This is oversimplified, but helpful. There are basically two types of coins:
One type represents a currency.
The other type represents a business product or service. Ethereum has elements of both. Be aware that some coins may have no product-service or a have a problematic business design. Avoid the scams.
Note: as bitcoin usage increases, transmission speed becomes more important.
The purpose of a blockchain is consensus on a global ledger, open for all to see.
Another way of saying this is public consensus of accurate transactions
.
The blockchain is a public, open source, self-resolving, mathematics based ledger (see tutorial on SHA256 hash below).
The core blockchain concept is a decentralized accounting ledger. It cannot be controlled by any one party. It is designed to self-resolve ALL financial transactions. This means all historical spending actions and preventing any accounting fraud such as double-spending.
It's all about decentralized collective bookeeping and data ownership. No one bank or one person owns the accounting ledger.
This is oversimplified but helpful: bitcoin and litecoin are massive pipelines (technical protocols) for digital currency transactions.
Ethereum is a massive pipeline for trading cryptos and digital contract transactions of all sorts including lending, business finance contracts of all types etc. The ethereum network consumes ethereum coins (gas
) to fund itself.
Here is a more complex answer:
Behind most cryptocurrencies is a simple technology known as blockchain, a system residing in multiple computers that allows for peer-to-peer financial ledger recording of all transactions occurring in a network...This results in a transparent open-access registry of monetary flows which makes the intermediation of banking authorities unnecessary. Thus it challenges the conventional belief that money can only work through central planning.
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Diversify. Wealth investing and emergency reserves should include cryptocurrencies, silver, gold, property, cash and strategic stocks. Percentages are unique to each individual. Please self-educate yourself on cryptos prior to investing large amounts. Note: authors consider cryptocurrency and precious metals to be complimentary, not exclusionary. Neither system is based on debt. The new, currently developing monetary system will most likely incorporate both.
In our current financial system, the legacy banks are the centralized middle-man for a.) ensuring identity and security and b.) keeping the accounting book, meaning accurate transaction details. You trust your government and your bank to keep the value of your currency steady on the assumption that the currency is based on real value, not debt.
The new decentralized middle-man is Cryptocurrency. The Wallet and Private Key ensure identity and security. The distributed ledger, called the blockchain, ensures the accounting book, meaning accurate transaction details. The blockchain is a self-resolving, mathematics based ledger (see tutorial on SHA256 hash below).
Your crypto wallet
has two main functions. First, it holds the keys to your account balance data. How many Litecoins do I have?
The private key and associated password (digital signature) are used to unlock and view your wallet's account balance. The private key is an encrypted hash code, a long series of numbers and characters. Do not share your private key. Anyone with your private key has access to your account.
Wallet Recovery Q & A
...Q: Hypothetically, if you formatted over a hard drive and erased your wallet but had your private key and address written down- how would you once again regain access to your wallet? A: You can import your private key into a new wallet, most wallets support private key imports. The private key is all you need to know...
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