Bitcoin: a layman’s explanation

Before you read any of my later blog posts about Bitcoin, it helps if you have some basic knowledge of what bitcoin, cryptocurrencies, and the blockchain are. A layman’s explanation is this:

Bitcoin is a digital form of holding value. Another object that holds value is the money in your wallet and your bank account. But paper money is controlled by central bankers. Bitcoin is controlled by no one and yet everyone. Thus, there is no central figure or governing body determining value. Bitcoin is made possible by a consensus in a digital online network known as the blockchain.

The block chain is a record of transactions, an accounting ledger that exists on the internet where everyone and anyone can see every single transaction. The bitcoin in your digital wallet is real because you can verify where it came from, thus eliminating the possibility of fraud or “fake” bitcoins. You can’t do that with paper money because paper money can be forged, your bank account can get hacked, or a third-party can screw up your online transaction with paper money.

Cryptocurrencies are forms digital money that are created by highly technical software and hardware. There are many crypto coins out there but the most famous and only one that matters is Bitcoin. For reasons that are too technical to get into, an easier way to understand bitcoin is that is both digital “gold” and digital “money”. You can store wealth in bitcoin (like storing your wealth in gold), and you can buy a plain ticket, a video game, or a cup of coffee with bitcoin so long as the merchant accepts bitcoin.

Next post… why bitcoin is real and here to stay. It is revolutionary technology and it’s only just getting started. In the meantime , I STRONGLY urge you to watch the excellent documentary on Netflix as seen in the pic with this post.

Banking on Bitcoin.

Enjoy.

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