Читать книгу Cryptocurrency All-in-One For Dummies - Peter Kent, Kiana Danial - Страница 25

Cryptocurrencies are also known as digital coins, but they’re quite different from the coins in your piggy bank. For one thing, they aren’t attached to a central bank, a country, or a regulatory body.

Here’s an example. Say you want to buy the latest version of Cryptocurrency All-in-One For Dummies from your local bookstore. Using your normal debit card, this is what happens:

1 You give your card details to the cashier or the store’s point-of-sale system.

2 The store runs the information through, essentially asking your bank whether you have enough money in your bank account to buy the book.

3 The bank checks its records to confirm whether you do.

4 If you do have enough, the bank gives a thumbs-up to the bookstore.

5 The bank then updates its records to show the movement of the money from your account to the bookstore’s account.

6 The bank gets a little cut for the trouble of being the middleman.

Now if you wanted to remove the bank from this entire process, who else would you trust to keep all these records without altering them or cheating in any way? Your best friend? Your dog walker? In fact, you may not trust any single person. But how about trusting everyone in the network?

Blockchain technology works to remove the middleman. When applied to cryptocurrencies, blockchain eliminates a central record of transactions. Instead, you distribute many copies of your transaction ledger around the world. Each owner of each copy records your transaction of buying the book.

Here’s what happens if you want to buy this book using a cryptocurrency:

1 You give your crypto details to the cashier.

2 The shop asks everyone in the network to see whether you have enough coins to buy the book.

3 All the record holders in the network check their records to see whether you do. (These record holders are called nodes, and are explained later in this chapter.)

4 If you do have enough, each node gives the thumbs-up to the cashier.

5 The nodes all update their records to show the transfer.

6 At random, a node gets a reward for the work.

That means no organization is keeping track of where your coins are or investigating fraud. In fact, cryptocurrencies such as Bitcoin wouldn’t exist without a whole network of bookkeepers (nodes) and a little thing known as cryptography. The following sections explain that and some other important terms related to the workings of cryptocurrencies.