A guide on how to understand bitcoin and cryptocurrency?
Although bitcoin is the most searched word (according to Google), it is a very technical topic for many people and can be extra technical for non-geeks. However, there are now hundreds of cryptocurrencies and more and more people wanting to know how they work is driven by the distrust of bankers, which is a completely different discussion.
It’s hard to find a common man’s explanation without using technical terms like “secret key”, “digital key”, “digital wallet” and “cryptocurrency” so I will try my best to move forward as simply as possible.
The concept of fiat money was created to make it easier for people to exchange goods or services, as it would at best be limited to exchanging between two willing parties, where money would allow you to pay. Your service or product, then purchase whatever service or product you need from others or others.
Therefore, I would argue that Bitcoin is the equivalent of a 21st century transaction, where it acts as a direct exchange of goods or services between two interested parties. There had to be bartering based on every promise and trust to deliver and deliver the promised product or service.
Today each party needs a unique file or unique key to exchange agreed values with Bitcoin or any other cryptocurrency.
Having a unique key or file makes it easy to keep a record of every transaction. However, it also brings problems.
Now, bartering is the simple exchange of skills or products as I said before, the modern equivalent, or sensitive to bitcoin security breaches, such as file theft or hacking, here comes the equation of securing a “cryptocurrency wallet”. Your transaction.
Basically you need a safe place to buy and hold your cryptocurrency / bitcoin. The need for a hardware wallet comes from here.
So now that you have written / recorded the amount of bitcoin in an address and then updated each time the transaction is made, the file is known as “The Blockchain” – and it keeps a record of all transactions with bitcoin.
The next issue is to make sure our files are unique.
I will address this in my next article.