Why blockchain technology matters for Bitcoin
Posted on April 6, 2021 by Jonathan Symcox
The meteoric rise of Bitcoin in 2021 has also put blockchain technology in the spotlight.
The unique technology is the reason cryptocurrencies exist today, and why they have found widespread use. But, specifically for Bitcoin, the design of the blockchain network is one of the main factors that has pushed the price of Bitcoin and helped with its status as a safe-haven asset.
Let’s take a look at the blockchain network and why it is important.
What is blockchain technology?
Blockchain technology was invented by a pseudo-anonymous person or people that go by the name Satoshi Nakamoto. Satoshi Nakamoto’s innovation came as a response to the global financial crisis in 2008.
He wanted to create a deflationary and decentralised cryptocurrency and, for that purpose, developed blockchain technology. This technology is basically a public ledger of transactions, while the transactional records are stored and duplicated to computers all over the world.
This is an open network, and anyone can join it; the same software runs on every computer, while the data is viewable to every user in the network.
So, in other words, at any time the records of every transaction can be viewed by every user. This transparency helps with the security of the network, but what makes the network tamperproof and secure is the cryptography.
Actually, each block of transactions is linked via cryptography. Secondly, the mining process is another important component of the blockchain network because the entire network reaches a census by approving blocks of transactions and making sure the system remains safe and fair. For adding blocks of transactions to the ledger, the miners get block rewards. One of the main outcomes of the blockchain network is the new BTC that is generated through mining.
So, without the blockchain network, it would not be possible for any BTC transaction to take place, and also, there won’t be any available supply of BTC. Furthermore, it was the only source for obtaining BTC early on. Now, the blockchain network is part of the underlying technology of many online trading sites, which makes investing in BTC a far easier process.
For example, Bitcoin Equaliser is an automated trading system that has partnered with reliable robot brokers. Moreover, they want to provide the best possible customer experience, that’s why they offer top-notch customer support to their members. If you want to register on the platform, you only need to make a deposit of $250.
The supply of BTC
Beyond making sure the process of making and receiving BTC transactions is easy, safe, and fast, the blockchain network was designed to regulate the supply of BTC. Due to the decentralised nature of the blockchain system, there is not an entity that is responsible for the control of the supply of BTC. In fact, the protocols of the network allow it to adjust the available supply of BTC in order to maximise its value.
One example is the Bitcoin halving, which halved the above-mentioned block reward of the miners, thus slowing down the rate at which new BTC are created. The event occurs whenever 210,000 blocks are added to the network, or it takes about four years to happen.
Usually, whenever it happens, it elevates the price of Bitcoin, and the currency enters a bull market phase. More specifically, the last bullish cycle happened after the halving in May. And, as we know, Bitcoin is now worth almost $60,000.
In addition, on the blockchain network, the miners exercise their right to vote on any proposed change. Based on the computing power they add to the system, they have a certain number of votes. This is also an essential governance structure that is based on the blockchain network.