Block Chain Technology Assignment: Significance Of Cryptocurrency
Write a report on block chain technology assignment critically analysing the growth and importance of cryptocurrency.
Introduction to block chain technology assignment
a) Short Description of the Block chain Technology and its relation to the creation of Crypto currencies
According to the view of Berentsen and Schar, (2018), Block chain technology has been considered as a tool of recording transactions between two parties effectively in a permanent way. The recording of transactions can be made effectively as blocks are linked in the block chain technology based on using cryptography. As mentioned by Glaser et al., (2014), each block focuses on the cryptographic hash of the previous block and transaction data. The reason is the linking enhances the record transaction process and effectiveness of the technology has been increased.
As mentioned by Nadarajah, and Chu, (2017), Block chain technology enhances recording of a series of transactions which reveals that it is a shared ledger system. The Bitcoin cryptocurrency has been developed based on the block chain technology for ensuring the quality of digital transactions. Based on the view of Nakamoto, (2008), the Bitcoin cryptocurrency has been developed based three pillars of Block chain technology including decentralization, transparency and immutability. According to Conti et al., (2018), the decentralization technology helps to offer each single user an opportunity for becoming one of the network’s different payment processor. Grover et al., (2019) have stated that transparency in the Block chain technology has been maintained by linking between one block to another. As mentioned by Tien et al., (2018), immutability is an important feature in case of Block chain in the creation of Cryptocurrency. By agree with the statement, Hunter and Kerr, (2019), have stated that block chain helps to increase the ability of ledger for remaining unchanged. As asserted by Fábio et al., (2020), the application of immutability helps to maintain transparency in the use of cryptocurrency which ensures the security of the entire system. Actually, the digital cryptocurrency system based on block chain technology has enhanced the transaction system. The use of standard mechanism can be ensured by applying block chain technology in relation to the creation of crypto currencies. Cryptocurrencies are associated with lesser incidences of fraud, owing to its secure handling through blockchain technologies, which is the reason in the world with growing instances of theft in banking systems, people are growing increasedly interested in cryptocurrencies.
b) Evaluating the growth of Crypto currencies
Figure 1: Time Plot Based on Current Price of Crypto Currencies
(Source: CoinMarketCap, 2020)
Based on the overall graphical analysis, it has been identified that the price of Bitcoin is very high compared to other cryptocurrency platform. This clearly reveals that Bitcoin has high demand in the market for its flexibility in the use. The price of Bitcoin is 7138 US dollar while the Price of Lite coin is only 43.06 USD. Except Bitcoin, other crypto currencies are having same demand in the market. According to the view of Tran and Leirvik, (2019), it has been identified that the use of cryptocurrency has enhanced digital transaction system throughout the globe. Among various crypto currencies; Bitcoin is most acceptable in the world and the growth would be increased in the future.
Figure 2: Time Plot of Change in Price of Crypto currencies
(Source: CoinMarketCap, 2020)
Based on the above graphical analysis, it is completely clear that the consistency in price has been maintained in Bit-coin and Bit-coin Cash. The maximum price change has been identified in case of in case of Chain Link Crypto-currency. From the view of Selim and Tu?berk, (2019), it has been identified that the decentralization process has been fully implemented in case of Bitcoin digital transactions and it has helped to maintain stability in the price. The graphical representation also states that the Price of Bitcoin and Bitcoin cash both have stability in the market. As the usage is reliable and transparency in the mechanism is followed, in future, the demand of Bitcoin cryptocurrency would be increased more.
c) Importance of Crypto currencies with reasons
In order to identify the importance of cryptocurrency, it can be stated that transactional property of this type of currency ensures the occurrence of transactions internationally (Hsieh et al., 2018). The reason is once the confirmation has been in case of transaction process that cannot be reversed. According to the view of Bouri et al., (2019), in case of Bitcoin transaction, it has been identified that the irreversible mechanism has enhanced its acceptance throughout the globe. As mentioned by Naheem, (2018), the monetary property of Cryptocurrency in addition to the transactional property has enhanced the quality of digital transaction and the acceptance is increased. This is because, the monetary transaction of cryptocurrency focuses on the token supply control according to the demand and flawless transaction can be made easily. Furthermore, the use of mining policy has helped to make an appropriate confirmation of transactions. In this context, it can be stated that the Block chain technology has been used in the process of validating crypto currencies. Based on cryptographic algorithm, the universal acceptance of the currency including Bitcoin can be developed (Dierksmeier and Seele, 2018). Hence, according to my opinion cryptocurrency is important in case of digital transaction system. The key reason of accepting this is standard format of transaction has been followed considering mining, monetary and transactional properties.
Based on the above discussion, it has been identified that the use of cryptocurrency including Bitcoin has enhanced digital transaction system all over the world. The demand of Bitcoin would be increased in future more as it is an effective way of transaction. The key matter is maintenance of security in the transactions and that can be easily applied by the used of crypto currencies.
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