Welcome to the daily exchange guys we’re here we’re talking about Bitcoin and what exactly is Bitcoin? Well, Bitcoin is the world’s most valuable digital currency. Bitcoin is a top of digital asset that’s available to anyone anywhere in the world.
Recently it’s become so popular the head of the US Treasuries talking about it in Congress, traders and Wall Street a buying it, the parent company of the New York Stock Exchange is selling it and even the president of the united states is tweeting about it.
So it’s time to pay attention. Bitcoin is often described as an electronic mishmash of cash and gold, speculative gold. This is because Bitcoin can be used both as money to pay for things like you would with cash or as a store of value to hold on to long term just like gold.
Unlike like cash and gold, though Bitcoin is entirely digital, which means it is borderless and can be owned by anyone anywhere in the world. It’s also not controlled by anyone, so it can’t be taken away from you. The way you know, funds in a bank account can be frozen or seized. You know, you can’t call up the CEO of Bitcoin.
Better yet, it has no weight, all size, so it’s just as easy to send to send you know, $100 worth of Bitcoin or $2 million worth of Bitcoin. And because it’s digital, you can do a whole lot more with it than you would with cash or gold.
In fact, some people like to call it smart money because it’s programmable. And as you may have heard, Bitcoin can be quite valuable to some people. Today, I’m going to help you understand what Bitcoin is how it works, explain why it’s so valuable and briefly show you where you can buy and trade it. Plus, I’ll be dropping all sorts of fun trivia along the way. Stick around and we’ll be right back after this.
Let’s talk about the difference between Bitcoin and the blockchain. Now this is important The first thing to understand when talking about Bitcoin is that there are actually two things people might be referring to about when they use the word Bitcoin versus the digital asset Bitcoin, also known as BTC.
That’s the code that’s used in in exchanges when it comes to Bitcoin. BTC is also often referred to as a coin or a digital coin to be more precise, BTC the digital coins that are used on the Bitcoin network.
So when someone talks about the price of a single Bitcoin, this is what they’re talking about. Bitcoins gradually created over time, and there will never be any more than 21 million of them. The second thing Bitcoin refers to is the Bitcoin network. This is the blockchain that powers the entire Bitcoin network. The blockchain is the underlying technology that allows users to send and receive Bitcoin.
The blockchain is what gives BTC its value, thanks to all its clever features and design. So when someone mentions BTC, they’re almost always talking about the digital coin itself. While they’re talking about the Bitcoin network, then they’re referring to the Bitcoin blockchain which enables the transactions of Bitcoin to happen.
Okay, so it’s important to know the difference. Let’s have one more look at that. Now blue diagram here. This is a screenshot from a Finder guide about Bitcoin as you can see, on the left is a description of the Bitcoin digital asset where as the next work is on the right, as I mentioned before, the digital asset is often abbreviated to be BTC and is usually referred to as a coin.
These coins can be collected, traded and spent like money. When someone talks about buying, selling or trading Bitcoin, they’re talking about these coins themselves. Now unlike a regular coin, though, you can divide BTC into tiny little fractions, which are called Satoshis. Now one Satoshi is equal to 0.0000000. That’s seven zero’s there, one B TC that’s it’s it’s it There are eight decimal places that the smallest unit, which can be called a Satoshi, which is 100, of a millionth of a Bitcoin.
In case you’re wondering, that’s a decimal with seven zeros after it or a 0.00000001 Satoshi are also known as SATs which is another name for which is where the popular investor phrase stacking SATs comes from. So back to our God, good this God here again, check it out. On the right is a brief description of the Bitcoin network more commonly known as the Bitcoin blockchain.
The Bitcoin blockchain is responsible for everything else that makes Bitcoin special, such as its security, speed, and all around genius. In fact, the Bitcoin blockchain has two main jobs, it takes care of transactions. Anytime Bitcoin is sent just through this network, which is also connected to the internet. Its second job is to keep a record of every Bitcoin transaction ever made. In fact, it goes all the way back to the first ever transaction ever made, which is called the Genesis block.
The record of transactions is known as the ledger and is publicly available to everyone. That means that anyone can verify a transaction and trust the Bitcoin blockchain rather than having to trust a person that you know has send a payment between people, you can actually just look it up it’s a public website that you can go to.
