Cryptocurrency is the coexisting entity to Satoshi Nakamoto’s greatest contribution to financial technology – the Bitcoin.
Bitcoin is a peer-to-peer electronic cash system which enables decentralised consensus. Cryptocurrency is a part of this innovation; a medium of exchange, stored in the blockchain that uses encryption techniques. On the other hand, blockchain is a decentralised database that stores cryptocurrency transactions. Its name is derived from the clustering processes of transactions into blocks. During the process, each block, except for the first, backtracks to a previous block. Each node in the network has its own copy of the blockchain and is synchronized with other nodes using a peer-to-peer protocol.However, since the blockchain is decentralised, a false version of a transaction can be produced without the user’s knowledge. Thus, it requires certain techniques and algorithms to ensure security when transactions are in process.
For example, Bitcoin uses a Proof of Work (PoW) algorithm as a security protocol where “miners” (cryptocurrencies are “mined” in order for transactions to take place under this algorithm) need to solve a complex mathematical problem in verifying transactions. In turn, the first miner to crack the puzzle will be given a block reward.On the other hand, Ociter employs a Proof of Stake (PoS) algorithm, an alternate protocol for verifying transactions on the blockchain. In equivalence to PoW’s “miners”, the “forgers” (sometimes called “validators”) create new blocks in a deterministic method that relies on the forger’s significant amount of stakes. No block rewards are given in this algorithm, thus, transaction fees are forwarded to the forgers once a transaction has been validated. A blockchain attack will only be successful when the attacker influences the system by manipulating the consensus, controlling 51% of the total computing power.