A Guide to Understanding Bitcoin and Cryptocurrency?
Although Bitcoin is one of the most searched terms (according to Google), it is a very technical topic for many people and can be overly technical for non-geeks. However, there are now hundreds of cryptocurrencies and more and more people want to know how they work because of the insecurity of bankers, which is a whole different discussion.
It’s hard to get a layman’s explanation without using technical terms like “secret keys”, “digital keys”, “digital wallet” and “cryptocurrency”, so I’ll do my best to keep things as straight as possible. be able.
The concept of fiat money, i.e. paper currency, was created to make it easier for people to exchange goods or services, as this would at best be limited to an exchange between two willing parties, whereas money allows you to provide money. purchase your service or goods, and then any services or goods you request from another or others.
Therefore, I would argue that Bitcoin is the 21st century equivalent of barter because it works directly as an exchange of goods or services between two willing parties. Barter must be based on every promise and trust, to secure and deliver the promised good or service.
With Bitcoin or any other cryptocurrency today, each party needs a unique file or unique key to exchange an agreed value between each other.
By having a unique key or file, it becomes easier to keep a record of each transaction. But this also comes with problems.
Now, barter is a simple exchange of skills or goods as I already mentioned, the modern equivalent or bitcoin is vulnerable to security breaches, i.e. theft or hacking of files, where a “cryptocurrency wallet” comes into the equation to ensure security. your transactions.
Basically you need a safe place for your cryptocurrency/bitcoin purchases and holdings. Hence the need for a hardware wallet.
So now you have written/recorded what amount of bitcoins are stored at which address and then updated each time a transaction is made, the file is known as the “Blockchain” and it stores a record of all bitcoin transactions.
The next thing is to ensure that our files remain unique.
I will talk about this in my next article.