– We’re talking digital money. ♪ Money, money, money, money ♪ Seriously? Too soon. (electronic warbling) We’re talking about Bitcoin. Bitcoin comes from the word bit. Bit is short for binary digit, which is actually the smallest
unit of data on a computer. Then it comes from the word
coin, which is currency. So bit-coin. Think of it as the
currency of the internet. Bitcoin has been around since 2008. It was actually around the
time of the financial collapse, and an anonymous
programmer, or programmers, by the name of Satoshi Nakamoto released a document
explaining how bitcoin, a new currency online, would be developed. Okay, but before we get any further, let’s explain how bitcoin works. First is the bitcoin itself,
the digital cryptocurrency. The second is the bitcoin miner, the programmers or the individuals who are extracting bitcoin from
the internet and mining it. And the third concept is blockchain. There’s a set number
of bitcoins out there. In order to extract
bitcoin, to mine bitcoin, you have to solve math problems
called hash algorithms. Hash algorithms are actually
found on the internet broadly, and not just for Bitcoin. Once they solve a hash
algorithm using computing power, the bitcoin gets extracted,
it’s given to the miner, and then the rest of the Bitcoin community has to take a look at that
coin and verify that yes, that bitcoin was mined appropriately. For other miners who work in analyzing and verifying bitcoin, they are also rewarded
with newly minted bitcoin. Now you have a bitcoin. Now you go ahead and want to
use your digital currency. You purchase a product
with someone using bitcoin. The bitcoin will carry the history that it was made by you,
then given to the seller. Now the seller turns around and busy more product with bitcoin. Now the bitcoin carries the
history that it was made by you, given to a seller, then
given to a manufacturer, and on and on it goes. But every person is just
an anonymous number. It’s not tracking specifically
that you owned it. It’s just tracking that
an individual owned it. This historical record on
Bitcoin is called the blockchain. Here are a few Bitcoin benefits. First is that there is no middleman, payment fees, transaction
fees, currency conversion fees. But with Bitcoin, none of that is there. Two, only a certain amount
of bitcoin that can be mined. In fact, it is capped
at 21 million bitcoins. It is expected that we will
only mine all the bitcoin in 2140. Bitcoin also removes
the double spend problem because of the blockchain. But there’s also some big
negatives about bitcoin, the first being it
fluctuates very, very highly. A huge percentage of bitcoin is reserved for the founder,
or founders, of Bitcoin. That definitely creates
another super elite. The third problem for bitcoin
is what most people fear is that it’ll be use for the black market. One thing to remember though is that this is just the
beginning of cryptocurrencies and that we have a lot to
learn from cryptocurrencies, of transactions that move
freely across borders, of blockchain, of creating
a historical ledger for all currencies, and
removing the double spend. Those are things that
Bitcoin has taught us. Thank you so much for watching. Before we wrap up, I would love it if you
could comment down below. Use this website that I’ve also linked in the description and search what the
current value of bitcoin the day you watched this video, and we’re gonna see how
much the value of bitcoin is really fluctuating. Also, subscribe, help share this video, and spread some digital literacy. (electronic warbling) (futuristic music)