How To Understand Bitcoin?
A Guide On How To Understand Bitcoin And Cryptocurrency?
Despite the fact that Bitcoin is among the most searched for phrases (according to Google), it is a very technical subject for lots of people and may get overly technical for non geeks. Nevertheless, there are actually hundreds of cryptocurrencies and more and more persons are starting to need to get to know how they work possibly pushed by a dis trust of bankers, which is an entire different discussion.
It is difficult to get a lay man’s rationalization without having to use technical phrases equivalent to “secret keys”, “digital keys”, “digital wallet” and “cryptocurrency” so I will do my best to keep things as straight forward as I presumably can.
The Idea of Fiat money i.e. paper currency, was formulated to make it simpler for folks to make an trade for goods or services to replace bartering, as this could be limited to an alternate between willing parties at greatest, whereas cash allows you to provide your service or items, then buy whatever service or goods you require from another or others.
Therefore, I would argue that Bitcoin is the 21st Century equivalent to bartering, in that it works as an exchange for items or companies directly between 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 any other cryptocurrency each party would need a novel file or unique key to exchange the agreed worth between every other.
By having a novel key or file it turns into simpler to keep a file on every transaction. However, this too comes with problems.
Now, bartering is the easy trade of skills or goods as I have 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 safe your transactions.
Basically you want a secure location in 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 quantity of Bitcoins and then updated every time a transaction is made, the file is known as “The blockchain” – and it keeps a record of all transactions made with bitcoin.
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