Cryptocurrency is a form of electronic money that uses cryptography and distributed databases to control the issuance and transfer of bitcoins. The currency is traded over an open market where traders buy and sell units of it, with each unit of it valued at different values depending on the time of the day. The units are usually traceable on currency exchanges.
Bitcoin offers a global online community that supports a decentralized internet. It is encrypted and operates on open source software. Users can transfer bitcoins from one computer to another and send them to other users as well. Some users use this method to purchase goods and services using bitcoins.
Bitcoin comes in two forms, namely, open source software and closed source software. The open source type has an issue of security. There is a high risk of hackers obtaining the private keys that allow users to make transactions, which makes it unsuitable for use by online businesses and organizations.
A problem that is also shared by most crypto currencies is the problem of how to solve the issue of bitcoin scalability. It is a hard question to answer given that there are two forms of how people can transfer the value of bitcoin; the public side and the private side.
In the public side, every transaction is recorded on the public ledger or blockchain and can be viewed by anybody but only the sender, the receiver and the time of the transaction is kept. It is impossible to erase any transaction from the public ledger. Thus, if somebody wants to transfer the value of bitcoins and the recipient does not have them, the transaction will be recorded on the public ledger. Hence, the owner of the private key will be the only one who can transfer the value of bitcoins without paying the transaction fee.
However, there is no way to secure the private key if the transaction is going to be recorded on the public ledger, so this means that the transaction cannotbe locked and cannot be verified. Furthermore, the transfer of bitcoins into the possession of the sender will be recorded on the public ledger, which means that anyone can check the history of any transaction made by a user.
Transactions which are made by users are much easier as there is no need to lock the transfer of bitcoins. However, users can not perform a trade when they are offline or out of the country. The next issue of how to solve the issue of bitcoin scalability is to employ blockchain technology to protect the privacy of users. It will be possible to use encryption software to protect the privacy of transactions and prevent them from being stored on the public ledger.
Using the blockchain to solve the issue of bitcoin capability will make it impossible for anyone to find out about the past transaction of any user and it will also prevent anyone from manipulating the coins. There is also another solution to solving the issue of bitcoin capability that is a blockchain concept of colored coins. This concept of mining coins which can be combined to create the value of the coins allows users to create a wallet that is segregated from the main wallets.