If you have an online retail that has integrated cryptocurrency payment in 2019, Congratulations! You are already staying ahead of the game. But blockchain tech is too complicated just to understand the general idea of how it works. I have asked many people, and they still think Bitcoin is controlled by the Chinese government (maybe they are onto something, but let’s just skip the conspiracy for now) To help users sidetrack from the rumors, this article will delve into the simple understanding of blockchain, cryptocurrency and what to do with it.
Block and Chain
As the name suggests, blockchain contains 2 parts: block and chain. In the blockchain network, data will be stored in units, which are called blocks. Each block has a unique combination of numbers and letters called hash, which is used to identify the blocks. Each block also has the hash of the previous block and the next block. Changing 1 bit of the hash will cause an avalanche effect on the blockchain, which changes the hash of all the blocks, hence the “chain”. Until this point, you might wonder “Then it’s not that secure after all. Anyone can change the information.”
This is the beauty of this new but not-so-new technology. Anyone can change the information of the blockchain, but it needs authorization from the mass. Data on the blockchain is controlled by many broadcasters, called nodes. In the Bitcoin network, anyone could set up the nodes to confirm the transaction, making it a P2P network. The nodes cannot broadcast any information they like to the blockchain. They need to broadcast and receive uniformly the same information, and follow a rule set, which is called the consensus. In order to create a new block on the blockchain, they are required to solve a puzzle, or have enough cryptocurrency. (depending on the consensus) Anything gets the majority approval of the nodes (51%) will be put on the blockchain.
The node which is used for data verification also has its variations: the node and the miner. A miner is a node used for verifying transactions and producing new blocks, which usually gives them rewards. For example, the consensus of the Bitcoin network is Proof of Work, and whichever node has solved the cryptographic puzzle will be given 12.5 BTC for their trouble. (It’ll be halved next year) BTC is the cryptocurrency. It is used to pay for sending BTC to another wallet, buying a new mining machine, or donating to Wikipedia. Because of its scarcity and value, 1 BTC is worth a hefty sum on the market.
Whoever possesses BTC, keeps it in a wallet (or multiple ones). The wallet is created with a public key and a private key. The public key is displayed to the public, which anyone could view, while the private key provides the ownership of the wallet. Only the one who has the private key could access the cryptocurrency inside or send it to another wallet. Moreover, the wallet address is generated from the public key, and used to identify the wallet on the network. To sum up:
- Blockchain is the combination of P2P event records secured by cryptography and incentivization to keep the network running without the control of a centralized body.
- Cryptocurrency is the currency created as a reward from the process of keeping the network running, and can be exchanged inside the network.
What To Do with Cryptocurrency
What will you do if you have 10 BTC now?
I’m not surprised if you are clueless as a Bitcoin first-timer. The good news is you can buy pretty much anything with BTC now (on the black market), or sell it for a hefty sum of cash on any available cryptocurrency exchange. However, the chance you receive 10 BTC out of nowhere is astronomically low. But it can change if you have an online retail store.
Another good news is, you can integrate cryptocurrency payment in your store, with the help of ezDeFi Gateway. ezDeFi is a gateway designed specifically for cryptocurrency payment, which utilizes P2P Communication. Every transaction is processed through the gateway and happens directly between the merchant and the user. Not just BTC, payment could be in the form of ETH, XRP, or LTC, etc. With just 0.1% for each transaction, merchants don’t have to worry about piling cost of traditional payment gateway.
What if I want to receive fiat currency instead?
Right now, the system of OTC exchanges are convenient for cryptocurrency holders. They can exchange pretty much any of the popular cryptocurrency on those exchanges and receive the native fiat currency, with even less fee than received fiat currency payment directly.
Cryptocurrency is not Monopoly money !
The current development of cryptocurrency is not overlooked by big companies. Microsoft, Expedia, Overstock, and Namecheap are the big names that announce its cryptocurrency payment. So in certain scenarios, cryptocurrency can be used to purchase the services or products from those companies.
Contrary to popular belief, cryptocurrency is not a shady currency used strictly for black market. Due to its efficiency and transparency, many corporations are starting to adopt blockchain into its business, as well as developing their cryptocurrencies. Adoption for this new type of payment is gaining increasingly attention, and ezDeFi Gateway shall help merchants make their first step in this new era of digital finance.