Blockchain technology is being hailed as the future of cryptocurrency. A blockchain is a distributed digital LEDGER that records transactions across many computers. Each computer stores a copy of the ledger and any changes are instantly updated on each machine. This makes blockchains extremely secure since no single point of failure exists; if one machine fails, its data is not lost. Blockchains are best known for their use in cryptocurrencies such as Bitcoin.
2. Smart contracts
Smart contracts are self-executing agreements written using code. These codes are programmed to execute once certain conditions have been met. In the case of cryptocurrencies, smart contracts allow two parties to create a binding contract without needing to go through intermediaries. Once created, the contract cannot be changed unilaterally. Instead, the terms of the agreement need to be agreed upon by both parties before the contract goes into effect.
3. Cryptocurrency
Cryptocurrencies are digital currencies that use cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Several physical commodities, especially precious metals, artworks, and collectibles, have been traded for centuries using barter systems. However, these markets were closed to outside participants until the advent of modern cryptographic currency. Since then, several different types of digital currency have emerged, including bitcoin (BTC), ethereum, ripple (XRP), litecoin, monero, stellar, dash, zcash, ByteCoin, and dogecoin.
4. Decentralized exchanges
Decentralized exchanges are online platforms where users post offers to buy or sell goods. These platforms operate peer-to-peer and eliminate third-party interference. Users set their own transaction fees and remain anonymous.
Initial coin offerings are similar to crowdfunding except that they offer investors coins in exchange for funding the project’s expenses. An example of this would be Kickstarter, which offered people who supported various projects small amounts of money in return for exclusive rewards.
6. Digital wallets
Digital wallets are software programs that store private keys on a user's device. These keys are used to access funds stored on a central server. The most popular type of wallet is a desktop application, however, mobile apps are becoming increasingly popular. Wallets range in size, price, and security features. Popular wallets include Trezor, Ledger, and KeepKey.
7. Mining
Mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions called the blockchain. This ledger of past transactions is called the blockchain because the process involves solving a computationally difficult puzzle to “minimize the gap between inputs and outputs” — i.e., making sure that the right amount of bitcoins go in and out of addresses.
