Unlike the common paper currency system which is managed by a country’s reserve bank or the federal banks, various protocols are necessary to be followed in order to keep the currency at its normal flow.
Countries like the United States of America, Canada, Africa, India, Malaysia, Japan and the various nations that are members of the European Union, have made bitcoin explorer as their legal digital currency. Bitcoins are also being used in various foreign exchange markets with their values ascending and descending as per the market trends.
To keep the Bitcoin cryptocurrency in the proper flow, a blockchain is maintained for the purpose. This blockchain explorer is able to record transactions which are made in bitcoin network and are stored on the digital ledger and are also made available publicly. This is done so as to provide a secure system and preventing any sort of misleading activities, etc.
Thus, the way banks keep ledgers of the several transactions in their book of accounts, similarly, blockchain acts as the same system of digital book-keeping. However, a blockchain has to follow a number of strict protocols or rules in order to keep this digital ledger system safe and secure from any unwanted uncertainties.
There are many rules that are marked in the blockchain and allowing the smooth and secure method of Bitcoin transaction.
7 Rules of the Bitcoin Blockchain you must not break
Let’s take a look at some of the important rules of the Bitcoin blockchain that provide laws and legal practices for dealing with the Bitcoin cryptocurrency. These various rules of the blockchain explained are as follow:
1. Blockchain stores data permanently
The digital cryptocurrency is entirely based on software, and it functions on the same. As you already know, a blockchain is a digital form of keeping records of every transaction that are made by individuals and businesses.
Thus, in a blockchain wallet, all your transactions are stored permanently on their software-based system. This means that you cannot easily do away with any cryptocurrency if you are in the thought of stashing that extra money in your accounts.
2. Never lose your private key
A major rule of the blockchain is that Bitcoins require a private key in order to be the transaction. This private key is very important and you cannot afford to lose this encrypted security key at any cost.
The private key actually controls your cryptocurrency and the bitcoin depends on it. If you lose your encrypted private key, then you will not be able to transact your Bitcoin price. It’s like you are losing your Bitcoin forever and there is no solution to this.
Thus, you must always backup your encrypted private key which you receive for your Bitcoin and keep it in a safe place, either in a hard copy or a soft copy.
3. Use digital wallet with password
Use the digital wallet to store all your encrypted private keys. You also need to set a password for your digital wallet for enhanced security of your Bitcoins. Your digital wallet can store on a hardware peripheral or on your computer system.
However, it is strictly suggestion that you store your digital wallet on other hardware devices, just in case if anything goes wrong with your computer system. You will still be able to recover the important encrypted private keys that will allow you to carry out your transaction using Bitcoins.
4. Always check the address of the receiver
When you are carrying out transactions, such as sending money to your friend or to a business or organizations. It is important that you first check and confirm properly the address of the recipient before sending your money in the digital currency.
This is to ensure that you don’t accidentally give away your money to the wrong people, or to the ones who are always on the lookout for misleading people into their traps. Also, you must remember that in this form of a decentralized system.
There is no such type of a customer support service or charge-backs. So, once your money is gone, it’s gone forever, and there’s no returning of your Bitcoin.
5. Be careful with the exchange system
Even though technology contains security. Yet there are chances of creating some back-doors or loop-holes through which hackers especially, take this to their advantage and steal your personal information and capital.
So, you must be very careful when you are using the exchange system for your Bitcoins trading. Even if you are moving your funds, selling or buying Bitcoins through the exchange system. It can get intercept by individuals who masquerade themselves as being legal persons just to steal away your money.
It is necessary that you know about the exchanges that deal with Bitcoins before you go about transacting your Bitcoins.
6. There is no involvement of the government
The blockchain technology is not governing by any bodies of the law. This means that there could be greater chances of possible illegal activities being conducting by individuals. If you own a business or an organization, it is a suggestion that you always consult your attorney before making any important decisions which are related to your finance.
Doing so can save you from falling into the traps of hackers or carrying out transactions. That you were not intending to do. Also, you must remember that the blockchain technology works with the decentralized cryptocurrency. That means having no involvement of the government whatsoever.
7. All the rules are based on code
Lastly, it is important to consider the fact that all the rules of the blockchain technology are entirely based on a code. There are no human beings and the code itself is the law. Also, since the blockchain is capable of keeping all the records of your transactions in its software. You cannot tamper with the data in any way. The digital ledger that is contained in the blockchain is also made available publicly. So, it is not possible to interpret its code and enforce any intentions.
Keeping in mind the important protocols that are mentioning above. You should create awareness about the blockchain and experience safe transactions.