A Guide On How To Understand Bitcoin And Cryptocurrency?
Even though Bitcoin is one of the most searched for terms (in response to Google), it is a very technical topic for a lot of people and can get overly technical for non geeks. Nevertheless, there at the moment are hundreds of cryptocurrencies and more and more persons are starting to wish to get to know how they work probably driven by a dis trust of bankers, which is an entire completely different discussion.
It’s difficult to get a lay man’s explanation without having to make use of technical phrases resembling “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 Concept of Fiat cash i.e. paper currency, was formulated to make it easier for people to make an exchange for items or services to replace bartering, as this would be limited to an change between two willing parties at finest, whereas cash lets you provide your service or goods, then buy no matter service or goods you require from another or others.
Due to this fact, I would argue that Bitcoin is the 21st Century equivalent to bartering, in that it works as an exchange for goods or services directly between two willing parties. Bartering had to be based on every promise and trust, to provide and deliver the promised items or service.
Immediately with Bitcoin or every other cryptocurrency each party would wish a unique file or unique key to exchange the agreed worth between each other.
By having a novel key or file it becomes simpler to keep a file on every transaction. Nevertheless, this too comes with problems.
Now, bartering is the simple change of skills or goods as I have already acknowledged, 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 secure your transactions.
Basically you want a safe location to your cryptocurrency/bitcoin purchases and holdings. This is where the need for a hardware wallet comes from.
So now that you’ve written down/recorded which address holds which amount of Bitcoins and then updated each time a transaction is made, the file is known as “The blockchain” – and it keeps a report of all transactions made with bitcoin.
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