A Guide On How To Understand Bitcoin And Cryptocurrency?
Even though Bitcoin is one of the most looked for phrases (in line with Google), it is a really technical subject for lots of people and might get overly technical for non geeks. Nonetheless, there are now hundreds of cryptocurrencies and more and more persons are starting to wish to get to know how they work presumably pushed by a dis trust of bankers, which is an entire different discussion.
It’s troublesome to get a lay man’s explanation without having to make use of technical terms reminiscent of «secret keys», «digital keys», «digital wallet» and «cryptocurrency» so I will do my greatest to keep things as straight forward as I possibly can.
The Concept of Fiat money i.e. paper currency, was formulated to make it easier for people to make an change for goods or services to exchange bartering, as this could be limited to an trade between two willing parties at best, whereas cash means that you can provide your service or goods, then buy whatever service or goods you require from one other or others.
Therefore, I might argue that Bitcoin is the 21st Century equal to bartering, in that it works as an exchange for goods or services directly between two willing parties. Bartering had to be based mostly on every promise and trust, to provide and deliver the promised goods or service.
In the present day with Bitcoin or every other cryptocurrency each party would need a singular file or unique key to alternate the agreed value between every other.
By having a novel key or file it becomes simpler to keep a document on every transaction. However, this too comes with problems.
Now, bartering is the simple trade of skills or goods as I have already said, the modern equivalent, or bitcoin is vulnerable to security breaches, i.e. theft or hacking of files, this is the place a «cryptocurrency wallet» comes into the equation to safe your transactions.
Basically you need a safe location on your cryptocurrency/bitcoin purchases and holdings. This is where the necessity for a hardware wallet comes from.
So now that you’ve got written down/recorded which address holds which amount of Bitcoins and then updated every time a transaction is made, the file is known as «The blockchain» — and it keeps a file of all transactions made with bitcoin.
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