Thinking of Investing in Crypto? Read This Guide on How Blockchain Works First

Crypto transactions are conducted on a peer-to-peer basis, meaning they occur directly from one device to another without a central server. In simple terms, cryptocurrency owners can freely transact with anyone without the involvement of third parties controlling the circulation.

However, all transactions are still recorded and monitored by the crypto asset network known as blockchain.

Understanding Blockchain

Blockchain is the computational system that underpins cryptocurrency. Conceptually, blockchain is a collection of interconnected blocks forming a digital ledger. Each block contains a set of transactions that are independently verified by the network.

As a result, transactions from party A to party B and vice versa are represented within a single block. Blockchain links these blocks together, preserving the complete transaction history of digital assets and online business networks.

In addition to recording transaction history, blockchain also distributes information about completed transactions to cryptocurrency holders. However, the information shared remains confidential and appears only as encrypted codes representing the identities of the transaction participants.

How Crypto Works?

For those curious about how crypto transactions operate, here is a simplified overview of the process:

1. User A initiates a transaction to User B.
2. The system records the transaction as a block.
3. The block is distributed across the network for verification.
4. Transaction validation is performed.
5. Once approved, the new block is added to the existing blockchain.
6. After completion, User B receives the funds from User A.

Crypto Regulations in Indonesia

In terms of function, cryptocurrency is still prohibited as a payment instrument in Indonesia. However, as a commodity, cryptocurrency is legally recognized as an investment asset that can be traded on futures exchanges.