Bitcoin for Dummies Explaining Bitcoin So You Can Actually Understand It
To start, don't allow the name of this piece make you feel any less of a person being or think that you are in reality a bitcoin dummy. That is not the situation! Bitcoin is complex. There are several quite intelligent computer programmers and program developers (We're talking people who have invented the very technology which enables us to get online!) Who are on record as saying that they even have difficulty comprehending Bitcoin fully.
Intro to Bitcoin
Bitcoin is your very first ever invented digital currency. It works the cornerstone of this blockchain technology. It's continuously being created through a procedure called mining which involves computers solving cryptographic puzzles. Each block has its own cryptographic puzzle, and also the unique solution signifies 1 Bitcoin and the current condition of pending transactions.
Bitcoin is an electronic money.
Using encryption techniques is how it is created and the way that transactions are verified as legitimate and recorded to the ledger. Operating independently of a central bank implies that there's no person, company, government agency or some other single thing that regulates bitcoin, it is regulated by the very men and women who use it. But before we can delve into the peculiarities of Bitcoin we will need to put some foundations.
What is Cryptography?
By doing so you are encrypting the information that's contained in the letter. Meaning that when someone stumbles upon the scattered bits, they would not be able to understand anything. That is till they decode, decrypt the message by simply placing the bits in the right order.
What is Blockchain?
Blockchain quite resembles a database. However, while conventional databases have a couple of places where the information is hosted, blockchain hosts the information on each computer on the network. Hence the term decentralized. Classic banking functions like Microsoft Office Documents and blockchain is like Google Docs. For the sake of simplicity let's assume that there's one spreadsheet which includes the condition of all accounts and transactions.
To reflect this transaction Sally's bank credits her accounts in the spreadsheet, then the document will be sent to John's lender to make their modifications and then sent straight back to Sally's bank so that they have the updated version of this spreadsheet. Even though there isn't any such spreadsheet, bank settlements operate in relatively the exact same manner -- lots of documents being traded to reflect every transaction.
With blockchain if Sally tells her lender to send 10 BTC to John, the 2 banks only both edit the Google spreadsheet and without any time wasted exchanging files, the transaction is recorded.
If you have ever edited a Google spreadsheet simultaneously with many people, you'd know it will start bugging, the new info is simply too far to be mirrored at once. Consequently, the system divides the entire spreadsheet (there is no true spreadsheet we are continuing the example) into smaller blocks of information which may be more easily processed.
The Oxford English Dictionary defines Bitcoin as "a Kind of electronic money in which encryption methods are Utilized to modulate the creation of units of currency and Confirm the transfer of capital, working independently of a central bank" But this definition is for the entire system of Bitcoin. Each Bitcoin is merely a 12-digit code that's encrypted.
What's a Digital Currency?
A digital money is cash that has no physical form. Reach into your pocket, wallet or where it is you maintain your dollars, Euros, Yen, Rupies, etc.. And pull out the equal of 1 US Dollar, or possibly a quarter, nickel, nickel or penny. Hold it. Consider it. Feel it. That's called fiat, that is the currency of your state (or some nation based on what you might have.)
With electronic currency such as Utrust coin, you can't hold it. You can't feel it. You cannot look at it. It only exists as a couple entry in a transaction ledger on a community somewhere. Now, while this can make some people shun digital currencies, they're only being childish and kind of stupid. Think about it. Many folks simply swipe a card along with their cash is magically moved from there account into the account of this shop they are paying, right? So technically, we all use digital currency already, we simply have the ability to actually get some of the money to put in our pockets or respective money holding places.
A Really Deep Comprehension of Money in General
Then to find even more specialized about it, the money you might have on your pocket isn't anything more than cheap paper and ink or cheap metals that were stamped by a machine. It technically is not worth anything. It is nothing more than a mark that says you've got the rights to spend the sum indicated on the invoice or coin and the coin or bill is a guarantee from the national bank who issues it they will pay the debt.
If you owed someone five dollars and wrote them an IOU onto a piece of paper, it's not any different than the usual 5-dollar invoice in the sense that the money you have is merely an IOU from the national bank that issued your specific currency. I can visit the store right now and buy a ream of paper, the 500-sheet pack for about $7 USD. You can fit 4 US Dollar bills of any denomination on each sheet, so if I used 100-dollar bills, that would be $200,000.00 USD. I believe not. So why would the newspaper which the national bank prints currency on be worth anything more? Well, it is not.
If you have never stopped to actually think about it, do so today. That money on your piggy bank is nothing more than a warranty in the Federal Reserve (if you are in the U.S.), or federal bank of some nation which you are eligible for that a lot of the golden * they own, and you possess the rights to exchange that guarantee to get products and support and upon doing so, the recipient of this cash will then inherit the same guarantee for the same value that is shown on the part of paper or metallic coin.
So, in most actuality , the only real difference that Bitcoin provides is that it does not have a tangible marker, or warranty in the kind of a mass printed, controlled piece of paper assuring the holder into the worth of the Bitcoin. That truly sounds horrible. No guarantee that you have a right into the Bitcoin in the federal bank? Well, you don't need it. Nope. Not at all. Why, you might ask? Why can you risk not having that assurance? Well, as you've the actual Bitcoin. The national bank does not possess it, in actuality, no bank or some other individual or business has it. You have it. You hold it and if you send it to someone, it goes directly from you to them. When you get it from someone, you receive it straight from them. So, there is no guarantee required. You've got the actual bitcoin on your hands, err, well, figuratively speaking of course.
The encryption methods used, which is explained in later chapters, ensures that all transactions are legitimate and that the balance are absolutely correct. Do not worry though, although the ledger of balances is public record, your identity is not. More on this later.
The technology which ensures that all transactions and balances are legitimate and valid is indeed innovative, so technologically innovative that each one of those 50 United States, in addition to the Federal Government of the United States, Governments of the entire European Union, China, Japan, South Africa, The United Arab Emirates and many more nations have laws either already voted into legislation or are in the process of placing into legislation , statutes which integrate the technology with the government and how it will day to day business.
So, ideally you've got some idea about exactly what bitcoin is by now, but I will spell it out to you anyways; Bitcoin is cash. It isn't money you can touch with your hands and it is not money that a lender or government holds or controls, but it is money. It may be used to buy items online from Microsoft, Dell, Walmart, Overstock and tens of thousands of other retailers. You can use it from the United States to pay the IRS along with other government entities also you can send it to anyone who takes it. The difference between bitcoin and also the cash in your pocket is that bitcoin is the same significance in North America, as it's in all Europe, Asia, Africa, South America, Australia and even Antarctica. Basically, everywhere on the planet earth that you can go, Bitcoin is going to be well worth the same precise volume. You can read more about Cryptocurrency and digital assets at the Bitcoin Blog
Bitcoin for Dummies Explaining Bitcoin So You Can Actually Understand It