In the last ten years, there has been the development of the concept of cryptocurrency.
You might have heard of bitcoin application development. What is this bitcoin? It is a cryptocurrency. Cryptocurrency is different from the currency we use every day in our lives.
The physical currency that we use for a transaction, the bank credit we have in our accounts, which can be withdrawn as physical currency or with the development of digital currency is also used to normal transactions. These are the money that we use to pay our taxes. There’s always confusion between digital currency and cryptocurrency.
They might seem the same but they’re not. Digital currency is a form of fiat currency which is backed by the government. It is just the digital form of the normal currency of your currency. Digital currency can be used to pay taxes. Cryptocurrency is not backed by the government. A cryptocurrency is a digital form of currency which is not backed by the government.
It does not have a legal tender and you can pay your taxes with it. It is decentralized and global. It doesn’t have a country border matter. Its credibility and value are the same globally. As it is not backed by a bank or the government, you can’t pay your taxes with it. As the government controls the supply of fiat currency, there’s an algorithm that controls the supply.
With bitcoin application development, you might be familiar with “blockchain”. It is recorded tracking technology for cryptocurrency. If you simply try to learn about blockchain technology through the internet, you might come across the definition “blockchain is a distributed, decentralized, public ledger.” This definition is at no point self-explanatory. But if you’re really looking to understand the blockchain technology, good for you, the technology is easier to understand than the definition.
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There’s no argument that this technology is very complex. We’ve come to a confusing point here. The term “blockchain” is simple, the definition is not. The technology is complex but the basic understanding of it is not. Well, don’t get confused. In this article, you’ll get an idea about the blockchain technology, types of blockchain and the differences between them.
As the name suggests, blockchain is a chain of blocks of information. but it’s not quite the direct traditional translation of the word’s ‘block’ and ‘chain’. when we use the words ‘chain’ and ‘block’ we refer to those more in a digital sense. ‘blocks’ are digital pieces of information stored in a public database that is the ‘chain’.
The ‘blocks’ in blockchain are digital pieces of information. Specifically, they have three parts or the type of information they store.
- Blocks store information about transactions like the date, time, a band dollar amount of your most recent purchase from any online purchase firm like Amazon, Flipkart, etc.
- Blocks store information about who is participating in transactions. Instead of using your actual name, your purchase is recorded without any identifying information using a unique “digital signature,” sort of like a username. So, each one gets a unique username which stores separate information.
- Blocks store information that distinguishes them from other blocks. Each block stores a unique code called a “hash” that allows us to tell it apart from every other block. So, even though any individual's purchases are the same, they are differentiated using the unique code.
The differences between public and private blockchains
The same suggests the differences in an obvious way. The terms public and private are self-explanatory. But let us understand in depth what these two types of blockchains mean
It is an open-source technology open for all to use. Anyone can participate in a public blockchain and no one is in charge. Comparing it in cryptocurrency terms with real-world fiat currency, it is like the currency we use in daily life that is distributed by the reserve banks. It is open to all.
There is no restriction or no permission needed to use public blockchain services. Similar to the government distributed fiat currency, there is no access or rights management done for a public blockchain and anyone can be a part of the consensus. Bitcoin is an example of public blockchain technology. The main features of public blockchain technology are-
- Anyone can run a BTC/LTC full node and start mining.
- Anyone can make transactions on BTC/LTC chain.
- Anyone can review/audit the blockchain in a blockchain explorer.
This type of blockchain is self-governed and decentralized. Hence there will be questions about the cyber security services of a public blockchain. The cybersecurity services of a public blockchain are ensured by a complex algorithm that is nearly impossible to understand or tamper with. So basically, though it is trustless, it is basically hack-proof.
Hence creating a bitcoin wallet requires complex programming to ensure its security. Hence, bitcoin wallet app development will require a set of good programmers. The Bitcoin protocol has its own unique characteristics. For developers planning to code a Bitcoin wallet application development from scratch, a range of skill sets are essential that relate to blockchain technology.
Private blockchain technology is the exact opposite of public bitcoin application technology. Most of the functions that are open to the public in public blockchain services are not open to the public in private blockchain technology at all. Here one can’t read/write or audit the blockchain anytime unless one has the permission to do so.
In private blockchains, the owner of the blockchain is a single entity or an enterprise that can override/delete commands on a blockchain if needed. No one else without permission from the enterprise cannot override or edit commands. it is not decentralized and hence can just be called a distributed ledger or database with cryptography to secure it. In contrast to public blockchain technology, the features of private blockchain technology are –
- Not everyone can run a full node and start mining.
- Not everyone can make transactions on the chain.
- Not everyone can review/audit the blockchain in a blockchain explorer.
Artificial intelligence in a blockchain
Both AI and blockchain involve technical complexity and there seems to be a sense of agreement among experts that these technologies will have serious business implications in the next five to ten years. Artificial intelligence solutions can be used in blockchain technology to make security and efficiency better.
Some of the artificial intelligence solutions in the blockchain would be:
- AI Marketplaces
- Crowdsourced Predictive Models for Hedge Funds
- Investment management Platforms