A rising technological trend bringing sweeping changes to global markets, Blockchain is a phenomenon to behold. The advent of the age of Cryptocurrency is here as governments and financial markets worldwide take note of its impact on existing systems.
Cryptocurrency is genuinely taking the financial world by storm. So much so that Cryptocurrency and the Blockchain systems are now being incorporated across academic curriculums. The new & unique nature of the subject compels many students to seek Blockchain finance assignment help from professionals.
This write-up aims to act as a student-friendly guide to writing a blockchain finance assignment by laying down ludic & detailed descriptions of essential concepts & terminologies. So, without further ado, let us begin.
1. Bitcoin And The Idea Of Cryptocurrency
In 2008, Satoshi Nakamoto introduced the world to Bitcoin’s concept through his paper “Bitcoin: A Peer-to-Peer Electronic Cash System.” He combined the ideas powering several then-existing digital monetary transactions systems and improved upon them to create a completely decentralized electronic cash system. Cryptocurrencies such as Bitcoin do not rely on any central authority to issue currency or settle and validate financial transactions.
To understand Blockchain’s ideas, we need to look into Bitcoin’s concepts and the concept of Cryptocurrency.
- Bitcoin is a collection of technologies and concepts that form the basis of the digital financial ecosystem. Bitcoin users communicate via the Bitcoin protocol stack, which is easily executable over a wide range of Internet-enabled computing devices.
- Bitcoin is the most popular and widespread Cryptocurrency today. As a currency, bitcoins are entirely virtual and are fast, secure & all-pervading.
- Cryptography is a crucial aspect of Bitcoin transactions as advanced encryptions, and digital signatures help secure all currency transfer.
- Like most cryptocurrency systems, Bitcoin is a fully distributed, peer-to-peer system. No central servers are storing a record of all transactions, nor is there any central point of control. Bitcoins. Simply put, nobody owns Bitcoin and its systems.
Many of you might be wondering where Bitcoin gets its value and where Blockchain comes into the picture? Well, we need account assignment help to probe a bit deeper to understand better.
2. Bitcoin Mining and BlockChain
So, how does Bitcoin get its value from, and how does the digital transaction process work?
Well, from the perspective of a potential user, Bitcoin is an application that comes with a wallet where users can store their Bitcoins. Behind the scenes, Bitcoin and its contemporary Ethereum use the concept of “Blockchain.”
A Blockchain is a digital public ledger and contains every transaction ever processed through a Bitcoin account. The authenticity of each transaction is made secure by digital signatures and corresponds to the sending addresses, allowing users to have complete control over their transactions.
According to the official Bitcoin website, up until May 2018, 100 billion dollars’ worth of Bitcoin transactions have been processed. From where did the currency gain its value? Here’s a brief rundown of the whole process that lends Bitcoin its value.
- When a user installs a Bitcoin application or wallet on her/his electronic device, an individual Bitcoin address gets generated. Users can, however, create more than their address. Owners can then communicate their addresses to individuals with whom they intend to carry out a transaction.
- The unique thing about Bitcoin addresses is that users should use them only once.
- Blockchain appears next. The complete system of the Bitcoin network relies on the shared public ledger. Every actual transaction operates through the Blockchain. The course is a database that allows Bitcoin wallets to calculate the amount of spendable balance left. The new transactions can be verified to determine their authenticity.
- Cryptography plays a massive role in the secure and decentralized nature of the Blockchain infrastructure. Using complicated encryption algorithmic procedures, the Bitcoin/Blockchain system makes it impossible for malicious individuals to hack other accounts or corrupt Blockchain.
- The consensus is an essential aspect of Blockchain networks. Bitcoin mining and Blockchain enable to create of a consensus on the system to validate transactions.
Bitcoin networks use computational processing power to confirm and encrypt transactions. The system needs to perform intensive mathematical operations to enhance security. Hash rate is the unit that measures the processing power of a Bitcoin network.
Mining is a crucial aspect of Bitcoin network systems. No Bitcoin transaction becomes a part of the Blockchain until a process called mining verifies and includes it. The trust and security of Bitcoin arise from computational mining. Bitcoin mining requires enormous computation to prove a transaction’s authenticity and bundle it into a clock.
Not all Bitcoin users do mining. Bitcoin mining is a specialized and competitive domain reward participating systems based on the calculations they carry out.
All Bitcoin users possess a private key that verifies their right to spend Bitcoins from a wallet. Individual transaction signatures can be mapped to unique private keys.
The idea of Blockchain and Bitcoin mining is central to the operation of the network. Given the critical and complicated nature of the underlying processes, a detailed explanation is necessary.
3. Transaction Mining In Blocks
Your Blockchain finance assignments might not dwell into the mathematics involved in the subject. However, it will require you to know and understand the techniques implemented by the system.
- No Bitcoin transaction is valid until authenticated and entered into the global distributed ledger, Blockchain. Every ten minutes, Bitcoin miners generate a block that contains the details of all transactions since the last blocks.
- New transactions continually flow into the network from wallets and other applications. All of these transactions go into a pool of unverified transactions.
