So, the easiest way to explain how crypto actually works is to do your research. Isn’t that annoying? When you go to find out how something works and you get told to do your research?
Well, duh! That’s exactly why you’re here, isn’t it?
Because we’re so kind and generous, we thought we’d help you out just a little bit by digging into some detail.
Put simply, crypto—or cryptocurrency—is a digital form of money. It does have some similarities to regular currencies (currencies such as GBP or USD) but is actually vastly different. Regular money is obviously controlled by a central source i.e. the government of the country that the money belongs and the banks within that system… this can be classed as being centrally controlled, or “centralized.”
The basis of cryptocurrency works on a decentralized system and the technology behind that being what’s known as blockchain. This works whereby a transaction that is carried out using cryptocurrency requires a consensus in the system to prevent any form of double-counting.
For example, say you buy a bitcoin and you wish to use that bitcoin to buy a loaf of bread ( I don’t know if this is actually possible yet, but who knows what will happen in the future). There needs to be a record out there in the ether that tells the entire Bitcoin network who owns your bitcoin. Once you’ve purchased your loaf of bread, the transfer of ownership of that individual bitcoin needs to go somewhere else. With regular money, the banks control this process. With cryptocurrency, no single entity is in control and so each crypto coin has a unique identity, with possession of that identity transferring between owners in exchange for goods and services.
Confused? It’s actually quite simple but, because it’s new, it doesn’t appear to be that way. This isn’t the place to go into detail as to how blockchain technology actually works because that can really be mind-boggling. However, if you are looking to expand your knowledge on cryptocurrency, the below infographic is an excellent starting point, containing a concentrated list of different resources of where you can find out more about cryptocurrency.
Depending on the best way for you to learn, for example, you might be more of a listener than a reader, then a podcast could be the way to go for you.
There are quite a few online courses you can take to understand more about cryptocurrency and even start trading or mining cryptocurrency. Warning! Trading and mining crypto is NOT for the faint-hearted and is considered an advanced form of involvement in crypto.
Have a browse through the infographic below and maybe cherry pick two or three resources that jump out at you. YouTube channels seem to be a fast-growing source of information for crypto, so if Crypto Zombie, DataDash or Ivan On Tech don’t appeal to you, there’s likely to be plenty more out there.
Source: 21 Places to Learn How Cryptocurrency Works Infographic from ICOHolder.com
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