Since I first got involved in Bitcoin, I’ve sought a simple means of explaining Bitcoin and the technology that underpins it, the Blockchain, to my friends and family, looking for a simple yet true-to-life analogy that illustrates something so complex. My understanding of the actual technological aspects of them is somewhat limited, so forgive the fact that this analogy inevitably has its own limitations, but I hereby present it to you – the glass deposit box analogy. Addresses, keys and the Blockchain
One of the first things people ask me when I talk to them about Bitcoin is, ‘if it’s on a computer, what’s to stop someone ‘copying and pasting’ Bitcoin?’ An explanation that wallets hold private keys to public addresses often leaves people confused, so this was the first idea I wanted to confront.
Imagine an enormous 24/7 bank vault. The vault is filled with row upon row of unlabelled deposit boxes. However, each deposit box has a glass frontage, allowing anyone and everyone to view the contents of the deposit box, but not access it. When someone opens a new deposit box, they are given a key that is unique to that box. Making a copy of the key doesn’t double the contents of the box. By the same token, although you own that deposit box, you don’t technically own it, per se, in that it is not in your possession, you merely possess the ability to access its contents at any time.
This is fundamentally how Bitcoin and the Blockchain works. Anyone and everyone can see the contents of everyone else’s Bitcoin addresses. There is no information tying people to their addresses, but everyone is aware of the existence of every address. When someone opens a Bitcoin wallet, they are creating a new address on the Blockchain and […]
