To start with bitcoin let us for a second go back to good old days to understand the concept of money.
Imagine you are sitting in a park with your friend Joey. Joey has two oranges with him and you have two apples with you. Both of you want to eat an apple and a orange. What do you do? You give one apple to Joey and take one orange from Joey. That’s pretty simple. This is termed as Barter System.
Now let us to move to little advanced scenario. Your have a beautifully grown apple tree in your lawn which is the only apple tree in your entire village. All villagers have an eye of your apples. You have plenty of supply and decided to give some to your known friends in the village. Initially you kept a RECORD in your mind of all those who took your apples. But after sometime it was troublesome to keep track of those records. You can’t remember who took how many of your apples. What do you do? So let’s have a meeting to solve the issue. The villagers sat and thought of a plan. There was a special STONE in their village which is of a particular size and shape. They decided to use it as a standard. Next time any villager who wanted to have an apple from you gave you one stone and took a apple from you. You used that stone to purchase orange which was exclusively grown by Joey. This is MONEY for you.
Now let’s dive even deeper. One day, you and Joey went to a nearby village. There you found a guava tree and wanted to have one. You asked the owner of the tree to give one in exchange of your newly found solution “STONE”. Surprisingly the man didn’t accept that stone. When they asked for the reason, the man replied that they were using a different kind of stone for the transaction. What do you do? Let’s call a meeting once again to solve the issue. You and Joey sat together with the new villagers and thought of a plan. They wanted a universal stone which is common to all the villages. They identified the stone as GOLD which gave birth to a universal currency.
I hope you are finding it interesting till now. Do you want to know what happens next. For this let’s dive again.
You and Joey wanted to explore all the villages nearby. They carried their gold along with them. But there was a problem, it was too heavy to carry all the time. What do you do? So as usual a meeting was called and thought of a plan. They decided to build a place to store their Gold and in exchange a bill was provided to them which displayed the value of their Gold. Eureka problem solved. Now they can move freely anywhere with their bills which are portable. This is BANK for you. Have you noticed we are slowly moving into a third-party who keeps record of your Gold and we are trusting the party that they won’t manipulate their worth. The bank in return are charging some parts of your gold for the trust they are providing.
Your curiosity to explore continued. You and Joey moved to a far land miles away from your village with your bill. You saw an Avocado and wanted to have it. What do you think what happened next? Yeah you guessed it right. The bill was not accepted in that land as the people there didn’t recognize the bank. Now you and Joey can’t set up a meeting as the land is complete unknown to you and the people living there are quite happy with their money bills and don’t want to change the system. What do you do now? You saw a place where they were exchanging your bills with their bills. Wow, you found the solution, you went there and asked them to give their bills. But they were exchanging 60 of your bills with one bill of their own. That is their one bill cost you 60 bills. What do you do? You want that guava badly but if you don’t exchange you can’t have it. You decided to do the exchange and have the guava. That’s Currency Exchange for you. That’s why if you move to US from India you pay 65 for one dollar.
You and Joey are now separated. You live in India and Joey lives in USA. After some more years, Internet happened. Suddenly the world changed. It is now a global village. With social networking and fast communication there is no barrier in communication. You and Joey are now friends in many social media platforms. One fine day you remembered you had to pay Joey some amount of money for the oranges you took from him long back. What do you do? You go up to a bank and decide to transfer money to Joey, the process takes a long time for few days and the bank charges you a huge some of money for that transaction.
Here comes Satoshi Nakamoto to the rescue. The first ever digital currency which solves the above problem. You can send bitcoin through email or as a text message and your money is transferred. Yes, it’s that easy. The definition of bitcoin goes around like this:
Bitcoin is a digital currency (cryptocurrency) which is independent of any country or geographical entity & can be used by anyone who is connected to the internet.
It uses Internet as the medium and BlockChain as the technology for its implementation. It is a digital asset (something like gold) which is limited in number (not more than 21 million). Like the internet it is decentralised that is it is not controlled by any third party like a bank or a country. Bitcoin serves various purpose on its own. It is a ledger used as a store of value and a medium of exchange.
You must have thousands of question by now about its functionality and how it works, how it works, the technology used behind it. So keep all your questions in mind. The story will continue. For now you and Joey had found a way to transact among each other faster and cheaper. That’s BITCOIN for you.
With human nature to explore more beyond our planet. Soon we might meet aliens and want to transact something with them and a new type of currency might emerge.
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https://steemit.com/technology/@debs/how-google-authenticator-actually-works
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