Bitcoin, cryptocurrency, blockchain; all words that have been circulating throughout social media, and concepts that not everyone understands. Before you can even begin to consider whether or not this is something you’re interested in investing in, let’s breakdown what each of these things mean.
After scrounging through a multitude of different articles and explanations, at it’s most basic, here are the simplest definitions:
To begin with, cryptocurrency is simply a digital form of currency. We are used to dollars and euros, etc. Cryptocurrency is simply another way to express a monetary amount, but it’s all done online and it operates separately from any sort of bank.
There are many different types of cryptocurrencies, such as Ethereum, Ripple and Bitcoin, that are available for anyone to access. Currently, Bitcoin is the most common form, and it’s often used as the benchmark for other forms of cryptocurrencies.
And finally, blockchain, the rather simple, yet hard to explain concept. Blockchain is the underlying technology that is used by cryptocurrency. It can serve many other purposes as well, but it’s most well-known usage is for things like Bitcoin.
Breaking it down, for whichever purpose it is being used, the necessary information is locked inside of a ‘block’, which can only be accessed by someone who has the right ‘key’. For cryptocurrencies, everything is encrypted, which means to get access into the block, the key is retrieved via solving complicated math problems. Most things are composed of a collection of blocks, once you get one key, you need to solve another equation to get access to the next; this forms the blockchain. The process of solving these equations and getting access into the blocks is what is referred to as mining.
Like mentioned previously, blockchain technology serves more purposes outside of uses in cryptocurrency. This article takes a look at all the different ways that blockchain is being used to innovate current systems, such as crowdfunding, healthcare and protecting information on the cloud.
Is it confusing? Yes, without a doubt, at first glance it is a completely foreign concept. However, once you break it all down and take the time to understand what this technology is capable of, it opens you up to a plethora of different opportunities. Collectively, we can only begin to imagine where we will go from here, before a gifted individual figures it out and changes the world as we understand it, once again.