Nick King
Bitcoin, along with most other cryptocurrencies, can be summarized in just one simple sentence: A cryptocurrency is a digital asset stored on a decentralized and cryptographically secure blockchain. So what’s crypto? The concepts and technologies behind crypto are complex: this explanation isn’t. 1 5 Okay, I’ll admit it’s not that simple, and it’s stuffed with buzzwords you’ve never bothered to google. So let’s break it down. An asset is an item owned by a person. Like a spoon. A cryptocurrency coin is an asset. But unlike a spoon, it isn’t physical —there are no real-world coins to jingle in your pocket. A cryptocurrency coin is formed of information stored on a computer —making it digital. This digital information, which details the owner of every coin and the transactions they have made, is stored in a special kind of database called a blockchain. It’s similar to how your bank manages your bank account: when you deposit money, your bank updates a database to show a transfer to your account and updates your balance to reflect it. A blockchain works the same way: when you buy a cryptocurrency coin, your account on the blockchain (commonly referred to as a wallet) will show a transfer into it, and will update your balance accordingly. But there’s a key difference between your bank’s database and a blockchain. Your bank might go off-line because a freak storm cuts power to its data center, or a hacker shuts down its systems. A blockchain is stored on thousands of computers across the world, all connected by the internet, making it extremely resistant to failure. This is called decentralization. But having a database spread across the world sounds pretty insecure, right? What if someone decides to hack it and give themselves a zillion coins? That’s where cryptography comes into play.
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