For those unfamiliar with Bitcoin, there are better ways to understand it than in this article. I would recommend Wikipedia to start with. This article is for people who think they already know what Bitcoin is but are not yet trading it. I was there – I thought I understood it too, but since I dipped my toe in the pond, I've found an unexpectedly insightful experience. Trading Bitcoin contains so many nuances that it is extremely educational. It forced me to consider many of the built-in functions that are unchecked and even not recognized in traditional currencies. In this way, I assigned my own values to these functions and was able to decide how best to meet my various needs – decisions that we normally make.
There are aspects of Bitcoin that make it similar to the fiat currency, but it's not cash. There are aspects similar to gold, but it is not a gold bar. There are aspects similar to securities, but it is not exactly a security. The question "What is it?" is actually a lot more complicated than it seems. It exists only as an entry in a distributed digital ledger. "Having" bitcoins really means having permission to transfer bitcoins. No, in fact that is not even technically correct. It means that a level of authority is measured in bitcoins in order to transfer exactly that authority. Try wrapping your brain around it. In the future, I will resort to referring to bitcoins as valuables that are being transferred, but I understand that this is just a shortcut to make this essay readable. Having bitcoins is the authority to transfer authority.
When deciding to purchase my first Bitcoin, the first step was to determine how to get Bitcoins transfer permission. Theoretically, one could print out the cryptographic code of a Bitcoin and pass the paper on to another person in order to transfer the Bitcoin represented by the code. However, how should this recipient know that the printout has not been duplicated and has already been printed? How should the recipient know that the expression represents a value in Bitcoin at all and not just a sequence of random characters? Transferring Bitcoin printouts to paper may work (albeit inefficiently) between people who implicitly trust each other, e.g. B. for gifts between relatives. Bitcoin's genius, however, is the distributed but authoritative nature of its general ledger, and for this to work, transactions must be carried out on its network to be carried out.
If a Bitcoin expression is transferred between a group of people without being exposed to the network, none of them know whether it is valid or fake. It would be like passing a bank check on to "bearer". it may have already been paid for, or it may not have been good at all. Nobody would know until he tried to present it to the manufacturer's bank for payment. As long as someone else is willing to accept a potentially hot potato for goods or services, it may not matter, but people tend to beware of ending up with hot potatoes. I am such a person, so I wanted my receipt of bitcoins to be checked by the network. This brought my focus to an investigation into digital Bitcoin "wallets". Wallets are a digital place to store Bitcoin authority codes.