You are a senior analyst at a large investment firm that is considering diversifying its portfolio by investing in cryptocurrencies like Bitcoin. The firm's leadership team is intrigued by the underlying blockchain techn

Blockchain technology and its impact on cryptocurrencies, particularly Bitcoin The goal is to provide with a clear understanding of blockchain technology and how its core properties contribute to the success and reliability of cryptocurrencies. a) Blockchain Technology-Meaning Blockchain is a series of data linked together. Every single transaction is linked to the chain using cryptographic principles in batches, making blocks. The blocks are connected to each other and have unique identifier codes (called hashes) that connect them to the previous and the subsequent blocks. This forms a blockchain, usually in the form of a continuous ledger of transactions. It isn't owned by any one individual. The series is managed and stored across several computer systems. Each ledger is shared, copied and stored on every computer connected in the system. b) Three pillars of Blockchain Technology The three main properties of Blockchain Technology which have helped it gain widespread acclaim are as follows: Decentralization Transparency Immutability Pillar 1: Decentralization Before Bitcoin and BitTorrent came along, we were more used to centralized data services. The idea is very simple. You have a centralized entity that stored all the data and you'd have to interact solely with this entity to get whatever information you required. Another example of a centralized system is the banks. They store all our money, and the only way that we can pay someone is through the bank. In a decentralized system, the information is not stored by one single entity. In fact, everyone in the network owns the information. In a decentralized network, if you wanted to interact with your friend then you can do so directly without going through a third party. That was the main ideology behind Bitcoins. You and only you alone are in charge of your money. You can send your money to anyone you want without having to go through a bank. Pillar 2: Transparency One of the most interesting and misunderstood concepts in blockchain technology is "transparency." Some people say that blockchain gives you privacy while some say that it is transparent. A person's identity is hidden vis complex cryptography and represented only by their public address. So, if you were to look up a person's transaction history, you will not see "Bob sent 1 BTC instead you will see "IMF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1 BTC". So, while the person's real identity is secure, you will still see all the transactions that were done by their public address. Pillar 3: Immutability Immutability, in the context of the blockchain, means that once something has been entered into the blockchain, it cannot be tampered with. The reason why the blockchain gets this property is that of the cryptographic hash function. In simple terms, hashing means taking an input string of any length and giving out an output of a fixed length. In the context of cryptocurrencies like bitcoin, the transactions are taken as input and run through a hashing algorithm (Bitcoin uses SHA-256) which gives an output of a fixed length. So basically, instead of remembering the input data which could be huge, you can just remember the hash and keep track.