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About fifteen percent of Americans now own some form of cryptocurrency. Coins have been all the rage on the stock markets for the last few years, in spite of the bubble that popped in early 2018.
Blockchain has gone hand in hand with crypto. Companies changed their name to involve blockchain and their stocks shot higher.
What is blockchain, though, and how is it connected to cryptocurrencies? This quick guide will help you understand the hype.
A Quick Primer on Blockchain
The easiest way to explain blockchain is to say it’s the technology that powers cryptocurrencies. Without it, Bitcoin and other coins wouldn’t be possible.
Blockchain’s uses aren’t limited to cryptocurrencies, though. It’s a powerful technology that can improve the speed and security of almost any transaction.
How Does Blockchain Work?
The principle behind blockchain is providing better security and record-keeping for transactions. When a new transaction is started, it creates what’s known as the genesis block.
The request then moves through a series of blocks in a chain. Each block contains a unique hash, or encrypted security key, as well as data. It also has the hash of the previous block.
The next block can then verify the transaction is legitimate by matching hashes. Since each block has a record of the previous block, it’s possible to trace back transactions. That also makes it easier to see if there’s anything amiss.
If someone were to change a block, it would invalidate all later blocks. Thus, a hacker would need to change all blocks in the chain.
To make the technology even more secure, blockchain also uses a distributed network. Each node, or computer terminal, receives a full copy of the blockchain. All nodes much reach a consensus about which blocks are valid.
In a distributed network, it’s almost impossible for a hacker to get to all the blocks on every node. A node reporting something different from all other nodes would have its blocks invalidated.
Uses in Finance and Beyond
With this in mind, it’s easy to see why cryptocurrencies use blockchain. Cryptocurrencies function on transactions performed online. The blockchain technology allows the network to see which transactions are valid and which ones aren’t.
Blockchain works fast, in addition to being so secure. It makes it possible to keep better tabs on all financial transactions.
It also has uses beyond finance. It could be used to protect the transfer of sensitive information. That’s why blockchain in healthcare is so popular.
It could also revolutionize eCommerce and much more.
Where Do Coins Come in?
Coins are “tokens,” which let you access certain blockchains. Bitcoin lets you access the Bitcoin blockchain. Several coins are based on the Ethereum blockchain.
If you want to buy a particular coin, you’ll usually need to have the blockchain for that coin. If the tokens are on the same network, you may be able to swap them. Most coins represent their own native blockchain, although some are built over Ethereum.
That’s where the decentralized Uniswap token comes in handy. Uniswap tokens let you swap ERC20 tokens like Ethereum the easy way. You can find out where to buy Uniswap tokens easily to get started with swapping.
The Outlook for Blockchain Seems Bright
Blockchain may seem confusing at first glance, but it’s simple to understand. Blockchain experts are always pushing to make the technology safer and more versatile.
As the world shifts online, blockchain technology is more important than ever. Investors could clean up if they back the right contender.
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