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A Cryptocurrency Crash Course for Beginners
While I'm still pretty baffled by the world of cryptocurrency, this piece by the New York Times really laid it out in layman's terms. Hope it helps you out too! Basic Run Down: 1. Digital money that is bought and sold online 2. Doesn't go through traditional institutions like banks 3. Is not linked to any concrete substance like gold Example: Alice wants to buy a bike from Dan using Bitcoin. Alice logs into her Bitcoin wallet with a private Key (pin, series of numbers unique to her) Now usually, the money she's sending would first go to a bank who would record the money being moved and transfered, but with Bitcoin, there is no bank or middle man. Instead, her transaction is added to a public list of transactions called a Block. Every ten minutes a "Block" of transactions is added to the list of all other previous transactions, creating a Chain. A Blockchain. Now, in order to verify that the transaction was legitimate, without having a bank check it, the Block is sent into the Bitcoin network, where various network members are racing to finish a very hard math problem (more on that later) The one who finishes the math problem first gets to have their record of the transaction be known as the official record, the verified record. For their efforts, they are given Bitcoin for each transaction they verify. This action of verifying bitcoin is called Mining. Because so many people are mining, this is meant to ensure that no one computer will monopolize the market, like banks have done in the past. As for the math problem, the more computers that join the race to solve it, the harder the math problem is. This is why people are fighting for the fastest computers and huge servers to help them become first. Apparently, Bitcoin is set to be available for mining until there are 21,000,000 Bitcoin in circulation. Right now, that's set to happen in 2140...