A Guide To Understanding Bitcoin And Cryptocurrency?
Although Bitcoin is one of the most searched terms (according to Google), it is a technical topic for many people and can be too technical for non-geeks. However, today there are hundreds of cryptocurrencies and more and more people are starting to want to know how they work possibly driven by a distrust of bankers, which is a different discussion.
It’s hard to get a layman’s explanation without having to use technical terms like “secret keys”, “digital key”, “digital wallet” and “cryptocurrency” so I’ll do my best to keep things as straight forward as I can. can be.
The Concept of Fiat money ie paper money, was created to make it easier for people to make an exchange of goods or services to replace bartering, because it is limited to an exchange between two ready parties at best, while money allows you to give. your services or goods, then purchase any services or goods you need from another or others.
Therefore, I would argue that Bitcoin is the 21st Century equivalent of bartering, that it works as an exchange of goods or services directly between two willing parties. Bartering must be based on every promise and trust, to provide and deliver the promised goods or services.
Now with Bitcoin or any cryptocurrency each party will need a unique file or unique key to exchange the agreed amount between each other.
By having a unique key or file it is easier to keep a record of each transaction. However, this also has its problems.
Today, bartering is the simple exchange of skills or goods as I said, the modern equivalent, or bitcoin can easily breach security, ie stealing or hacking files, this is where a “cryptocurrency wallet” comes into the equation to ensure. your transactions.
Basically you need a safe location for your cryptocurrency/bitcoin purchases and holdings. This is where the need for a hardware wallet comes from.
So now that you write/record which address holds which amount of Bitcoins and then update every time there is a transaction, the file is known as “The blockchain” – and it keeps a record of everything transactions made using bitcoin.
The next issue is making sure our files stay unique.
I will discuss this in my next article.