CryptoCurrency – A study

Cryptocurrency in general a reference to all decentralized digital currencies.It uses crptography for coin creation and online transactions.They are open source and available publicly with a transaction ledger to record the transactions.

In other words, Cryptocurrency is a virtual money over the internet.

The decentralized nature of cryptocurrencies prevents any single authority, such as a central bank or government, from ultimate control. By maintaining a public ledger, known as a blockchain, cryptocurrencies provide transparency, which is essential for building trust between untrusted parties. With the core software open sourced,anybody can view, submit bug fixes, or submit updates, which in turn helps improve the system.All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances.

In cryptocurrency, the term “token” describes a digital asset. It refers to the fact that cryptos are both value tokens / currency tokens (they represent value, but aren’t themselves of any inherent value) and they use strings of data called tokens (tokenization is a type of encryption).

How It works ??

As Bitcoin was the original open source cryptocurrency, most others are built using the same core technologies, such as keys, wallets, miners, and decentralized peer­to­peer networks. Ownership of cryptocurrencies requires a pair of keys (one public and one private), each a unique string of numbers and letters. It relies on the power of the internet to guarantee its value and confirm transactions. Users on a network verify every transaction, and those transactions then become a matter of public record. This prevents the same digital currency or coin from being spent twice by the same person.A public key functions as an “address”, to which other users send units of the cryptocurrency. A private key is kept confidential and allows a user to claim ownership of the associated cryptocurrency units. Wallets store the cryptographic keys that are used to access a currencies.

Mining of Coins(Currencies)

The currency creation (coins) in cryptocurrencies involves a process called as mining. The traders(miners) use a mathematical cryptographic algorithm to be solved to obtain certain amount of bitcoins in exchange.

Risks in Cryptocurrency 

As with all currencies, cryptocurrencies come with risks. The more prominent risks come from theft, fraud, volatility, technical failures, lack of government support, regulatory uncertainty, competition from other currencies, and level of adoption. Many of these risks could result in one or more cryptocurrencies losing all value. For cryptocurrencies, theft most often occurs online from either an insider, an individual who works at or has physical access to the company, or an outside individual, who
gains unauthorized access to the company’s or individual’s systems online through a hack. In both cases, control of the cryptocurrency is transferred away from the owner. There have been two main targets for theft: exchanges and users. Over the last five years, many cryptocurrency exchanges have been hacked resulting in theft and the loss of cryptocurrency.

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BlockChain - The Beginning

Blockchain—a kind of distributed ledger technology—has been described in the popular press as the next big thing. It is a data structure of cryptographically linked “blocks” of transactions that are virtually impossible to change or remove without being detected. Therein lies its strength.

Blockchain technology is the technology that allows users to maintain  a ledger having all transactions data and update them to maintain integrity when a new transmission occurs. It is a structured list that saves data in the form of a distributed database which is designed to make an arbitrarily manipulating it difficult since the network participants save and verify blockchain. 

An important part of blockchain is security related to the personal  key used in encryption. An attacker carries out various attempts to access a user’s person key stored in user’s computer or any device inorder to hack the bitcoin. The integrity of transactions can be verified through the public key based encryption of the hash value of transmission data.  

All transactions are logged and made available in a public ledger, helping ensure their authenticity and preventing fraud. Each time a transaction takes place, such as sender sending data to cloud storage or   receiver , the details of that deal including its source destination, timestamp, are added for refrence as a block . 

The validity of the transactions within the cryptographically protected block is then cheked and confirmed by the collective computing power of miners within the network.  

Blockchain works on the basis of elliptic curve digital signature algorithm. Since blockchain is a publicly available ledger. On an individual basis, these miners are computers which are configured to utilize their GPU and/or CPU cycles to solve complex mathematical problems, passing the block's data through a hashing algorithm until a solution is found. 

Once solved, the block and all of its respective transactions have been verified as legitimate. Rewards (bitcoin, in this example) are then divvied up among the computer or computers that contributed to the successful hash. 
The property of decentralization is the advantage of blockchaining the user data.

The records inside the chain aren’t stored in a single location and it is immutable by any single party. Implementation of blockchain technologycan create a verifiable record of any data.  

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