In the first part of this article, we have discussed about the crypto history and the problem with double spending. Traders of cryptocurrency must be aware of the double spending fraud.
The traditional solution to this is that a trusted third party (central server) keeps records of all balances and transactions. It requires a central administrator who is familiar with the details of the money transactions and the personal information of individual users.
All individual participants do this in decentralized networks such as bitcoin. This is possible to do through blockchain, a public ledger that records all transactions that have occurred within the network and is accessible to anyone. In conclusion, anyone within the network can see the account balance of everyone.
Read more: Bitcoin Maintains Bullish of $10,000 Range
Crypto history: the mechanism of cryptocurrency transaction
All transactions are in the form of a file consisting of the sender’s and recipient’s public key (walllet address) and the amount of coins sent. The sender must give final approval with the private key for the transaction to take place. All of this is part of basic encryption technology. Ultimately, the transaction spreads across the network but requires confirmation from those involved before then.
Miners within the cryptographic network can only see the transaction details if they solve the cryptographic puzzle. They mark transactions as legitimate and spread them throughout the network. Then all nodes on the network are added to the database. Once the deal confirmed, to forge or reverse it will be impossible. And the miner will receive compensation and transaction fees.
The legality of balances and transactions in any cryptographic network follow the Absolute Consensus of all participants. If some nodes on the network object to a single account balance, the system will lose ground to exist. However, there are numerous rules and programs within the network to prevent this from occurring.
Meanwhile Cryptocurrency is crypto because the process of maintaining agreement needs strong encryption technology. Along with the aforementioned points, this makes the existence of a third party and unconditional trust not necessary at all.
