Over the last few years, cryptocurrency has risen in popularity. In 2009, Bitcoin became the first form of digital currency. Now, there are over 100 million people who hold a piece of the digital currency market and thousands of cryptocurrencies, firmly establishing a new digital form of investing.
Due to the unregulated nature of the Internet, there is always the potential for frauds and scams. As popularity for cryptocurrency has grown, scams and frauds in the digital currency market have also increased.
Thankfully, blockchain technology offers a layer of security and protection that can stop hackers and protect buyers. Here’s what you need to know about cryptocurrency and how big data can be beneficial for consumers by creating predictions and adding an extra layer of protection.
What is Cryptocurrency and How Has it Become Popular?
Cryptocurrency is a form of digital payment that can be used to purchase online goods or services. Cryptocurrency is facilitated through a technology called blockchain. According to Coin Market Cap, there are over 10,000 types of cryptocurrencies.
Digital currency has grown in popularity because it is a decentralized form of currency that does not rely on a central banking system. Without a central banking system, the value of money does not fluctuate due to inflation.
Some people have also become more interested in cryptocurrency because they like how blockchain processes and records payments. In some instances, the system can be more secure than traditional banking.
What is Blockchain and How Does it Work?
Blockchain is a digital ledger that records all transactions. Transactions are validated through one of two ways: proof of work or proof of stake.
Proof of Work. With proof of work, a mathematical problem is used to verify transactions. This method requires computing power and effort to solve, which prevents malicious attacks. It also allows for cryptocurrency to be securely processed without the need for a third party.
Proof of Stake. Through the proof of stake method, an individual’s transactions are limited to the amount of cryptocurrency they are holding. Hackers would need to have the majority of their cryptocurrency in order to take over. A PoS system does not require as much computing power as the PoW method, resulting in an often quicker overall process.
Blockchain can simplify transactions through a more secure process than traditional banking. As a result, other industries may incorporate blockchain technologies into their systems.
According to an article by Fast Company, one area that could adopt blockchain technology is the aviation industry. The aviation industry involves equipment manufacturers, operators, and more. Blockchain could effectively record the history and conditions of parts.
Combining Big Data with Blockchain Technology
The combination of big data with blockchain technology brings the potential for growth in many companies as well as strengthens the cryptocurrency market.
Big data can already unlock patterns and trends that can create insightful findings for companies. If data analytics is used to analyze cryptocurrencies, it can become a useful tool for predicting trends and protecting against illegal practices.
Insightful Data Analytics. Blockchain is a decentralized system where providers have control over which data is shared and which isn’t. Data in the system is trustworthy because it goes through a verification process. However, due to its decentralized nature, it isn’t organized. As a result, it may deter investors from buying or trading.
Data analytics can be used to facilitate the data and predict larger trends in specific kinds of cryptocurrency. That way, investors can make smart decisions about trading and buying.
Additional Protection Against Illegal Practices. Big data can help indicate trends or patterns in illegal practices, adding a layer of security in cryptocurrency. From these patterns, companies can implement tighter security methods.
It can serve as a tool for helping cryptocurrency owners become more aware of hacking attempts. These trends can also potentially identify larger scams and frauds in cryptocurrency.
Streamlining Processes in Businesses. The digital currency market takes time to understand and analyze. One reason is that many types of digital currency can be traded. Market shifts are also difficult to monitor.
Big data can be used to create a streamlined process where models can create reliable data reports that are updated in real-time. Meanwhile, teams can focus their time on more efficient tasks.
An Overview of Cryptocurrency and the Role of Big Data
The momentum of the digital financial market brings the potential for growth in digital currency. Cryptocurrency allows individuals to make purchases digitally and opens up opportunities for a decentralized form of currency.
However, as cryptocurrency rises in popularity, the threat of scams and frauds also increases. Hackers also have the possibility of interfering with transactions. Protection measures such as proof of work and proof of stake are used to ensure that blockchain transactions are valid.
In addition, the incorporation of big data techniques can also offer additional methods of protection and useful analytics tools. More investors will likely incorporate big data techniques to secure transactions and make smart decisions in the digital currency market.
Cryptocurency is the currency of the future. As a data scientist, you’ll harness the power of applied mathematics and computer science to glean valuable business insights. Learn more about how WOZ curriculum can prepare you for a career in Big Data.
Sophia Acevedo is a journalist based in Southern California. She is a 2020 graduate from California State University, Fullerton, and a proud Daily Titan alum.