The Bitcoin how it works?
If for you, the terms Bitcoin, Ethereum or blockchain sound like Chinese or Japanese this is not surprising: this new virtual currency was designed by Satushi Nakamoto! (Pseudonym)
But do not panic !! You are not the only ones in this case!
That’s why we’ll quickly explain what it’s all about so you can surf this new wave!
Understand how the bitcoin works
The idea of a totally virtual currency is actually simple, even if it sounds complicated.
Most of the financial transactions (80%) in the Western world are computerized and therefore virtual (bank cards, transfers etc …)
Its technique is much more complicated, because it is based on algorithms that are not within the reach of all, but its functioning is totally transparent to the average user.
Example to understand how the bitcoin works:
Here is an example that will help you understand how it works:
You took a photo of the sunrise that you stored in a folder on your computer.
A photo of the sunrise is a Bitcoin. A file on the computer is a digital wallet (the software has been designed to manage the digital currency: storage, transfer etc.).
Your fame has preceded you and a demand has been created around
this image, but there is no possibility of reproducing it, there is only one image like this one.
The image demand is what will determine the confidence of buyers and the value of money through the free market. Your fame is what will give confidence to users in this currency.
No possibility to duplicate because each Bitcoin is unique and can not be duplicated, and therefore render it worthless.
The photography of the sunrise is only possible once a day, an action that requires investment in equipment, time and effort.
Taking a picture once a day means creating new parts at regular intervals, (a Bitcoin is created every 10 minutes and there can not be more than …… Bitcoin emitted in the world) at constant rates, which can not be changed, each piece being unique. The investment in equipment, time and effort is the processing and creation of foreign exchange.
There are those who are willing to wait and pay to receive your unique sunrise image that can not be copied.
Those who are willing to pay is what gives the business value to that currency, the market value also takes into account the fact that you have invested time and effort to create something unique that is limited in quantity and therefore negotiable.
You and the buyers are interested in maintaining the commercial value of these images, preventing their thefts and updating the ownership registry of these images, and therefore you will be updating all changes to this registry.
We update each change together, it is the public list of the network of currencies produced and exchanged.
The result? A unique product that can not be copied, and duplicated, this product is requested by many people and therefore has value. Money can be invested, bought or converted into other products.
We thus find all that makes the characteristics of a traditional currency:
The function of currency is to be a standard of value and a tool for exchange and saving.
Money works if it establishes a bond of trust in a given community (national, European, international, corporate network ….)
But unlike traditional currencies, and this is its strength and originality, its rules and its functioning do not depend on political or economic objectives.
It is not linked to any bank or political body!