Getting to Know Blockchain as the Technology Behind Digital Currency

In this increasingly developing era, digital currencies or cryptocurrencies are starting to be looked at and in demand by many people. This is because cryptocurrencies are believed to be able to replace the types of physical currency that people use every day. According to (Mulyanto, 2015) the application of cryptocurrencies as a substitute for cash in Indonesia is believed to give people the freedom to make transactions without being faced with the constraints of different payment systems. Several forms of digital currency are quite popular and well known by the public such as Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Stellar (XLM), etc. This digital currency certainly does not have a physical form and is located on the internet, as if we have cash and then we store it in a bank, while this digital money or cryptocurrency is stored on the internet in a blockchain network. However, some people don't know in detail what blockchain is, which is the technology that builds digital currency or cryptocurrency.

What is Blockchain?

Blockchain is a technological system behind cryptocurrency that functions to regulate and manage digital currency or cryptocurrency transaction data such as Bitcoin. Just as when we want to transact using cash, of course there is the role of third parties such as banks as regulatory agencies and managers of the transactions that we make. However, what distinguishes between banks and blockchain technology is that every transaction made is managed by the blockchain users themselves so that the nature of the transaction is open and free. Transaction systems like this by blackchain technology are called "from users to users". As the name implies, blockchain consists of a chain of blocks that are sequential and distributed to its users, where each block is distributed in a ledger and must have three elements in it, namely data, hash, and hash of the previous block (Noorsanti et al., 2018).

Then, How Does Blockchain Work?

Everyone who wants to use digital currency needs to have a wallet or what is commonly called a data folder, every time we create a wallet or data folder we will get a public key and a secret key. The public key here can be likened to an account number, while the secret key can be likened to the pin of the account we have. Inside this folder will contain data about transactions made between blockchain users. So it's the same according to (Bagus & Bhiantara, 2018), when there is a transaction that you want to do, every user in the chain will record and save it as a new record, and so if there is a transaction again, a new data record will be added to the folder every time. users on their respective devices, and keep in mind that the records are made without the presence of third-party intermediaries such as banks.

  The Blockchain system can be started when one of the blocks gets a new data folder, which already contains data, a series of cryptographic hashes and hashes from the previous block, those three elements that can later form a network. To avoid changes to new data made by unwanted parties, the cryptographic hash will take new data and convert it into a compact string or commonly known as a unique code series. Then, after the transaction is considered valid, the data that has been changed is then added to a new block consisting of the new hash and the hash of the previous block. Thus, users will easily find the location of the block in the chain.

By using blockchain technology, all activities related to digital currencies and their assets such as trading, investing, to mining crypto assets will be organized easily and of course will be guaranteed with a good level of security.