Simple Explanation of Blockchain and Cryptocurrency: Top 3 Beginner’s Benefits

The simple explanation of blockchain and cryptocurrency starts with the concept of a digital (online) system that facilitates monetary transactions, such as money used over the Internet. As for blockchain, it acts like a digital ledger or record book that you cannot change after writing on it—it is immutable, in technical terminology.

Cryptocurrency can be referred to as digital coins, unlike digital fiat currency, with the former using blockchain technology for smooth transactions and wallet processes, including trades. Nowadays, over 300 million people have embraced this process of finances or digital currencies, slowly making them a part of life just like fiat currencies. 

Key Points in This Discussion

Digital Record System: Blockchain creates secure, immutable digital transaction records.
Digital Money Revolution: Cryptocurrency offers blazing-fast, safe payments without a banking authority. Global Accessibility: These technological financial systems work 24/7 across all countries and time zones.

What Is Blockchain Technology?

If you are a beginner, first understand distributed ledger technology. This system records transactions that you can share and replicate across multiple computers. This process requires no central authority, such as a central bank or government.

Imagine it as a notebook with a special feature, but one you share with many people. Suppose you or any individual writes something or enters data in that notebook. In that case, other people using the same special notebook can easily see what is being written, but cannot make any changes or erase any part of it. 

This is a simple explanation of blockchain technology.

Now, the history of blockchain and cryptocurrency started to take the shape we know today in 2008 with the creation of Bitcoin, perhaps by a person (or group of individuals) using a hypothetical name (or pseudonym) Satoshi Nakamoto.

This pioneering use of blockchain in finance has revolutionised the ingenuity and transformed how we consider our transaction behaviour over time, and now it is going to be a part and parcel of everyone, although not now, but in the near future, that’s for sure. 

We can skip it for the time being, but sometimes later, we cannot. The reasons are:

• Transparency: All transactions are visible to everyone in the blockchain. 
• Security: No one can change the information once it is recorded.
• Speed: Transfers or transactions happen in minutes and instantly, not days. 

Best Ways Cryptocurrency Works

When referring to digital assets, we mean virtual assets, virtual currencies or money used over the internet and the former function using complex mathematical codes or algorithms. This complex mathematical code is called cryptography. When you go deeper into or learn about cryptocurrency and blockchain technology principles and patterns, you will understand how the code designed to protect your money and keep it safe in a digital locker.

With this revolution in financial technology, there is a widespread trend, i.e., the digital finance transformation is quickly happening in banking and the financial system. The following chart demonstrates how this financial technology is taking over the traditional currency, what the control system is and how its efficiency is multifold in nature: 

Top 3 Benefits for Beginners

There are many reasons why you should learn the technology and the system. Also, as mentioned above, this financial technology system will become the norm for everyone in the near future. The following section lists out the reasons for learning and the benefits for beginner people in this financial technology system:

New Opportunities and Careers: Learning about blockchain and cryptocurrency can help you be in the better professions and careers.

User-Friendly Learning Curve: You can learn blockchain and cryptocurrency from beginning to end, as these technologies provide you with simple and easy steps for understanding.

Improved and Easy Accessibility: You can use and access digital money, including the transaction process, on your mobile devices or mobile banking apps, which helps with inclusivity and accessibility.

Why This Matters Today

Technology is improving day by day, affecting and transforming all sectors or verticals of business. And in financial technology, as the history of blockchain and cryptocurrency tells, the transformation is happening at a tremendous pace.

Hence, when the major chunk of the transactions of the financial system will take place through this technology, it is quite necessary for everyone to learn about digital currencies in their best effort to prepare for the economy and financial world that is approaching you. 

Conclusion

With improvement is ledger technology, the crypto and blockchain world will improve too. Its decentralization process will become much better with highly encrypted system protecting the clients’data and personal information.

The simple explanation of blockchain and cryptocurrency helps us to explore how this technology is changing our financial transaction at present and will too in the future, in secure, transparent and highly efficient digital mechanism. 

Frequently Asked Questions

Is cryptocurrency real money?

Yes, it functions like fiat money except that it is used over the internet and it can be referred to as digital money, but not exactly, because fiat money can also be used as digital money. However, it is a money used over the internet.

Nowadays, many stores are accepting such money for payments. Moreover, you can use this virtual money in exchange for regular or fiat money using the dedicated websites that support exchange (or called as exchange websites). 

How do I start using cryptocurrency?

It is pretty simple to learn about cryptocurrency and blockchain or use digital money; you need to download a digital wallet app on your smartphone or computer/laptop and register for it as per the instructions provided by the provider’s particular system.

Once you have completed the above, you can start sending and receiving a small amount of digital coins or currencies. This is how you can learn using cryptocurrency. 

Can children use cryptocurrency?

As this type of money is used over the internet, children need adults’ or guardians’ supervision as well as their permission. Many cryptocurrencies require you to have attained adulthood or have crossed the age of 18 years. This is to ensure the safety of the individual and the company’s compliance with legal rules and procedures. 

What happens if I lose my cryptocurrency password?

When you lose your credentials for your traditional banks, you can reset or visit the physical banking establishment to retrieve the password. However, if you misplace your cryptocurrency password, you cannot retrieve it, in most cases.

Their wallet system portal or website may have space to reset the password; you can check for the same where you use to log in. It is better to write the password somewhere and in an area where no one can access or discover what it is for. 

Are cryptocurrencies safe to use?

Regarding the safety and security of the cryptocurrencies, your personal data remains in well-encrypted environment protecting it from online threats. But is always advisable that when using any apps or websites, you should follow safety rules and embrace online etiquette (safe/good manners) for the protection of your financial data. 

Postscript

Coinbase has over 100 million users who now use cryptocurrencies, and the figure ticks every minute. Many other such crypto companies have their own clients. So, the worldwide users, if estimated, will amount to a mammoth figure. 

So, with this simple explanation of blockchain and cryptocurrency, you can see how many trends in fintech are emerging and transformations are happening, improving people’s lives in terms of finances.