Are you interested in Bitcoin (CRYPTO:BTC) but don’t know where to begin? Or do you feel completely lost when it comes to the basics of the digital currency? In this Fool Live interview, recorded on March 18, senior analyst John Rotonti and lead analyst of Motley Fool Deutschland Bernd Schmid cover a wide range of topics to help answer any questions Bitcoin beginners might have.
John Rotonti: Fools, I’m John Rotonti kicking off our Bitcoin theme day on Motley Fool Live and I’m here with Bernd Schmid, the lead analyst from Motley Fool Deutschland. Welcome, Bernd.
Bernd Schmid: Hi John, and thanks for pronouncing my name correctly.
Rotonti: I try because people butcher my last name all the time so it’s something that I try to be cognizant of. Bernd, let’s just get started with, what is Bitcoin?
Schmid: Well, I look at Bitcoin, there are so many different answers you can give to this simple question, and it really depends on what you’re looking at it but if you want to understand exactly from a basic, you don’t have any clue. You’ve never heard the term. I would describe it as it’s a network of computers who are all running the same software and running the same database and the database essentially stores transactions in terms of, you can send stuff with digital money around, let’s call it like this. These computers, this network, they are ensuring the security of the network and then making sure that transactions are valid. Also in the process of doing that, they’re creating this money called Bitcoin. Yeah, I think that’s a good way to frame this.
Rotonti: Awesome, so it’s digital money or digital currency that runs off of a network of computers. If someone was to ask you, how does Bitcoin work? Would that be your answer, that it’s this network of computers and that’s the foundation of how it works?
Schmid: Yeah, I think so. I think you can call it currency. There is a lot of arguments. What is the currency and so on, but for the sake of argument or for simplicity, let’s think of it as a currency. What do you want to do with it? You can make transactions on this network and you have a ledger which tells you what is the balance essentially of everybody’s money like who has how much of it and also securing and making sure that all this data is consistent. How does it work? It’s essentially everybody can send transactions to this network and then you have people they are called, not people, it’s computers they’re called miners. They’re trying to validate, is this a valid transaction? Does it come from somebody who has this amount of Bitcoin? Is it really this person who can do it? Who is it sending it to and if they come to the conclusion yes, it’s a valid transaction. They will add this transaction to the database and this database, maybe one thing because probably many people have had to turn blockchain and Bitcoin is essentially the state….
Read more:The ABCs of Bitcoin | The Motley Fool