Now unlike almost all other networks, no one owns or is in charge of the Bitcoin blockchain This means no one can stop change all the transactions it’s a bit like BitTorrent. If you want to have a look at the rest of that guide yourself, which is a whole lot more info on Bitcoin, you can click on the link in the top right hand corner, or find out the link in the description of the video below will tell you all about it.
Now, who is the creator of Bitcoin? And this talks about obviously the Satoshi white paper. Knowing who created Bitcoin isn’t actually that important. As I mentioned before, no one owns or controls the Bitcoin network. That’s why the creative all creators plural, should have chosen and remain anonymous.
Bitcoin started as a technical white paper less than 10 pages long, which was published to a famous cypherpunk mailing list in 2008. Here’s a picture of the white paper. It was called Bitcoin and a peer to peer electronic cash system and was authored by the pseudo anonymous Satoshi Nakamoto. Interestingly the only reference to the word Bitcoin is in the title and the official website.
Nowhere in the text is the word Bitcoin used. The Bitcoin blockchain was then launched a few months later on January 2009, by the anonymous author of the white paper Satoshi Nakamoto, because the Satoshi Nakamoto is a pseudonym, which means it’s not a real name, someone prominent, I guess figures in the cryptocurrency industry have theorized that Satoshi might be a group of people, rather than one individual.
Regardless of who created Bitcoin, the most important thing is that Bitcoin stays leaderless, decentralized and owned by no one just like the creator intended. So how does Bitcoin work? And this is just to explain the blockchain. OK, so now, you know, what is a Bitcoin? And what makes it different to up to you know, I guess, the network itself, but how does it actually come all together work?
Well, as we mentioned, blockchain is the actual technology that brings it all together. The Bitcoin network was first, I guess, the ever example of a blockchain. as we know them today, it gets the name because blockchain because it can be pictured just like a series of blocks of information that have been chained together with sequential order.
Now, here’s a picture of a chain blocks of packets of data such as transactions and messages, which has been broadcast the network blocks that kept in a sequential order. This ensures the blockchain keeps complete and organized record of all transactions ever made on the Bitcoin network.
In the case of Bitcoin blockchain, new block is created roughly every 10 minutes, blocks are created by specialized computers called miners. Now, a report by media outlet coindesk estimated that there were more than 2 million mining machines active in 2019. You’re going to want to remember that number. Now, only one miner can add a block at a time.
So that’s one machine adding a block every 10 minutes. And this is where it gets very, very, very interesting. Information inside each block is checked for accuracy, but comparing it with the information presented by every other miner. So if one miner tries to lie, change a few numbers so that their personal account becomes a lot richer, they will be unable to because it wouldn’t match up with anyone else’s records.
And remember, in 2019, that would be one minus version of the truth versus more than a million, saying, otherwise. So that makes Bitcoin a pretty tough nut to crack, right? This process of validating transactions through agreement is called consensus and it is one of the fundamental cornerstones of the Bitcoin blockchain and blockchains as a whole.
Consider this is kind of like a classroom of students marking their work together after a field trip as long as the majority of students have the same answer, then, that is the one they will accept as the truth. In Bitcoin consensus can be threatened by something known as a 51% attack.
As the name suggest s, the 51% attack hypothetically occurs when someone takes control of 51% of the network or the votes. So they can write whatever they want into the blocks and have faith those blocks will pass consensus. So to be specific, a 51% attack occurs when the majority of the mining hash rates or the people checking the transactions
is used to attack the network by putting a fake transaction in to the new blocks or altering old ones. Fortunately, this has never happened to Bitcoin as the logistics of organizing one and nearly impossible and do and will devalue the network in the process, rendering the attack largely pointless.
In other words, if you go and attack the network and change your number, you’re actually going to kill the value of the coins that you steal. There’s no point in robbing the bookstore if you burn down old books in the process.
Here is an miner as an example. It’s a machine as mentioned before, they are specialized machines, such as the as the one in this picture, they keep the Bitcoin network secure as well as updating it with new transactions miners also act as nodes which means they keep the full history of the Bitcoin ledger which is available for anyone to see, miners are located all over the world and contribute to the power of the Bitcoin network. This is known as the hash power.
