Blockchain Technology Key To Cyrptocurrency

Blockchain technology is the basic element of digital data that represents digital currency. Before examining blockchain you need to understand the basics of cryptocurrency.

Currency Basics

Conventional currencies are money used as a medium of exchange.

Some currencies are “fiat” money. They are not backed by any commodity like gold. They are issued by government fiat and initially worth whatever the government declares they are worth.

Some currencies are “commodity money” because they have an intrinsic value of their metal content (e.g.coins)

Some currencies are “representative money” because they merely represent an underlying commodity (e.g. gold or silver) and can be exchanged or converted to the commodity represented.

Most currencies are “fiat” money issued by a central bank. The United States central bank is the Federal Reserve Bank.

An advantage of fiat currency is that having been issued by a central bank, the central bank can regulate the money supply. That enables the central bank to establish monetary policies that affect supply and demand for legal tender. With this tool, the central bank can modulate economic fluctuations like inflation or recessions.

Digital Currency

In a sense, digital currencies are unsecured digital promises to pay. The common form of digital currency is not issued by a central bank. They exist as a decentralized system. Thus, they are not regulated by a central bank. They are issued and sold by private entities that control supply and demand just as a central bank controls supply and demand of normal currencies.

However, with the emergence of privately issued digital currencies, central banks became increasingly concerned about a loss of control of the monetary system. So digital currencies are now being created by some central banks. Some countries have even banned private digital currencies.


The basic element of digital data backing up digital currency is the “blockchain”. It consists of blocks of information or transaction records that are linked sequentially forming a chain or ledger of information and records. Blockchains are public with open access or private with restricted access. Hence, transactions can be available for all to see or hide.

Cryptocurrencies are commodities like grain and precious metals. Other commodities are grown, cultivated, or mined. They are not created without cost.

Likewise, digital currencies, (i.e. blockchains) are “mined” by a costly process of converting great volumes of energy. Blockchain mining is a process of creating, verifying, and digitally adding blocks of transaction records to a chain of such blocks.

Anyone can be a blockchain miner if they have the required hardware and software. An order for a specific number of digital currency (e.g. Bitcoin) is offered to a network of blockchain miners who are challenged to solve a complex mathematical problem. The first miner to solve the problem gets the order. The losers verify the record before it is added to a blockchain.

The mining process consumes an extraordinary amount of computing power. Some blockchain miners installed new power plants, or purchase existing power plants and install their computer plants nearby.


Blockchain technology is used for myriad data applications. It allows records of transactions to be recorded and communicated without being altered or destroyed. It is particularly suited for cryptocurrency trading.

Trading in cryptocurrencies is a complex investment. OKX operates principally as a cryptocurrency exchange. It also offers excellent tutorials on the basics of crypto trading.