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Blockchain Technology Explained

By Hank Blaine

Thanks to Bitcoin, blockchain technology has steadily risen in the digital financial and trading sphere given the subsequential boom of the cryptocurrency market.

However, there’s more to Bitcoin, cryptocurrencies, and blockchain technology in general. Bitcoin is still widely regarded as a volatile asset, with its value being dictated by the cryptocurrency industry itself. Investors should be well aware that Bitcoin’s dominance over other cryptocurrencies sets the price for Bitcoin.

That being said, we are committed to publishing NitroBetting guides that will help you understand the basics of crypto, blockchain technology, and how it factors into your investments in Bitcoin.

Safe and Immutable Storage

Traditional banks and financial institutions have proven time and again that they’re not well-equipped when it comes to cybersecurity, as countless hackers have managed to infiltrate these companies’ defenses. These security breaches have not only resulted in the loss of revenue but also in having personal information of thousands of customers ready to be leaked and exploited.

Blockchain technology, meanwhile, guarantees that hacking into its system is rendered futile. However, that doesn’t mean that Bitcoin users are without fault in investing in the product. Users must put their trust into an anonymous third-party entity running the Bitcoin blockchain from the back end. On the other hand, transactions using blockchain require little to no personal information, providing almost complete anonymity between the two parties in a given transaction using Bitcoin.

Compared to fiat currencies, stocks, and other physical investments (gold, precious metals, and gems, etc.), theft and loss of Bitcoin is hardly an issue. In contrast, this higher level of security is what traditional financial companies lack, which is why many online investors have converted most of their assets into Bitcoin instead.

A Distributed Platform for All Applications

“Smart Contracts” are the latest developments from the second generation of blockchain platforms. These contracts, which originated from the Ethereum blockchain, execute commands based on encoded parameters on a typical blockchain peer-to-peer network. Besides being an off-chain solution to ease network congestion, each smart contract adds another layer on top of other transactions, allowing for complex systems to operate.

These systems form what’s called a decentralized application, which can be utilized for any digital purpose. But Bitcoin investors need not worry about the technical aspects of decentralized applications, as blockchain administrators made sure to install a user-friendly front-end for Bitcoin users to navigate their transactions with.

Alternative cryptocurrencies often make use of underlying decentralized applications, extending the use of cryptocurrencies for investments, online gaming, and even blockchain-based social media activities. These alternatives often make use of cryptocurrencies to represent a share of the cryptocurrency market, while others simply use cryptocurrency as a means to fulfill online transactions and contracts. This makes these alternative cryptocurrencies even more volatile than Bitcoin.

Smart contracts provide a new function for Bitcoin apart from being just another digital currency. They also allow for Bitcoin to run on a trustless, distributed operating system. As the Bitcoin blockchain expands its applications, so too does the possible innovations of the platform. Smart contracts represent working products, and investors will be safe with the knowledge that their investment in Bitcoin is a working, evolving entity, rather than a dormant investment that’s neither rising nor dropping in value.

Investments in A Digital Realm

Over the past few years, several new Bitcoin investment options have emerged. However, a certain degree of technical knowledge is often required for direct investment in Bitcoin. Given this hurdle, financial institutions introduced an exchange-traded fund (ETF) based on Bitcoin to alleviate the issue. This shifted the focus of Bitcoin investment to be more financial than technical, which in turn opened up a larger investment base.

However, it’s still worth noting that governmental laws on cryptocurrency trade vary from country to country. But with how the Bitcoin framework is as it stands, investing in a Bitcoin ETF is not only similar to trading stocks, it’s also a much safer alternative from a legal standpoint than traditional stocks.

Some Bitcoin competitors, also known as “alt-coins”, are now listed as securities and with their platforms capable of being publicly traded on the stock market. Although alt-coins such as the Grayscale Bitcoin Trust (GBTC) offers a more “traditional” means for an investment, it also comes at a high premium, which results in a more high-risk, high-reward situation.

In summation: there are plenty of methods in which one can invest in Bitcoin. It’s all a matter of how much risk an investor wants to put into the market, with more risk-averse investors opting for safer options like a Bitcoin ETF or GBTC investment. And regardless of which investment option suits a certain investor, Bitcoin ultimately provides the safest and fastest-evolving investment in the digital market.

For a more detailed explanation on BTC, how it works, and what you can do with it, head on over to our bitcoin guide for a quick BTC info-boost!