The hash power contributed to each, I guess the each mining rig similar to the one the way that the palace speed and memory vary between different personal computers. And so because of that, it means some miners powerful than others. Now, while mine is a machines, they are owned by real people, organizations and businesses all around the world.
That being said miners is still independent, which means outside of their own company, they don’t belong to any central authority, so no one tells them what to do. In fact, there is often a lot of disagreement between the miners. If Miners disagree on on the rules, code or history of the blockchain – they are you know, able to fork the chain and create a different ID that they believe in.
And that is a different blockchain forking off from a shared point in the transaction history. This has led to the creation of several new blockchains such as Bitcoin Cash and Bitcoin SV. If you’d like to know about the Bitcoin forks, check out the description below for some videos and guides and some of the most popular forks.
You know back to Bitcoin. Thanks to the distribution of the miners is across diverse geographical, cultural and political landscapes, Bitcoin is said to be decentralized. Decentralization means that no single authority or no person has total control over the Bitcoin network.
Because of this Bitcoin is considered unhackable since it would nearly be impossible to take over and control so many machines or people at once. So as you can see, miners is play a big part in not just the day to day operation of Bitcoin but also its security. And for doing all this miners are rewarded with Bitcoin itself for each block they successfully add to the blockchain.
This is how new Bitcoin are created. The amount of Bitcoin miners are paid is reduced by half every four years or so. So part of bitcoins algorithm is obviously designed to counter inflation. In 2019, the reward was 12.5 Bitcoin per block, with that number set to reduce by half in 2020. In the event known as the halvening. In a nutshell miners secure the network and verify new transactions once every 10 minutes for doing so that paid in Bitcoin, 12 and a half currently, but that amount reduces every four years.
So about blockchain adoption and technology. So one more thing before we move on from our discussion about blockchain, there are now hundreds of different blockchains in use in industries as diverse as mobile phone networks, health insurance to even gaming.
What I mean to say is there is no one single blockchain blockchains are essentially networks and does anyone with the right tools and know how can get one up and running. Much like a company might build an intranet for workplace communications, say or mimicking, you know, the technology of the internet, the public Internet. Bitcoin was the first ever blockchain built in a public way with a coin, so that’s something of an industry standard that all other blockchains have adopted or improved upon, to suit their own specific needs.
It was kind of the first – there were other blockchains before that, but they weren’t ever used as a cryptocurrency in the same way. So when we talk about the blockchain, we’re just discussing the technology in general while in a specific blockchain can be used for all sorts of coins. In this case, Bitcoin uses a blockchain.
So how does Bitcoin get its value? So now you know how it all works. Hopefully, you’re starting to see for yourself why something like Bitcoin can be so valuable. Not only can you not shut it down, and we’ve covered that, but Bitcoin maintains its value in three key ways.
Number one, it fills a need, two, price speculation on the currency, and three, the use of the network. So let’s talk about the first one filling a need. Thanks to the transition to a global digital economy, a digital asset can be sent anywhere in the world and used for payments in a totally secure fashion is is incredibly valuable.
While we’re able to move government issued money like US dollars and British pounds electronically, it’s not quite the same. Government issued currencies, which are also known as fiat currencies are not truly digital. They correspond to a physical unit, which must be stored in a physical location, only the representation of ownership can be moved digitally, not the actual unit of currency itself.
Bitcoin, however, is purely digital, so it is transferred in its entirety when the transaction is made the actual money itself moves. On top of that Bitcoin is borderless. If you want to transfer your money from your bank account in New York to your auntie in London, you’ll have to exchange in and out of currencies.
This is typically quite costly, especially for small amounts. And what if you want to send money somewhere more exotic, say there’s a chance your bank won’t even offer you the service. And you’ll have to use even more expensive provider. Bitcoin, however, is the same no matter where the world you are.
So it makes no difference where you send it who’s added to or how much you send. Plus, it’s incredibly easy, especially if you compare to taking out all the cash of your account and moving it physically into another. These days, a Bitcoin account transaction can be made with as little as two things and address and the amount you want to send, then you can simply send it, the money is now completely and fully in someone else’s account.
No one else is in the middle. There’s no middle person. You can even transfer millions of dollars worth of Bitcoin for a fraction of the price it would cost using a bank. The last thing I’ll add is that it’s completely public. This means that anyone can verify that the transaction has been made without having to rely on a third party. Let you think of why that might be useful.