- Bitcoin miners take unverified transactions, add them to a new block, and then try it to solve the complicated & challenging task of proving its validity.
- Every miner starts adding a new block of transactions as soon as they receive the previous block. Miners who receive the last block know that they have lost the competition of proving the authenticity of that block.
- Miners are a special breed of computer and cryptographic experts. They use computational power and their expertise to validate transactions & add them to blocks. Bitcoin miners cannot decrypt previous locks or look into previous transactions. They also cannot tamper with Bitcoin wallets since private keys protect every single wallet.
- All miners include a unique transaction in their block where they intend to receive their Bitcoin reward to complete their transaction. Suppose they find a particular solution that makes a block valid. In that case, that block gets added to the global Blockchain system, and the rewards transaction of 25 Bitcoins per block gets added to their wallet.
For example, suppose a user named Alan made a Bitcoin transaction picked up by the network. The transaction goes into the pool of unverified transactions. If the wallet has sufficient funds, it will be included in a new block after being authenticated by a Bitcoin miner’s mining pool. The miners rig or computer systems obtained a solution for the blocks’ validation and published it on the Bitcoin network where other miners validated it. The race for validating the next block then ensues.
- In a Blockchain, as the number of blocks increases, so does the whole chain’s encryption. One block mined on the top of another is known as a confirmation of the block’s entry into the chain. As blocks keep on piling up on one another, the chain becomes more trusted by the network.
- Bitcoin mining is the process by which new Bitcoins are issued to the network. The number of Bitcoins generated by block validation decreases by half every four years. By 2140, no further Bitcoins will be issued.
However, mining is not about generating new Bitcoins. The primary process decentralizes and secures the whole system.
- Bitcoin mining and BlockChain are the things that make Bitcoin networks secure and enable the emergence & continued existence of network-wide consensus without the requirement of a central authority. Mining allows for a peer-to-peer digital transaction, and the reward of newly minted coins & transaction fees aligns Bitcoin miners’ actions with the system’s security requirements.
Now that we have some ideas about the Bitcoin networks’ underlying processes let us determine whether, despite the entire hullabaloo, do any significant businesses use Bitcoin and do any economy consider it a valid financial instrument?
4. Bitcoin and Blockchain Across the World
The following two points reflect the rising influence of Bitcoin and Blockchain.
- Several countries, including the world’s most powerful economy, allow financial transactions to be carried out in Bitcoin.
- Major corporations are using Blockchain technology to mobilize their assets across the world.
Here are some of the companies that have implemented the Blockchain system in their operations. The list compiled by Forbes contains 50 businesses that generate no less than $ 1 billion or more in revenue.
- Amazon= As an extension of Amazon Web Services, the e-commerce behemoth offers blockchain tools for companies that cannot build their own. Clients like Sony Music, BMW, Accenture, Jinju Beer, Nestle, etc.
- Ant Financial= The Chinese financial platform used Blockchain heavily.
- Anthem= The American Health Insurance company uses Blockchain to secure patient medical data.
- Aon= The British corporation is using Blockchain to secure itself from hacking and enhancing your insurance operations.
- Baidu= The Chinese search engine heavily implements its version of Blockchain in its operations.
- BMW= Germany’s luxury carmaker avail Amazon Web Services to implement Blockchain and secure its supply chain. It is also a member of the MOBI ( Mobile Open Blockchain Initiative) and uses Blockchain to give cars a secure digital identity.
Many countries across the globe allow financial transactions using the blockchain system and Bitcoins & Ethereum as currency. Some of the most prominent ones are:
- The United States Of America, where Bitcoin is even categorized as properties for taxation by the IRS,
- Canada, which considers Bitcoins as money service businesses,
- Australia, which has a similar stance to Canada
- The European Union, such as the UK, Finland, Germany, Bulgaria, etc.
Though Bitcoin has been around for many years, its decentralized nature is the things that make it both secure and challenging to regulate. This is the reason why many economies are reluctant to embrace the currency.
The secure and heavily encrypted nature of the underlying technology is attracting businesses and other entities worldwide. Blockchain is one of the leading trends to look forward to in 2021. And this is the reason why it is a major subject in finance curriculums across academia.
So, before ending this write-up, let’s look at how Blockchain is slowly but surely transforming the financial domain.
5. Blockchain in Finance
- Blockchain technology has disrupted existing operations in the finance and banking industry. The tech has been able to reduce the number of frauds in stock exchanges and money transfer services. Its highly secure nature prevents money laundering and protects the system from cyber-attacks.
- The system allows independent and reasonable verification procedures that can be used by different agencies with ease.
- Blockchain gave rise to smart contracts that contain unique digital signatures for secure financial transactions.
- Blockchain revolutionized all payment procedures by removing all intermediaries in the payment processing system and ushering in higher security.
- Operational errors reduce with proper implementation of Blockchain.
And that brings us to the end of this write-up. As we move into the age of AI, data science, and automation, cryptocurrencies such as Bitcoin and technologies like Blockchain are expected to play a significant role in manipulating the world economy. Research more on the subject and use this guide as a reference for your investigation & for acing your blockchain finance assignments.