Do you know nothing about Bitcoin but you would like to grasp a basic understanding of what it is? The technicalities of cryptocurrencies can be difficult to understand as the topic can get rather dry, and reading introductory guides can leave one more confused at the end of it than at the beginning.
Before I took the plunge investing a little of my hard earned dollars into this mystery, I wanted to at least know the basics and whether or not it was safe. Taken from what I have learned, this is how I can best explain it.
We are sitting at the kitchen table having lunch together.
I have a cookie. I give it to you.
You now have a cookie. I have none.
My cookie was physically put into your hand.
You know it happened. I was there. You were there. You touched it.
We didn’t need a third person there to help us make the transfer. We didn’t need to pull in our friend Fred to sit with us at the kitchen table and confirm that the cookie went from me to you.
The cookie is yours! I can’t give you another cookie because I don’t have any left. I can’t control it anymore. The cookie left my possession completely. You have full control over that cookie now. You can give it to your friend if you want, and then that friend can give it to his friend. And so on.
Following me so far?
Now say, I have one digital cookie. Here, I’ll give you my digital cookie.
Ah! Now it gets interesting.
How do you know that that digital cookie that used to be mine, is now yours, and only yours? Think about it for a second.
It’s more complicated, right? How do you know that I didn’t send that cookie to our friend Fred as an email attachment first? Or your friend Jack? Or my friend Amy too?
Maybe I made a couple of copies of that digital cookie on my computer. Maybe I put it up on the internet and one million people downloaded it.
As you see, this digital exchange is a bit of a problem. Sending digital cookies doesn’t look like sending physical cookies. Maybe these digital cookies need to be tracked in a ledger. It’s basically a book where you track all transactions — an accounting book.
This ledger, since it’s digital, needs to live in its own world and have someone in charge of it. So say, the guy who "baked" the online cookies, has a digital ledger of all the cookies that exist in their system. So, cool, someone like them could keep track of our digital cookies. Awesome — we solved it!
There’s a bit of a problem though:
What if the cookie baker created more? He could just add a couple of digital cookies to his balance whenever he wants!
It’s not exactly like when we were at the kitchen table that one day. It was just you and me then. Going through the digital cookie "baker" is like pulling in our friend Fred for all our cookie transactions. How can I just hand over my digital cookie to you, like, you know— the usual way?
What if we gave this ledger — to everybody? Instead of the ledger living on a cookie baker's computer, it’ll live in everybody’s computers. All the transactions that have ever happened, from all time, in digital cookies will be recorded in it.
You can’t cheat it. I can’t send you digital cookies I don’t have, because then it wouldn’t sync up with everybody in the system. Plus it’s not controlled by one person, so I know there’s no one that can just decide to give himself more digital cookies. The rules of the system were already defined at the beginning. And the code and rules are open-source. It’s there for the people to contribute to, maintain, secure, improve on, and check on.
This system is called the Bitcoin protocol. And those digital cookies are the “bitcoins” within the system. Cool, right?!
When I make an exchange I now know that the digital cookie certifiably left my possession and is now completely yours. I used to not be able to say that about digital things. It will be updated and verified by the public ledger.
Because it’s a public ledger, I didn’t need our friend Fred (third-party) to make sure I didn’t cheat, or make extra copies for myself, or send cookies twice, or thrice…
In other words, it behaves like a physical object.
But you know what’s cool? It’s still digital. We can now deal with 1,000 cookies, or 1 million cookies, or even .0000001 cookies. I can send it with a click of a button, and I can still drop it in your digital wallet if I was in Seattle and you were all the way in Hong Kong.
So that's how I can best explain Bitcoin and the security of it. There is so much being written for and against all cryptocurrencies and opinions about its future. I have been forming my own opinion but I am not going to get into all that here.
But if you are new to the idea and have had growing curiosity among confusion, I hope this helps! Consider yourself one smart cookie and now know more about Bitcoin than a lot of people!
Please leave comments, upvote, and resteem!
Thank you!
Rhonda Anne
Sources:
https://blog.bolehvpn.net/the-ultimate-guide-to-cryptocurrency-for-a-super-beginner/
https://medium.freecodecamp.org/explain-bitcoin-73b4257ac833
https://en.bitcoin.it/wiki/Block_chain