Blockchain technology is a method that makes it possible for Internet users, to send and/or receive money without need to use a third party infrastructure. Using a specific blockchain application and by way of cryptography, money remains confidential and virtual for as long as transfers are made and recorded in the open ledger of a blockchain platform.
The blockchain platform supplies the “private key” or the verification code needed by each transacting party, either as a cryptocurrency sender or recipient. Without a private key, the cryptocurrency cannot be transferred or recorded in the blockchain ledger. The inclusion of a private key encryption therefore, renders the cryptocurrency transaction valid.
Correlated to the “private key” is the “public key,” the latter being the open cryptographic message generated by the blockchain application to identify every cryptocurrency transactions recorded in its blockchain ledger. A blockchain cryptograph entry therefore represents the public key and a valid private key.
How the Blockchain Platform Records and Links All Related Cryptocurrency Data
The blockchain ledger is open as it allows verification of transactions as they occur.
A specific blockchain recording, starts by linking the origin of the cryptocurrency in use. The original cryptocurrency transaction may be related to the purchase of the virtual money for a specific value using actual cash. The virtual money may have originated from a cryptocurrency exchange platform or cryptocurrency wallet provider.
Another origin of a specific cryptocurrency is when a miner earns it by solving all transactions connected in a particular blockchain ledger.
In both cases, a public key to identify the original transaction is generated, while the procurer or miner receiving the cryptocurrency will obtain a “private key.” If a portion or all of the original cryptocurrency received will be sent to another blockchain platform user, the private key encryption of the new owner will be recorded in the blockchain ledger.
The new recipient will likewise receive his or her own “private key,” as it gives the recipient valid authority to use the cryptocurrency for his or her own blockchain transaction.
In every blockchain transaction, the public key identifying the cryptocurrency transaction must come with a corresponding “private key,” to allow confirmation that the transaction is connected to a particular series of blockchain entries.
A cryptocurrency may be in bitcoin denomination or any other type, classified as alternative coins to the widely used bitcoin. Some examples of alternative coins or altcoins are Ethereum,Litecoin, Ripple, Dash and Cardano.
How to Convert Cryptocurrency into Actual Cash?
Still using cryptography, virtual money or cryptocurrency can be converted back into actual cash through a cryptocurrency exchange platform. The platform may be one that belongs to a third party cryptocurrency broker or a peer-peer network of cryptocurrency users.
The commutation of virtual currency into actual cash will again be recorded as a related part of the series of blockchain transactions; tying it up to the initial blockchain entry identifying the method of how the cryptocurrency was obtained. Once the public key and the private key has been verified through the blockchain platform, actual exchange of cryptocurrency into cash will be allowed to take place.