In an effort to write more about the general topics most important for Fairlay users we are starting to write some articles about Cryptocurrency and Sports Betting in general, which should help newer users understand the basic concepts.
The blockchain is the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. It is a protocol that creates a global payment-network using Computers connected by the Internet. The blockchain is all about a digital distributed ledger (earlier attempts were more centralized).
Cryptocurrency is used as money and is not only software but also at the same time a secure protocol on which values are limited and clearly held firm.
Bitcoin is an Open-Source Software Protocol like many others on the internet the same way as E-Mail, your Web-Browser, Html are open protocols. Open-Source means everyone can use and modify this software at any time for free. No single person or company can control it.
How can this be money then if everyone can use the software for free, the protocol is all open source and everyone is even free to do changes? Like any digital music file, movie or data, both bitcoin software and its transactions can easily be copied. Plus any shared data and information can be flawed or corrupted. Anything may be faked. So how could a digital Cryptocurrency be safe if anyone can make millions of copies? The answer is the Blockchain: A public distributed ledger (database).
Distributed Ledger: A set of data stored independently on many independent nodes as a ledger of, which is synchronized across all participating nodes. There is no one centralized entity that controls the data.
Additionally it should be very important to know who is behind these currencies. Who can I call if something goes wrong, who is responsible? We trust third parties like banks so how can we know that these virtual goods are worth something and can be owned? The answer lies in the math: There is no centralized authority, there is no one you can call, it stands on its own feet.
The strength of an good Cryptocurrency lies in a decentralized peer to peer network with a fixed amount of units distributed in the public internet. It should act faster, more secure and pseudonymous as compared to fiat money via a bank transfer because it cuts out these middle-man or any other third parties. Every individual may be able to use it permission-less without having to disclose its identity. This is what bitcoiners call trustless, you don't need to trust anyone, you are in full control over your own money.
Bank money is based on a trust that a central authority can approve and control those things. A Blockchain is exactly the opposite from a fiat money system especially since there is no quantity limit. Another strength is that every change to the software should be public and transparent.
Investors lose money, other early adopters may be wealthy. The market of cryptocurrencies is fast and wild, prices can go up and down for more than 10% in a day. Every week more new cryptocurrencies emerge, old die as you can see on https://deadcoins.com
The most important aspect is to understand are wallet addresses, which are derived from Public Keys that also have a Private Key counterpart. You can tell anyone your address (so you can receive funds), but you should never ever tell your private keys or seed words (which generate private keys) to anyone. Only with the private keys you will be able to spend your money, but the same is true for anyone else that gets hold of your private keys. No one can access any accounts, wallets, recover keys, reset passwords, nor reverse transactions. You and only you access to your private keys, hardware wallet or wallet with its password! You are responsible for your security.
Finally miners are the computers that are at task to verifies that the information of a transaction is true (i.e. whenever you want to send money to someone). They make up the most important piece of a cryptocurrency infrastructure. They ensure that only the owner of a private key are be able to spend his amount. This becomes possible on the basis of the nodes which holding the whole blockchain order-book of every transaction all the way to the beginning of it. In a cryptographic process to confirm transactions simultaneously into a new block a very difficult calculation has to be done by the miners as defined in core protocol.
Blockchain technology has proven be a great solution for many use cases. It is a new solution to specific use cases. There are benefits regarding decreased transaction costs, trustless environments, etc. However, it is not beneficial in every situation; it is not a cure-all. Nor is it flawless; the technology is still in its infancy, and as with any new technology, it is still going through a learning curve, as businesses and users test how the technology can best be employed.