Blockchain and Cryptocurrency Explained in Plain English
I get a lot of people asking me what are Blockchains and Cryptocurrencies. "I read about it all over the place but it's all technobabble and I don't get it".
So, I decided to try to put it in simple but informative format.
Cryptocurrency and the Blockchain Explained
Times are changing, and different cryptocurrencies are taking the Internet and the financial world by storm. Bitcoin was seemingly the start of this new trend, and recently Aether was the hot new currency people were after. The names may change, but the technology and methods of acquiring cryptocurrencies are largely the same. However, it can be a difficult business to get into or to understand, and the industry is full of buzzwords that can be prohibitive for the layman. Because of this, this article will serve as an easy to understand educational resource on the blockchain and cryptocurrency, and should answer most of the entry questions you may have.
What is a Blockchain? What is a Cryptocurrency?
The technology here is pretty complex, and it came to the surface along with the popularity of Bitcoin. Simply put, you can think of the blockchain as a sort of encrypted ledger. The blockchain records all transactions across the peer-to-peer network of the cryptocurrency and its "miners," or the people who try to acquire cryptocurrencies. What the blockchain does is effectively secure a cryptocurrency so it can't be imitated and transactions can be verified, much like how banks and federal governments do for regular currencies like dollars.
A cryptocurrency is just a medium of exchange, like any dollar or coin you would normally use to buy something. The only difference is that cryptocurrencies are digital and encrypted, making them virtually impossible to trace or steal.
How does it Work?
Cryptocurrencies are much more like regular money than most people think they are. A certain number of a currency is created, people work for them, and they are assigned a value or buying power based on the market.
Essentially how it works is once a currency has been created, people can dedicate their computers to "mining" for it. Mining refers to when a person has their computer solve complex algorithms in the hopes of earning some of the cryptocurrency. There are a lot of groups out there for people to work one another and band their computing power together to mine much faster.
What are its advantages?
The chief advantages of cryptocurrency are pretty apparent once you understand how it works. The two chief advantages of investing time and money into cryptocurrency is that it's extremely secure from any government, inflation, or thieves, and that it is very difficult to trace. However, the blockchain has a wide variety of other uses from just managing cryptocurrency.
Basically, the blockchain can record a wide variety of different transactions, not just financial ones. The blockchain could allow users to vote in elections with verifiable, secure voting, it could allow for encrypted information in business and healthcare – the possibilities are basically limitless.
Who can benefit from it?
Anyone can benefit from the use of the blockchain and cryptocurrency. Really, there's almost no reason not to try some kind of mining so long as you have a solid Internet connection and some unused hardware. It can basically mean free money for the dedicated individual. The blockchain can also benefit society and business as a whole, providing safe, reliable, and encrypted information to a wide variety of users.
Why is it changing the world?
It's no secret that cryptocurrency and the blockchain are taking the world by storm. Blockchain is an amazing piece of technology with an incredible amount of potential applications. Cryptocurrency is no different, and it's shaking up the financial world, drawing investments and attention from all over the world.