We know that cryptocurrencies are a form of digital currency with no centralized agency to control or generate them. If they are not issued by any central authority, then how do they enter the economy? The users cannot mine these coins at their home nor can they buy them from anyone. These coins are released into the economy by a digital decentralized, but public ledger is known as blockchain.
With every transaction won by a user by winning the complex computational puzzle, a block is added by the ledger and a blockchain is created, and every new block added releases a coin into the digital market. the blocks are added in a chronological order and the newly released coins can be easily distinguished. The transaction which is currently added becomes the block and is immediately followed by the next in a linear fashion to form a chain of numerous such blocks.
Blockchain as a product of Fintech
Blockchain method was originally invented to carry out transactions and keep records on bitcoins. With the introduction of Fintech system known as Distributed Ledger Technology (DLT), it changed its form and utility and became the public ledger of bitcoins.
It combines dual side benefits where the ledger is helped by digital record keeping of coins and cryptocurrency transactions and manage the participants of bitcoin managing, while the nodes automatically get a digital record of their activity in the blockchain. You insert any kind of digital transaction into the blockchain, it is automatically saved and placed in the chronological records along with the user addresses, ready to be retrieved anytime you want.
Fintech has not only transformed cryptocurrency market but has also added its commercial value. Even though legal issues exist for bitcoin transactions, many payment gateways and online merchants are open-minded in this case.
The ledger releases the coin, but the coin is wholly owned and used by the trader alone, without having to submit any regulatory documents to an authority. If security is a concern, the blocks are added using cryptography to prevent copying of the data even though they can be accessed by the nodes. The data stored in the blockchain can be shared by all the participating nodes in the network.
Initially, a product of bitcoins alone, this financial technology is now finding application in various other fields like financial education and firms, stock exchanges, insurance, service sectors, music, jewelry and so on. It is not impossible to see this electronic system playing crucial roles in governance and public life.