Cryptocurrency is a peer-to-peer currency system that works on a decentralized ledger system. This currency is designed to meet the needs of the digital era. The blockchain ledger technology provides cryptocurrency an advantage over the traditional ledger system that is used in banks and other financial institutions.
The traditional ledger system is decentralized which means it is controlled by a single authoritative body. The decentralized ledger system of the blockchain that is used in the cryptocurrency is accessible and maintained simultaneously by a number of computers across the network. It is for this reason the cryptocurrency is more secure and more efficient than the transactional system embodied in existing financial institutions.
Transactions on the crypto networks have increased over the past few years. Multinational corporations like Tesla, Square Inc. have invested in crypto assets to reap the benefits of the blockchain technology. With the availability of trading platforms like digital currency, new traders are also able to trade in cryptocurrencies.
But what exactly is the blockchain? How does it function? These are some important questions that we should understand in order to fully explore the idea of the Genesis block. Let us get started by understanding how a blockchain works.
How is the blockchain maintained?
The blockchain is maintained by a group of miners. The task of the miners is to audit and verify all the transactions that take place over the cryptocurrency network. It is through the process of mining that the miners are able to determine whether a transaction is a legitimate one.
Mining is the process through which the miners are able to verify and audit transactions. It is also through this process that new crypto coins are generated and added into circulation. The miners are able to successfully create a new block of rewards in crypto coins. Mining can be understood in this few simple steps:
- A user who owns a crypto wallet and a private passkey can make transactions with crypto tokens.
- On making a transaction it has to be verified by the miners.
- The miners are required to solve complicated mathematical equations in order to generate the required hash number that would verify the legitimacy of any transaction.
- Once they are able to generate the approximate hexadecimal number they are able to verify the transaction in order to create new blocks of transactional data.
- The new block is added in the linear sequence to the existing blockchain
As mentioned above, the blockchain consists of a series of blocks. The blocks in a blockchain are used to store the record of all the transactions that have already been verified by the miners.
The first block that was mined in a cryptocurrency network is known as the Genesis block. The Genesis Block is the foundation of the blockchain that goes into the creation of the ledger system of a particular cryptocurrency.
Structure of the genesis block
The genesis block is the block 0 in a blockchain. To put it simplistically, a block can be equated with a page in a ledger or a spreadsheet. When one block is completed, the chain introduces a new block.
All the blocks are linked to each other. This means that every new transaction is verified against the totality of all the transaction history since the genesis block. This makes the blockchain secure and more accurate than the traditional ledger.
A block consists of a unique header that consists of the respective hash. The block does not only store the transaction data, but also the time and the address of the wallets from which transactions were made.
Additionally, the blocks also consist of a record of the previous block. The genesis block is an exception to this as there are no blocks before it.
Conclusion: The blockchain ledger system is used to keep an accurate account of all the transactions that are taking place over the cryptocurrency network. The blockchain is highly encrypted and it works on a consensus program. These features make the blockchain more efficient and more secure than the traditional ledger system that is used in banks.