How does Bitcoin get its value? Well Another reason is the price speculation. Since Bitcoin has grown in use and price, so to has its popularitywith one group – it’s become particularly popular with investors, day traders and speculators. Thanks to the volatility of bitcoins price, which can change as much as 20% or more in a day, investors and traders who had previously traded markets like forex, commodities and stocks have rushed to capitalize on bitcoins price swings.
Now, there are hundreds of cryptocurrency exchanges around the world satisfying the customer need to speculate on the price of bitcoin. Some are reporting volumes of several billion per day. Another reason Bitcoin drives price speculation besides volatility, is because it is both a rare and finite asset, there is a fixed supply is difficult to acquire.
Only miners can create new Bitcoin which makes it very difficult to get a hold off and the Bitcoin algorithm is programmed so that the total amount of Bitcoin ever made will only be 21 million. The last Bitcoin estimated to be mined around the year 2140. Then when you factor in, there are hundreds of thousands if not millions of Bitcoin that are estimated to have been lost, total supply actually becomes even less.
Thanks to the halvening, which happens every four years, the supply of new Bitcoin is decreasing over time. So for some people, this creates a desirable asset as well as one to speculate on over the long term. A bit like gold and its finiteness and how it is only a small amount of it is produced every year. In fact, it is the rarity and limited supply that have caused many to lock in Bitcoin to digital gold.
The Third reason of how it gets us value is the network usage. Bitcoin maintains its value, simply, another way I guess, is through the use of the network itself. Bitcoin has been attracting users since day one for various reasons, mainly because it is verifiable, secure, public decentralized, and trustless.
You don’t need to trust anyone else. Then there are plenty of economic theories that explain why network activity creates values such as Metcalfe’s law, which can be used to explain the value of the Bitcoin network. However, it’s even simpler than that. Because is the Bitcoin blockchain now requires massive amounts of electricity run, the miners who operate the network need to pay for the electricity bills.
Because they are rewarded with Bitcoin for every block mined, they then have to sell the Bitcoin to recoup the money spent on electricity. So as the network continues to be used, it naturally feeds a price discovery mechanism, which continues to feedback and give Bitcoin value based on the principle of supply and demand. So on top of those reasons, there’s, of course, a whole bunch of other things that people like about Bitcoin, some see it even as an alternative to the global banking system.
Some see it as a technical marvel, others feel it’s very political in a way of to wrestle financial control out of the hands of governments and private enterprise, some see it as a hedge against traditional financial markets. Why do you think Bitcoin might be valuable? Maybe you have a total different take on it? I guess. Maybe you think it’s worthless? Let us know your thoughts in the comments below.
So where can i buy bitcoin? So now that you understand what all the hype is about, maybe you would like to buy some Bitcoin, at last I guess, I mentioned before there is a now in an almost industry built around buying and selling Bitcoin. This means that you can purchase it almost any way that you like online, in a store, an ATM, with a credit card, the debit card, even with cash itself, the list goes on.
The easiest way to get started though and learn about the full range of options available is head on over to Finder. I’ve got a guide for you here. And we can obviously take you through that there. We have hundreds of guides on Bitcoin, cryptocurrency and blockchain and our guides on buying Bitcoin or perhaps the most comprehensive on the internet with dozens of guides that let you compare cryptocurrency exchanges.
Where you can exchange money, fiat money for cryptocurrency and Bitcoin, and the steps we can take you through that, and most importantly, help you get the best deal comparing over 70 different exchanges in terms of the prices and fees. You can find out guides as well as other helpful links in description of this video right below.
If video is your preferred format, then we also have a range of videos that show you how to buy your first cryptocurrency such as Bitcoin, Ethereum, and XRP Ripple with a range of exchanges. In those we show you how to compare exchanges and sign up safely and securely by walking you through each step of the way.
If well that sounds like too much then you check out our exchange guide which suggests several exchanges depending on your needs, such as the best for beginners and most secure. Of course if you found this video helpful, please give it a like and consider subscribing to the channel for more content about Bitcoin cryptocurrency and blockchain Don’t forget, tell us why you think Bitcoin is or isn’t valuable in the comments below. Alright, that’s Bitcoin guys. See you guys later. Yeah.