A guide on how to understand Bitcoin and cryptocurrencies?
Although Bitcoin is one of the most searched terms (according to Google), it is a very technical topic for a lot of people and it can get too technical for non-geeks. However, there are now hundreds of cryptocurrencies and more and more people are beginning to want to know how they work, possibly driven by a mistrust of bankers, which is a completely different discussion.
It’s hard to get an explanation from a layman without having to use technical terms like “secret keys,” “digital keys,” “digital wallet,” and “cryptocurrency,” so I’ll do my best to keep things as simple as possible. may.
The concept of fiat money, that is, paper money, was formulated to make it easier for people to make an exchange of goods or services to replace barter, as this would be limited to an exchange between two interested parties at best, while money allows you to provide your service or goods, then buy whatever services or goods you need from another or others.
Therefore, I would say that Bitcoin is the 21st century equivalent of bartering, as it functions as an exchange of goods or services directly between two interested parties. Barter had to be based on every promise and trust, to provide and deliver the promised goods or services.
Today, with Bitcoin or any other cryptocurrency, each party would need a unique file or unique key to exchange the agreed value with each other.
By having a unique key or file, it is easier to keep a record of each transaction. However, this also comes with problems.
Now bartering is the simple exchange of skills or goods as I have already said, the modern equivalent, or bitcoin is susceptible to security breaches, that is, theft or hacking of files, this is where a “cryptocurrency wallet” comes in. the equation to secure your transactions.
Basically, you need a secure location for your crypto / bitcoin purchases and holdings. This is where the need for a hardware wallet comes from.
So now that you have written / recorded which address contains what amount of Bitcoins and then updated each time a transaction takes place, the file is known as “The Blockchain”, and it keeps a record of all transactions made with bitcoin. .
The next problem is ensuring that our files remain unique.
I will cover this in my next article.