A Guide On How To Understand Bitcoin And Cryptocurrency?
Regardless that Bitcoin is one of the most looked for phrases (according to Google), it is a really technical subject for a lot of people and may get overly technical for non geeks. Nevertheless, there at the moment are hundreds of cryptocurrencies and more and more people are starting to want to get to know how they work presumably pushed by a dis trust of bankers, which is a whole totally different discussion.
It’s difficult to get a lay man’s explanation without having to use technical phrases such as “secret keys”, “digital keys”, “digital wallet” and “cryptocurrency” so I will do my best to keep things as straight forward as I probably can.
The Idea of Fiat money i.e. paper currency, was formulated to make it less complicated for individuals to make an change for goods or providers to replace bartering, as this would be limited to an alternate between two willing parties at greatest, whereas money lets you provide your service or goods, then purchase whatever service or goods you require from another or others.
Therefore, I might argue that Bitcoin is the twenty first Century equivalent to bartering, in that it works as an change for goods or providers directly between two willing parties. Bartering had to be based on each promise and trust, to provide and deliver the promised goods or service.
At the moment with Bitcoin or another cryptocurrency every party would need a unique file or distinctive key to alternate the agreed worth between each other.
By having a unique key or file it turns into easier to keep a document on each transaction. Nonetheless, this too comes with problems.
Now, bartering is the easy alternate of skills or items as I have already acknowledged, the trendy equivalent, or bitcoin is inclined 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 want a secure location in your cryptocurrency/bitcoin purchases and holdings. This is the place the necessity for a hardware wallet comes from.
So now that you’ve 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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