Assuming your 5-year old walked over to you and posed the question: Daddy, what is the meaning of Bitcoin? What would you say to her? Would you tell her it is a form of digital currency for purchasing toys? Or that it is mined using powerful computers? Would they even decipher the words coming out of your mouth?
This is a serious predicament for many parents for the simple reason that children just lack the intelligence to understand this technical and rather complex world that is blockchain technology. Lucky for you, we are here to put that to rest. Follow through as we help you figure out what to say to your child when they ask you what blockchain technology is.
What Is Blockchain?
Blockchain can be simply defined as a distributed, digital record. It is a decentralized database that gives an unalterable record of digital transactions. Think of it as a spreadsheet containing millions of duplicated data over a network of computers and that this network is designed to make regular updates of the data on the spreadsheet.
How Blockchain Works
Each block has a timestamp plus the link to the previous block on the blockchain. The end result of this is a long chain of blocks that can lead back to the initial block. All the blockchain records are in the public domain and can be verified by any user.
Since there is virtually no central location, it is just impossible to hack because the same data exists in millions of other places. For this reason, blockchain technology is safe and secure than most other financial systems in the world.
The blockchain technology is what underpins cryptocurrency which is technically a digital coin running on the blockchain.
Bitcoin was the first cryptocurrency to be introduced to the world in 2009, and now, so many others have emerged in the market. Nonetheless, it is still the leading cryptocurrency used by industries and big corporations worldwide.
Now that you know the meaning of Blockchain, here are some of its advantages:
- Decentralization: This is by far the biggest benefit of blockchain technology. The decentralized network of blockchain keeps hackers away. It is impossible to bring down the technology because each node on the network has the same data as the rest. In addition, when one node breaks down, the rest of the network will be untouched.
- Reduced Risk of Fraud: The blockchain network undergoes checks on a constant basis. This is essentially a DIY project as the system checks itself by verifying if the information on each node is correct. This helps reduce fraud to a greater extent.
- Transparency and Trust: Users that utilize blockchain have no worries or concerns about the system’s ability to safeguard their resources. There’s actually no need of having a third-party being involved. The ledger lets you control all your transactions in an accurate and transparent manner.
This is just a very basic meaning of Bitcoin and blockchain technology. As mentioned earlier, it is quite a complex subject that is better explained by the best bitcoin broker and other crypto experts. However, this information is all you need to let your child understand more about blockchain technology.
Bill Adams has been into currency trading for over 5 years. After taking a short course about Forex and Cryptocurrency, he decided to put his knowledge to good use as a writer and trader at TenkoFX. His Educational background in Business Administration and Economics has given him a broad base from which to approach Forex and Cryptocurrency topics.