Bitcoin also a financial technology in its infancy in terms of adoption, it may seem mystical to some. Blockchain technology is unlike any other system currently supply fuel the currency, and as such is not well understood by the general public. For many, especially the older generations, cryptocurrency may seem magic trick of digital magic, and certainly not something that could put their savings confidence and life.

To help understand the cryptocurrency, I will try to explain Bitcoin through the allegory of a pre-electricity people, without reference to any modern technology.

History of decentralized operations

Our people have no centralized hypothetical currency and instead uses a simple exchange. Residents, tired of the inefficiency simple change, but suspicious of a central bank that currency adopt a decentralized accounting system around the units of measurement known VillageCoin, and record all transfers in a public reason.

Record keepers

When a citizen wishes to transfer an amount of VillageCoin to another, recording the transaction on a piece of paper containing the sender, recipient, amount and date, and present it in a large urn, safe for inclusion in the reason. anotadores volunteer, hereinafter known simply as guardians process all transactions. Several guards must sign an agreement before it can be included in the accounts in order to avoid fraud and errors. Transactions can also indicate a small amount of VillageCoin reserved for the guards, with higher rates, which ensures that transactions are processed first ublic ledger

Public ledger

Once confirmed by the owners, all transactions are written in rolls that are then encased in glass. These are called blocks. Each block is recorded in his head a brief summary of the transactions contained therein. These blocks are chained and kept in the public archives of the town, so all transactions are permanently and publicly accessible.

Back to Bitcoin

Bitcoin functions in the same way as the accounting system of this fictional town. Transactions between addresses containing an amount and date are sent to the network. Instead of holders of physical records, computerized process called mining and confirm transactions. They small transaction fees are paid, and also new claims "mined" for the supply of currency slowly over time (with a ceiling of 21 million) Bitcoin. All transactions ending in data blocks, which in turn are linked in blockchain permanent and public record.

The only fundamental difference between Bitcoin and VillageCoin fiction are using digital records rather than physical, physical identity transaction does not address bound (nobody necessarily knows who controls what direction), the transaction is instantaneous and easy, instead of time consuming and requires materials physical for transcription and Bitcoin is a global currency (instead be relegated to a small town).

Bitcoin is not so complicated after all

When viewed through the lens of keeping physical records, Bitcoin begins to make more sense for the average layperson. The concept of a public and decentralized blockchain Leger is the simple and natural conclusion of any desire to record any human activity long term without an organ of centralized management. If more you understand the simple roots technological genius behind Bitcoin, controlled by central banks currency would have been abandoned for now