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How To Understand Bitcoin?

A Guide On How To Understand Bitcoin And Cryptocurrency?

Even though Bitcoin is without doubt one of the most searched for terms (in line with Google), it is a really technical subject for lots of people and may get overly technical for non geeks. However, there are now hundreds of cryptocurrencies and more and more people are starting to need to get to know how they work presumably pushed by a dis trust of bankers, which is an entire different discussion.

It's difficult to get a lay man's rationalization without having to use technical phrases similar to "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 easier for people to make an trade for goods or companies to replace bartering, as this could be limited to an change between willing parties at greatest, whereas cash permits you to provide your service or items, then purchase no matter service or goods you require from one other or others.

Therefore, I would argue that Bitcoin is the twenty first Century equal to bartering, in that it works as an trade for items or companies directly between willing parties. Bartering had to be primarily based on every promise and trust, to provide and deliver the promised goods or service.

Right now with Bitcoin or any other cryptocurrency every party would want a novel file or unique key to trade the agreed worth between every other.

By having a singular key or file it turns into easier to keep a document on every transaction. However, this too comes with problems.

Now, bartering is the easy exchange of skills or items as I've already said, the modern equivalent, or bitcoin is vulnerable 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 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 quantity of Bitcoins and then updated every 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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