Simple Guide to Understand Basic Facts about Bitcoin
Bitcoin can seem to be complicated if you are trying to get the concept behind the whole idea of online currency transactions. However, things may appear difficult only if you do not know what to look for and what it takes for Bitcoin transactions that may not feature in most other conventional ones. If you are having problems trying to understand the whole concept, do not worry, here are some of the basic things you need to get clear.
Bitcoin in physical setting
As much as the whole idea of Bitcoin is based on online transactions, it can be viewed from a physical transaction perspective for a better understanding. Look at it this way; you are sharing something with someone, this could be money, fruit, book, you name them. Then, it is only the two of you.
You do not need to involve another person to witness it, nor do you have any concerns over the authentication of the transfer of ownership. The state of the property shifts permanently from one person to the other, and the second owner can further transfer the ownership to yet a third owner. Well, Bitcoin operates similarly.
The only difference is that in most cases, Bitcoin operates on digital money. Now, here is where several issues come up. Unlike exchange in real life, the digital one can come with its fair share of challenges. One of these is determining how the exchange of ownership can be confirmed and whether or not the previous owner had shared it with someone else or in public. This raises the concern of double spending, which has been a challenge yet to be solved.
Could ledgers help?
Well, some measures such as digital ledgers can be used to counter this problem. In such a case, a third party will have to be involved to oversee the transactions carried out. However, this comes with its downsides too. The person responsible for tracking the sales can interfere with the process by creating more of the bitcoins.
This issue can be avoided by making the whole process public, where such a ledger can be shared on everyone’s computer. The process will involve the use of open source codes and rules that will help achieve a more secure and improved surveillance of the transactions and monitoring of the entities in question.
Why open source is the way to go
This remedy comes in handy, thanks to three crucial aspects. One of them is the main idea that everything is in public domain, where everyone knows the number of the pieces available, which is the amount in case of Bitcoin.
Secondly, upon a transaction, one will understand that the transfer of ownership has been completed, as the public ledger will update and verify the process.
Lastly, with the ledger shared by all, there is no need for a third party to oversee your transaction, nor can the owner sell it twice or more, just as it would be the case in a physical setting.
Bitcoin involves a simple process that does not have to be as complicated. Despite many people finding it difficult to understand it, looking at it this way makes things easier and clearer. This process does not have to intimidate you any longer.
