A Review on Bitcoin and Currency Encryption: Bitcoin and Blockchain

1.1 Cryptocurrency:

Figure 1.

Bitcoin Logo [1]

https://en.bitcoin.it/w/images/en/2/29/BC_Logo.png

Let’s break the above word into two simple words “Crypto” &” Currency”. Crypto is a Greek originated word which means secret and currency (we all know!). Now if we combine this it becomes a secret currency. So what does a secret currency means? The secret currency here is regarded as a digital way of completing transactions that are nearly untraceable and are secure. Bitcoin is generally considered as the first cryptocurrency (Nakamoto, 2008 and Gord, 2016).

1.2 Why use Cryptocurrency-

Cryptocurrency like every other currency can be used for doing transactions but what makes cryptocurrency different is that it is decentralized. Now you would be thinking what does that mean? Simply, we can say that it can be said as the currency that is not issued by any government and is encrypted. But then how it is better than other currency? The answer to this is since cryptocurrency are not issued by any government, the governments do not have the right to take it away from you. This is the major advantage of cryptocurrency. Also in terms of security these currencies are way better than other currencies because they are very difficult to trace.

1.3 Blockchain

Before moving on to bitcoin we first need to understand what is blockchain (Zheng et al, 2017). Simply, a blockchain can be compared to the record or ledger of transactions being carried out. But in a way more complex method. Blockchain is a combination of a consensus algorithm, the protocol that the network implements and a group of nodes running that protocol. Hence this has to be differentiated from a database as ‘database’ is just a piece of software but the blockchain is an online encrypted transfer method consisting of an algorithm (Pilkington, 2016).

What makes blockchain more authentic is that each entry in the blockchain is immutable. This means one any entry of record is placed in ledger it cannot be removed replaced or re-entered. Blockchains follow very strict protocols so that none of its users can break the rule or use it against their advantage.

Let's see how it works:-

• 1.

  Every system that carries out the transaction is being considered as a node.

• 2.

  Nodes can be compared to account holders of the bank.

• 3.

  Each time a new node is added a majority of nodes first validate the new node.

• 4.

  Once the new node is validated it needs to download the entire digital ledger and sync with it.

• 5.

  Now each transaction that gets appended to a block (and the block subsequently to the blockchain) then the newly added node will have a copy of it and is in sync with the entire network.

The blockchain can be simply explained as a data structure where each block is linked with each other like a doubly linked list. Now for those of u who don’t know what is doubly linked list, it is just a simple array of letter post which contains the address from where they were sent and the address to where they are going to be sent. Each blockchain solution has its level of encrypted algorithm. It depends on the network and the domain for which it's being used (Dhillon V. 2016 & Dhillon V. et al 2017).