Understanding Bitcoin – Part 1

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Bitcoin-2-ThumbIt’s O.K. to not understand how Bitcoin works. At one time, nobody understood what vaccination was. Most people didn’t understand how it worked, and many people could not even express what it was, let alone the vast transformative effect it would have on society.

However, the utility was there, and slowly it pervaded our everyday lives. Now nearly everyone knows and understands what vaccination does, and most people are able to explain how it does it quite effectively. Understanding how these new concepts operate is an important part of existing as a conscious citizen of the modern world.

Bitcoin is a software program, much like any program, such as Microsoft Word or Facebook. Software is digital or electronic. Ultimately, Bitcoin is electricity! It is nothing more than organized electrical energy. It runs through computers and cable lines.

Like electricity, it can be stored as power, much like the battery attached to a solar cell stores the energy from the sun to power the home. But instead of a solar cell, you can store your Bitcoin on a computer hard drive, a cellphone or a piece of paper. This is where Bitcoin merges the physical world with the digital universe.

“But how can this be?” you ask.

Remember the Bar Code that’s on the cereal box or toy box that the cashier scans to get the price at the checkout counter. This allows retailers to get the information including the price, location, and quantity for every product in their store.

Bitcoin has its own unique bar code, which allows you to track the same information. Bitcoin stores human value that comes with a bar code to track it.

Just like a bar code, you can post that Bitcoin bar code online or you can print it out on paper. Specifically it is called a QRR code, which behaves just like bar code for Bitcoin. If you scan this code, it will tell you all the information needed about your Bitcoin: price, quantity, and location.

These bar codes can be stored in a computer, or printed on a piece of paper. You cannot store electricity directly on a piece of paper. Electricity is not really stored on a computer. Rather, you need it to turn on the computer or access a USB key.

Electricity is the fuel that powers the engine of a computer, like gas is the fuel for cars. It is represented in units of Watts. Bitcoin, likewise, is represented in unit of Coins (i.e. Bitcoins). Just as you could ask “how many Watts for last month’s electricity bill?” you could inquire “how many coins did I receive or send out?”

This is where it gets tricky for us humans who are not computer savvy. In general, we all have an idea what a programmer does and what the software is that he or she writes. Just like we have a sense of what doctors and auto mechanics do to fix our bodies and our cars. As with programmers, we don’t know HOW they do things, but we do know WHAT they do, and have an inkling as to WHY.

We know authors write, singers sing, and chefs cook. However, we do not necessarily know, or even care, how people perform certain functions of their profession, especially when it’s not within our own skills or, more importantly, relevant to our own lives.

So programmers program, or write code. Another way to see it is that programmers are authors who write in a different language, literally! We, as English speakers, would not naturally understand it. Think of it this way: if you only spoke and read English, then you would only be able to read books by authors who write in English.

If you wanted to read Les Miserables by VictorHugo, written in French, you could not read it, let alone understand it, unless you trained yourself and spent an enormous amount time learning that language. So why can you read English but not French? Both languages basically use the same alphabet. However the ways in which the words and sentences are arranged, and the meanings, are all different.

Peter LeIn the next article, I’ll explain how you can understand the language of Bitcoin without having to learn it yourself! In the meantime, to read my two reports, Bitcoin in English, Part 1 and Part 2, please enrol as a QWealth Premium Member here:

 

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