Uncovering Bitcoin and Cryptocurrency: A Guide
Despite being one of the terms that people search for the most (according to Google), Bitcoin is a very technical topic for many people and can become overly technical for non-geeks. However, there are now hundreds of cryptocurrencies, and more and more people are showing an interest in learning how they operate. This interest may be prompted by a lack of confidence in banks, which is a completely different topic.
It is difficult to get a lay man’s explanation without having to use technical terms such as “secret keys”, “digital keys”, “digital wallet” and “cryptocurrency” so I’ll try to be as clear-cut as I can be in my dealings.
Fiat currency, also referred to as paper currency, was formulated to make it simpler for people to make an exchange for goods or services to replace bartering, as this would be limited to an exchange between two willing parties at best, whereas money allows you to provide your service or goods, then purchase whatever service or goods you require from another or others.
As a result, I would contend that Bitcoin functions as the direct exchange of goods or services between two willing parties, making it the 21st Century equivalent of bartering. In order to provide and deliver the promised goods or services, bartering had to be based on each promise and trust.
To exchange the agreed-upon value today with Bitcoin or any other cryptocurrency, each party would require a distinct file or distinct key.
It is simpler to keep track of each transaction when there is a special key or file. However, this too has drawbacks.
As I’ve already mentioned, bartering is the straightforward exchange of goods or skills. Bitcoin, the modern equivalent, is vulnerable to security flaws, i.e. theft or hacking of files, this is where a “cryptocurrency wallet” comes into the equation to secure your transactions.
In essence, you require a secure location for your cryptocurrency/bitcoin investments. This is the reason why a hardware wallet is necessary.
So now that you have written down/recorded which address holds which amount 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.
Our files’ continued uniqueness is the next challenge.
This will be covered in my following article.