, which are easier to bypass. Altering party details, transaction dates and currency figures are easy with physical ledgers. The digital records on the other hand, are not just difficult to alter, but are technically impossible to alter.

Bitcoin transactions are recorded via blockchains. Every transaction is separately ( and permanently ) recorded and can be verified by both parties openly. This keeps complete transparency in the transaction of Bitcoins. Further each of these entries ( blocks ) are tied to each other with digital cryptographic measures.

When an entry is made in form of a block, the block contain huge data about the transaction. In order to hide this data from a third party, blockhain technology uses cryptohrphic algorithm. Complex algorithms that map the entire data and compresses it into compact blocks. This compression process is an one-way process, completely irreversible. Hence, a third party can never try and view the original data, much less tampering with it.

Further, these blocks are also coded with timestamps. A digital stamp of the entry date. This timestamp too is permanent to an extent, that even the owner of the document cannot change it. Finally, this entire distributed ( or decentralized ) system, removes a centralized control of record keeping. A centralized system is vulnerable and easier to hack, threatening transactions. Such advanced digital transaction technology has made Bitcoin trading a popular activity in 21st century. Websites like profit bitcoin provide such trading opportunities. It has become a safe and easy alternative to earn money.

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