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A Guide On How To Understand Bitcoin And Cryptocurrency?

Regardless that Bitcoin is one of the most searched for terms (based on Google), it is a really technical topic for a lot of people and can get overly technical for non geeks. Nevertheless, there are actually hundreds of cryptocurrencies and more and more persons are starting to wish to get to know how they work probably pushed by a dis trust of bankers, which is a complete different discussion.

It's difficult to get a lay man's explanation without having to make use of 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 Concept of Fiat money i.e. paper currency, was formulated to make it simpler for folks to make an alternate for goods or companies to interchange bartering, as this could be limited to an exchange between two willing parties at best, whereas cash allows you to provide your service or goods, then buy whatever service or goods you require from one other or others.

Due to this fact, I might argue that Bitcoin is the twenty first Century equivalent to bartering, in that it works as an exchange for items or providers directly between two willing parties. Bartering had to be based mostly on every promise and trust, to provide and deliver the promised goods or service.

At the moment with Bitcoin or another cryptocurrency every party would need a novel file or unique key to exchange the agreed value between every other.

By having a unique key or file it turns into easier to keep a record on each transaction. However, this too comes with problems.

Now, bartering is the simple alternate of skills or items as I have already stated, the fashionable equivalent, or bitcoin is prone to security breaches, i.e. theft or hacking of files, this is the place a "cryptocurrency wallet" comes into the equation to safe your transactions.

Basically you need a safe location on your cryptocurrency/bitcoin purchases and holdings. This is the place the need for a hardware wallet comes from.

So now that you've got written down/recorded which address holds which amount of Bitcoins and then up to date each time a transaction is made, the file is known as "The blockchain" - and it keeps a report of all transactions made with bitcoin.

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