A Guide On How To Understand Bitcoin And Cryptocurrency?
Although Bitcoin is among the most looked for terms (based on Google), it is a very technical topic for a lot of people and might get overly technical for non geeks. However, there at the moment are hundreds of cryptocurrencies and more and more people are starting to need to get to know how they work probably pushed by a dis trust of bankers, which is a whole totally different discussion.
It’s tough to get a lay man’s clarification without having to make use of technical phrases akin 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 money i.e. paper currency, was formulated to make it less complicated for people to make an trade for items or companies to replace bartering, as this would be limited to an alternate between two willing parties at greatest, whereas money means that you can provide your service or items, 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 exchange for goods or companies directly between two willing parties. Bartering had to be primarily based on every promise and trust, to provide and deliver the promised goods or service.
At present with Bitcoin or every other cryptocurrency every party would wish a unique file or distinctive key to exchange the agreed worth between each other.
By having a novel key or file it turns into simpler to keep a document on each transaction. Nonetheless, this too comes with problems.
Now, bartering is the simple exchange of skills or items as I’ve already said, the modern equivalent, or bitcoin is inclined to security breaches, i.e. theft or hacking of files, this is the place a “cryptocurrency wallet” comes into the equation to safe your transactions.
Basically you want a secure location to your cryptocurrency/bitcoin purchases and holdings. This is the place the need for a hardware wallet comes from.
So now that you have 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 record of all transactions made with bitcoin.