Apart from the material cash payment, almost all real-time payments suffer a doubling spending issue. This problem is totally avoided in the case digital currency transfer because such electronic assets are carried and passed between the peer end users of a networking system with the help of a public-private cryptographic key. This encryption technology is dependent on the blockchain concept and maintains a public record of all transactions in a sequential order.
The automated working manner of blockchain with the help of combined computing powers of user network verifies and updates balance and secures transaction. Each confirmed transactions are added to the chain which further revises their block version and thus maintains the good record. Transactions are possible only for those parties who hold the password or the private key associated with an account, usually referred as a public key.
Theory of Mining Process
Mining is distributed consent system that is used to allow the waiting transactions, by coding them in blocks and is added to the blockchain. It is a so-called source of new virtual coins which are later taken up by the dedicated miners of the network.
Miners are a part of this network that possesses the power to collect the exchanging requests and accordingly assemble the blocks added to the blockchain. Coin incentives are rewarded by the protocol to the able miners as an idea to increase the coin circulation.
The fixed circulation rate at which the coin enters network helps in maintaining and protecting the system from an oversupply of currency or hyperinflation. This whole process of producing a valid block is time-consuming and is a kind of a complex math puzzle for the miners to solve. This puzzle is further associated with a cryptographic hash function.
Some features of this hashtag include
- Asymmetric in nature
- Hard to solve but very easy to verify
- Leave a proof-of-work fingerprint
- Protects the neutrality of the network
- Works in a predetermined manner
The mined coins are known as the virtual currency and a bitcoin is an example to this. Each user transfers the bitcoin to the other end user by digitally signing a hash of the preceding transaction. The only thing needed to initiate a transfer is the bitcoin address of the recipient. This particular digital coin is known to be pseudonymous as they never exhibit anyone’s identity. The users secretly store these coins in their virtual wallet which are efficiently used for Fintech Limited trading purpose.