A humble attempt to interpret BitCoin and Blockchain simple as a story.
November 10, 2017
Before talking about Bitcoins, lets talk about Money.
What is money? literally ?
Money is the representation of worth or value that we are holding, using a medium or an instrument provided by any central authority or any trusted third party.
In our case, these guys are Reserve Bank of India or PayTM or any financial institutions. So when you hold a RS 2000 note, you are holding a piece of representation made by RBI equivalent to a worth of RS 2000/-.
These financial instruments have some common features too,
Nobody in the world can have exactly the same note as you are having, and when you transfer or give it to someone, you lose it.You cannot hold it and give it to someone like in the case of a digital media file. You can just copy a file and share with someone. But not money.
So what this bitcoin did is they made a network of computers, where anybody from anywhere can join the network, and you can have a unique representation of your value using #Bitcoin in that network.
So basically Bitcoin is an instrument provided by the network called Blockchain to represent unique value using the internet.
That means if you hold a bitcoin, no one in the network can hold the same bitcoin, and you cannot simultaneously share it and have the possession. That is you cannot hold and share the same bitcoin, reproducing the same features of our traditional financial instruments in a digital environment.
Why Bitcoin or similar systems are substantial for the existence of a sustainable economic environment?
So in the present day situation we have the only choice to depend third party systems to represent the value that we generate,
just assume a situation, where a large community of people who are isolated from the civilised world, they are unaware of RBI and Rupee or PayTM, how will they represent the worth of assets they possess ? How will they represent value generated?
Here is the important aspect of Bitcoin.
We can simply represent a unique value we are holding with the help of an internet connection and can able to make a transfer of these values to others without using an independent third party organisation.
How does this work?
Bitcoin is operated within a network of computers, and a database of all the transaction that every participant make in the blockchain network.
Reconciliation of the balance is automatically done by network and verification of transactions made inside the network is done by other participating parties.
So without having a central third-party authority, you are able to represent your worth and able to transact it to anywhere irrespective of land, culture, border, or anything. You just need an internet connection and a device to do that.
This is our humble effort to clarify Bitcoin to people who are not having tech expertise.
Do not hesitate to criticise, as we consider it as an important tool for making yourself better.