However, investing in something you don’t understand is always a bad idea. For crypto fans who are already deeply involved in the matter, it is sometimes difficult to explain the complexity of digital gold to the so-called “no-coiners” in simple language.
Down with the BTC jargon
That is why it is particularly important to use simple language and to make no claim to completeness. Some details, such as when the next BTC halving will take place or what changes the Taproot update has brought to the BTC network, can be left out for the time being.
The version for grandma and grandpa
We go to the grocery store around the corner. Products are sold there by producers that the retailer of the shop has previously bought there. All groceries are displayed and priced in the shop. You can then pay accordingly at the checkout.
The exchange of goods is also possible with blockchain technology. However, everything is done digitally. With blockchain, you no longer have to walk around the corner to the store, because the technology allows you to deal directly with the milk producer and skip the intermediate step in the grocery store.
This is possible because in the context of the blockchain, not only one organization is in charge. The power is distributed among all participants – be it the farmer or John, who needs milk for his coffee party. The blockchain works as an account book in which all transactions are written down.
Because everyone has the same information about purchases and sales, incorrect information is quickly noticed and can be rejected. Even after the fact, information about transactions made cannot be changed.
Blockchain technology also forms the basis for BTC. BTC is a digital currency and payment system in one. For example, you are no longer dependent on banks to carry out the transfers – the blockchain does not require intermediaries. Also, nobody can get in the way in the BTC network: It is not controlled by the state and is therefore safe from censorship.
Why do you need BTC at all?
BTC is a censorship-resistant, decentralized, transparent and transnational digital currency that can also be used quickly and cheaply. Because of these characteristics, many speak of a democratization of money. The limit of 21 million BTC should also help the network to have a deflationary effect, which means that BTC will increase in value due to this shortage.
Who is in control of BTC?
In general, it is the network participants who democratically make decisions for the BTC blockchain. The so-called “BTC Core Maintainers” are responsible for the implementation of various decisions. This is a small group of developers who have the ability to change the BTC code for the benefit of the community. However, you can only make certain customizations if the community has given prior consent.
How secure is BTC?
Thanks to cryptography – the science of encryption and decryption – the blockchain is considered one of the most secure technologies of all. For example, the decentralized nature of BTC makes it very difficult, if not impossible, to hack the network. Because not only one central unit, but tens of thousands of network nodes have a copy of the BTC code, an attack on all these participants would have to take place simultaneously, which is technically almost impossible.
Doesn’t that use a lot of energy?
Yes, the consensus mechanism in the BTC network (Proof of Work) is energy intensive. However, the discussion does not end with this statement. On the one hand, it is very difficult to find reliable data about the energy consumption of bitcoins and also about what the energy mix looks like exactly. On the other hand, you have to ask yourself what you are willing to use energy for. For example, the annual Christmas lights in the US consume significantly more energy.