Have you ever picked up a book in the Dummies series only to find that you must sincerely be the dumbest of dummies? You can no more make heads or tails of what they are on about in that book than before you bothered to crack it open. That seems to be where most of us stand when it comes to understanding cryptocurrencies and blockchain technology.
Bear in mind it isn’t you! It’s a totally new concept in the financial markets and so unlike anything you’ve ever dealt with, your frustration is understandable. With that in mind, let’s try to explain the concept so that you no longer count yourself among the dumbest of the dumb.
Begin With a Point of Reference
Although you might like to know how blockchain technology works, the first thing you are probably interested in is a way to find the relative value of crypto to your country’s fiat (printed and minted money). Not to worry! Let one of the calculators on the okx.com website do the math for you.
No matter what country you are in, cryptocurrency remains the same! Now the only thing left to do is find out what that global value is in relation to the money you are used to dealing with. That wasn’t so complicated, was it?
A Basic Definition of the Blockchain
The next chapter in the Dumbest of Dummies series is a very basic understanding of exactly what blockchain technology is. Actually, the easiest way to explain the blockchain is to see it as a database that continues to grow a list of chronological records. These records are blocks and they only exist in cyberspace. Each block is timestamped so that you can follow the ownership of crypto as it is bought, sold, or exchanged for something of value.
The blockchain is not part of any central bank and so cannot be controlled by any government as their nation’s currency is. It is simply a public record of the movement of crypto. Think of it like being able to track where every dollar in your pocket has ever been since it was printed. Now, that would be some feat, wouldn’t it? With crypto existing as a digital record, it can be tracked in nanoseconds, and it cannot be altered as crypto is highly encrypted.
The other really important thing to understand is that these records are scattered around the internet so that no one crypto can be found on any one computer within the network. Each crypto is a segmented record so you would need both the public and private codes to get in and read that data held in a digital block before moving on to the next bit of data in the next block, and so forth.
But Where Do They Come From?
Now, this is a question for the next book in the series! That’s the part that is really complicated to the layperson without a background in math and computer coding. Once created, they can be bought, sold, and transferred within a transaction, but again, that’s another story for another day. Suffice it to say that only one person or entity can own that crypto at any one time.
Now onto that question. It’s rather like a toddler asking mom where babies come from. Is there really a simple answer that a small tot could comprehend? In this case, we are the tiny tots so let’s wait until mom has time to think about that before asking where those Bitcoins came from that she’s holding in her hot wallet.