Back

Digital Currency | O Level Computer Science 2210 & IGCSE Computer Science 0478 | Detailed Free Notes To Score An A Star (A*)

Views 0

Digital Currency

What is digital currency?

  • Purely in digital format
  • No physical form
    • Fiat currencies have physical form
  • Digital currency is an accepted form of payment
    • It can be transferred between accounts to complete transaction
    • Online banking has become possible due to it.
    • Money only exists as data on a computer
    • Transferable into physical cash if needed
  • Central banking system required
    • Centralization has the issue of maintaining security and confidentiality
    • Issues with digital currency systems
    • Cryptocurrency has overcome these issues through decentralization
      • Uses cryptography to track transaction
      • It is not regulated by governments and central banks like traditional digital currencies
        • No state control
        • Rules are made by the community
      • Transactions are publicly available
        • All transactions can be tracked
        • Money amount in the system can be monitored
      • It is within a blockchain network
        • More security

Blockchain

  • Decentralized database
  • All transactions are stored here.
  • Interconnected computers not connected to a central server
  • Transaction data is stored on all computers in the network
  • All network gets a copy whenever a new transaction occurs
  • It can not be changed without consent of all network members
  • Removes the risk of security issues like hacking
  • Used in numerous areas like education, research, politics etc.
  • Working
    • A new block is created at every new transaction
    • It contains
      • Data
        • The name of sender and receiver, amount of money etc.
      • Hash value
        • A unique value generated by an algorithm
          • Cryptographic algorithm called SHA 256
          • Acts as a fingerprint
        • Contains a timestamp
        • Identifies when the event occurred
      • Previous Hash Value
        • Pointing back to the previous block in the chain
      • Block 1 is called the genesis block
        • Not connected to any previous block
        • If chain broken, then any new block is invalid
        • Prevents tampering
      • Proof of Work
        • Ensures that it takes 10 minutes to determine the necessary proof of work for each block before they are added to the chain
        • Policed by miners
          • A special network users which get a commission for each block created
          • This entire process is slowed down which foils hackers
          • Currency gets regulated by all networks
          • Overcomes the problems of creating new string of blocks for fast transactions.
          • Problem can be discovered before being added to the network
        • Very difficult to hack the blockchain
          • Every single block in the chain has to be attacked at once
          • Any one block can break the link and the transaction will be terminated
        • A new block is sent to a computer in the blockchain
          • Correctness is checked
          • Before it is added to the blockchain
          • A new network user gets a copy of everything in the entire blockchain system
Hunain Zia

Hunain Zia has previously achieved considerable success in the high-school educational stream, gaining a massive 154 Total A Grades and 7 Major Distinctions, a process in which he broke/ set 11 different world records, including the most A grades ever achieved, most subjects ever appeared in, most distinctions, gaining distinctions across two separate boards (Pearson Edexcel and CAIE) within the same year/ ever, and even 19 hours of constant examination. All records stand intact today. Hunain pursued his Honors Accounting Degree from the prestigious Bentley University, and then completed an LLB (in Honors) from University of London. Currently, he manages multiple social and commercial projects, has founded digital streams and works tirelessly in the education sector.

Educate A Change focuses on truly bringing change in the educational sector worldwide. All our courses are designed to ensure success, and provide complete preparation without requiring any other external material. Therefore, it takes away the expense of academies, books, past paper compilations and other miscellaneous items. Instead, by just the courses we offer, the student can prepare fully for the best grades in their CAIEs, Edexcel and other high-school exams. The earnings from our course-sales are invested in social projects and growing the free educational activities of Educate A Change.