A Guide On How To Understand Bitcoin And Cryptocurrency?
Though Bitcoin is without doubt one of the most looked for phrases (in line with Google), it is a very technical subject for lots of people and might get overly technical for non geeks. Nevertheless, there are now hundreds of cryptocurrencies and more and more people are starting to wish to get to know how they work possibly pushed by a dis trust of bankers, which is a whole different discussion.
It is tough to get a lay man’s rationalization without having to use technical terms akin to “secret keys”, “digital keys”, “digital wallet” and “cryptocurrency” so I will do my best to keep things as straight forward as I presumably can.
The Idea of Fiat money i.e. paper currency, was formulated to make it easier for folks to make an trade for items or services to interchange bartering, as this would be limited to an trade between two willing parties at finest, whereas cash allows you to provide your service or goods, then buy whatever service or goods you require from another or others.
Subsequently, I’d argue that Bitcoin is the 21st Century equivalent to bartering, in that it works as an exchange for goods or providers directly between willing parties. Bartering had to be based on each promise and trust, to provide and deliver the promised goods or service.
In the present day with Bitcoin or every other cryptocurrency every party would want a unique file or unique key to trade the agreed worth between each other.
By having a novel key or file it turns into simpler to keep a document on every transaction. However, this too comes with problems.
Now, bartering is the simple exchange of skills or items as I have already acknowledged, the modern equivalent, or bitcoin is prone to security breaches, i.e. theft or hacking of files, this is where a “cryptocurrency wallet” comes into the equation to safe your transactions.
Basically you need a secure location for your cryptocurrency/bitcoin purchases and holdings. This is where the necessity for a hardware wallet comes from.
So now that you have written down/recorded which address holds which quantity of Bitcoins and then updated each time a transaction is made, the file is known as “The blockchain” – and it keeps a document of all transactions made with bitcoin.
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