Lots of people are curious about Bitcoin and cryptocurrency these days. This is particularly true among PC gamers. Not only is cryptocurrency making headlines, it’s also screwing up the graphics card market. Which naturally leads people to asking questions like, “What is this stuff?”
I am not remotely an expert and I’ve never had a reason to use Bitcoin, but I understand a little bit of the underlying technology and I think I can help explain it to people.
Essentially, a bunch of math nerds have invented a new form of money and the world is curious what’s going to happen next. We’ve never had “money” that worked like this before. It’s not tied to a specific paper currency. It’s not guaranteed by a bank. It’s not issued by a government. It’s not backed by precious metals. Instead the currency is governed by a few simple rules and guaranteed by math. This creates a lot of interesting questions regarding economics, trust, law, and existing financial regulations.
But we’re not here to have those debates. We’re here to try and understand what this system is and how it’s possible to have a secure currency with no centralized power. Do note that every level of simplification is bound to bruise the truth a little. What I’m going to give is a very rudimentary overview and many, many details have been left out. This will not make you an expert, but I hope I can at least help you understand a couple of basic questions like:
- How does cryptocurrency work?
- What is this “block chain” thing people keep talking about?
Cryptocurrency is built using two key technologies: asymmetrical cryptography, and hash functions. Those terms might sound complex and scary, but anyone can grasp them. So before we explain cryptocurrency and the blockchain, let’s explain these two technologies.
Continue reading 〉〉 “Cryptocurrency and the Blockchain: What is This Stuff?”
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