What is Cryptocurrency and Blockchain Technology
Published / Last Updated on 15/11/2019
If you walk into the Bank of England with a £20 'sterling' note, if you read it I states: "I promise to pay the bearer on demand the sum of twenty pounds".
Do you really expect the Bank of England to go to the vaults and bring you a bag of 20 pounds in weight of Saxon silver coins called 'sterlings'?
Currencies globally are all virtual currencies now. You never see any money. Currency is mostly transactional as a value, the money note represents a means to transfer values or promises - it is not real silver sterlings or silver dollars.
This is also what crypto currencies are, it is simply a means to transfer value - think of them as 'Internet Cash Tokens'.
Crypto assets are simply 'encrypted' files i.e. unique locked puzzles/codes that have been cracked, at a cost e.g. time, electricity and computer power, they are unique and the Crypto Coin/Token therefore has a value that can be transferred around the world bypassing currency exchange rates etc.
Encrypted Tokens (Coins) are made up of:
- Public Keys (codes) - think of these keys like a bank account.
- Private Keys (codes) - think of these keys like your PIN number.
Your 'coins' are stored in a 'Wallet' - this is not a private wallet but a Public Register (a public wallet) that shows that it is a valid crypto asset.
The Public Register 'Wallet' is what is known as 'blockchain' technology - a chain of encrypted tokens.
You can 'mine' for tokens using your computer, or a network of computers at significant cost to crack the new 'puzzles', codes, encryption to mine/find your own crypto coins and/or you can simply buy/trade as normal.
