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Why Are There Bitcoin Transaction Fees?

Why Are There Bitcoin Transaction Fees?

The term cryptocurrency was introduced by a Chinese engineer named Wei Dai in the year of 1998. At that time, cryptocurrency existed online. The provision for the exchange of cryptocurrency with tokens or any fiat currency was possible in online mode. There was also no central controlling authority like any bank, any financial institution or any government branch required for the exchange of cryptocurrency. Perhaps by clicking on profit builder you can begin purchasing and selling Bitcoin.

People were familiar with the word cryptocurrency and its usage but nobody was aware of the concept used behind cryptocurrency. This was made possible by a guy named “Satoshi Nakamoto”. Now bitcoin has become the most popular cryptocurrency among other cryptocurrencies.

Now let’s discuss the working concept behind cryptocurrency.

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Bitcoin, Blockchains, and Databases

 A blockchain is a storage place for verified Bitcoins. It is a kind of database in which data is stored electronically. The tables are used to store or structure the data in the case of a database whereas blockchains store their data in the form of blocks. The blocks are connected in a queue i.e. one behind another while filled with data. This form makes the data easy to access and further not possible to change by any other. The data stored in the blockchains requires multiple computers, the same as for databases.

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Then a server needs to be connected by the computers. In the case of a database, the owner of the server is a specific person or entity. But for blockchains, multiple computers are owned and controlled by several people or entities. Multiple hardware and servers were used for managing the database of cryptocurrency and also to access blockchains, several computers are required. However, servers were controlled by any particular person and blockchain data is owned by several people. These computers connected to servers are called nodes. The function of the role is to verify the transaction history, and block filling and this way keep the system in working mode.

The Blockchain Trilemma

 A safe, secure, and decentralized blockchain can only work efficiently. The founder of the blockchain trilemma and also of Ethereum, Vitalik Buterin declared that blockchains can meet the criteria of safety, security and decentralization. The programmers who work on the blockchain concept, are in progress to make it a more reliable and safest mode of transaction in the digital world. The security of the blockchain is maintained through coding which makes sure the network nodes are sure about the transaction history before finalising it. Due to its complex nature, the data stored in the blocks is difficult for data hackers against data tempering.

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Decentralization

The blocks that store data of crypto transactions are connected through nodes. Each node is connected to another one. Therefore, the digital information passes from one node to another after passing each node. This makes the security network more efficient. As if someone were to try to hack the information, it would be nearly impossible for them to pass through several networks and reach their goal.

Scalability

Whenever the network will be in used by multiple users at the same time, this makes the network slow due to traffic jams and as a result, the transaction processes become slow. This also makes cryptocurrency prices high. Therefore, a scalable blockchain is a must to maintain the centralized network.

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For scalable blockchain provision, some developers make changes in the coding for direct modifications to each network of the blockchain. Or another network could also be designed which can run parallel to the original one, for example, bitcoin or Litecoin or lightning network.

 

 

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