A Guide On How To Understand Bitcoin And Cryptocurrency?
Regardless that Bitcoin is among the most searched for terms (in response to Google), it is a really technical topic for a lot 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 want to get to know how they work possibly driven by a dis trust of bankers, which is an entire different discussion.
It is troublesome to get a lay man’s explanation without having to use technical phrases corresponding to “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 Idea of Fiat cash i.e. paper currency, was formulated to make it simpler for folks to make an trade for goods or companies to interchange bartering, as this could be limited to an change between two willing parties at best, whereas money allows you to provide your service or goods, then buy whatever service or items you require from one other or others.
Due to this fact, I would argue that Bitcoin is the 21st Century equal to bartering, in that it works as an trade for goods or services directly between willing parties. Bartering had to be based mostly on each promise and trust, to provide and deliver the promised goods or service.
Immediately with Bitcoin or any other cryptocurrency each party would want a unique file or distinctive key to exchange the agreed value between each other.
By having a unique key or file it turns into simpler to keep a file on every transaction. However, this too comes with problems.
Now, bartering is the simple change of skills or goods as I’ve already said, the modern equal, 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 secure your transactions.
Basically you need a secure location on 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 file of all transactions made with bitcoin.
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