This is my very first post on Steemit so I decided to keep it simple. Please be patient.
In this short article, I will try to describe Bitcoin to you like you're a 6-year old kiddo, line by line.
So let's start.
Algorithm As A Currency:
Bitcoin has a number of superior user functionalities such as peer-to-peer connection, relative anonymity, and affordability.
It's a new form of digital cash.
Instead of being released by a central bank, its distribution is controlled by a decentralized network of computers.
This network relies on cryptography and network technology to regulate the supply of Bitcoins and monitor who owns them.
Therefore, Bitcoin is known as a cryptocurrency.
Although Bitcoin uses a ledger, it is kept up collaboratively by the decentralized network of computers.
For that reason, it is also called a distributed ledger.
As new transaction entries are added to this distributed ledger, they incorporate references back to the previous groups of entries.
In this way, all participants can verify for themselves the source and origin of everything on the ledger.
These groups of transaction entries are called blocks, and the whole collection is, therefore, a blockchain.
It’s creator(s), Satoshi Nakamoto, wrote that it was a system of purely peer-to-peer electronic cash which can be controlled completely by the holder.
In addition, it can be sent to anybody without needing a bank’s permission or facing the risk of a confiscation.
Every full participant in the Bitcoin system has a copy of every transaction, arranged in these blocks, going all the way back to the start of the Bitcoin.
Each block is cryptographically linked to the previous block, forming a blockchain that maintains a full history of transactions.
Every copy of the ledger is synchronized by algorithms which are set up to keep “consensus” about the state of the ledger.
However, once a transaction is sufficiently confirmed, it can never be reversed.
Users can access the ledger with different applications on a desktop or a mobile phone.
A Brief Note On Bitcoin Wallets:
In order for a user to be able to store and transfer bitcoins, he or she needs a special software called Bitcoin wallet.
A “wallet” is basically Bitcoin’s equivalent of a bank account.
There are two main types of wallets.
A software wallet is one that the user installs on own computer or mobile device.
One is in complete control over the security of coins but these wallets can sometimes be tricky to install and maintain.
- A web wallet, or hosted wallet, is one that is hosted by a third party.
They are often much easier to use, but you have to trust the provider to maintain high levels of security to protect your coins.
(3.) A third option would be so-called “cold wallets”.
These are basically a small piece of hardware which you can connect to your computer via USB to store your coins offline.
Anyone can get comfortable with the idea of using the bitcoin currency (or any other cryptocurrency).
Just give it a try.