Bitcoin & Crypto Simplified | The Basics Explained
in this video I will explain you Bitcoin
and crypto Basics we will go Tru over 60
terms you have to know when you want to
start educating yourself about Bitcoin
and cryptocurrencies so let’s
start first up is
altcoins so what are altcoins these are
cryptocurrencies that were created after
Bitcoin offering various technological
improvements investing in altcoins is
like exploring a wider array of stocks
each with unique features Beyond Bitcoin
scope
ethereum a popular altcoin introduced
smart contracts expanding blockchain
uses Beyond mere
transactions next up Atomic swaps these
are direct peer-to-peer cryptocurrency
exchanges without the need for a third
party it’s like swapping baseball cards
directly with a friend but with digital
currencies Atomic swaps use a technology
called hashed time lock contracts htlcs
for added security what is is Bitcoin
it’s digital cash that lets you send or
receive money online directly without
needing a bank imagine paying for a
coffee overseas without exchange rates
or Bank fees just using your phone to
transfer
Bitcoin the first real world transaction
with Bitcoin was for two pizzas costing
10,000 Bitcoins in
2010
blockchain a blockchain is a digital
Ledger where transactions are recorded
publicly and chronologically
it’s like a shared Google doc that
everyone can see and verify but no one
can alter
unfairly a blockchain can store more
than just currency transactions it can
include contracts records and even
art blockchain as a
service these are cloud services that
offer blockchain infrastructure for
businesses to build applications on it
is like renting a plot in a community
garden you get the benefits without
managing the garden Amazon web services
and Microsoft azour are among the major
players offering blockchain as a
service blockchain Bridges these are
protocols that connect independent
blockchains to enable the transfer of
data and value it’s like using a
translator to facilitate a conversation
between two people who speak different
languages blockchain Bridges can be
vulnerable to security risks which has
led to several high-profile
hacks blockchain consensus
algorithms these are rules that manage
the agreement of data on a blockchain
network consensus algorithms in
blockchain are like having a group
decision-making process where majority
rules Beyond proof of work and proof of
stake there are over a dozen consensus
algorithms each with their own benefits
and
trade-offs blockchain
interoperability the capability of
different blockchains to communicate and
transact with one another it’s like
sending email from Gmail to Outlook
different systems but the message gets
through projects like Cosmos aim to
create an internet of blockchains where
different chains can interact
seamlessly Cold
Storage keeping a cryptocurrency wallet
completely offline to secure it from
unauthorized access imagine storing
valuable jewelry in a safe deposit box
Cold Storage keeps your digital assets
safe Hardware wallets are a popular form
of Cold Storage providing physical
security for digital assets
cross-chain
technology technology that enables the
exchange of information and value
between different blockchain networks
this allows for transferring assets from
one blockchain to another similar to
exchanging money between different banks
cross-chain technology aims to solve the
problem of interoperability between
blockchains crypto
airdrops free distribution of
cryptocurrency tokens to generate
awareness or award
participation receiving an airdrop is
like getting a free sample by mail to
try a new product airdrops are often
used as a marketing tool by new projects
to gain attention and encourage Mass
participation crypto
Collectibles unique digital assets often
represented as nfts that can be bought
sold or traded collecting crypto
Collectibles is like collecting Rare
Coins or stamps but in the digital world
some crypto Collectibles like the first
tweet turned into an nft have sold for
Millions crypto derivatives financial
instruments whose value is based on
underlying
cryptocurrencies like betting on the
future price of Bitcoin without actually
owning it similar to stock options or
Futures derivatives can provide a way to
hedge or leverage your Investments but
they can also increase
risk crypto index
funds investment funds that track a
selection of cryptocurrencies to mirror
the performance of an index it’s like
investing in a range of stocks with an
index fund but this one’s for a spread
of crypto
assets index funds provide exposure to
the crypto Market while reducing the
risk of investing in a single
coin cryptocurrency
faucets websites are apps that give away
small amounts of cryptocurrency for free
usually in return for completing
tasks like a dripping faucet these
platforms dri small amounts of crypto to
users for watching ads or solving
captas Bitcoin faucets were among the
first to appear designed to spread
awareness and encourage
adoption cryptocurrency
regulations the laws and guidelines
governing the use and trade of
cryptocurrencies regulations in crypto
are like traffic rules for cars ensuring
order and safety on the
roads many countries are still in the
process of developing comprehensive
regulatory Frameworks for
cryptocurrency
cryptoeconomics the study and design of
protocols that govern the production
distribution and consumption of goods
and services in a decentralized digital
economy it’s like blending economic
theory and cryptographic verification to
design secure and efficient
systems cryptoeconomics involves Game
Theory mechanism design and behavioral
economics to build robust systems
cryptojacking the unauthorized use of
someone else’s computer to mine
cryptocurrency imagine someone secretly
using your car’s fuel to drive their own
car cryptojacking uses your computing
power to mine crypto cryptojacking can
significantly slow down affected devices
and increase electricity costs for the
victim custodial versus non-custodial
Services services that hold your funds
custodial versus you holding your own
funds non-custodial
using a custodial Service is like
renting a safe deposit box while
non-custodial is like having a safe at
home non-custodial wallets give you full
control over your crypto reducing the
risk of exchange hacks affecting
you Dao decentralized autonomous
organization organizations run by rules
encoded into smart contracts without
centralized control imagine a company
where decisions are made by shareholder
vote directly on the blockchain without
a CEO or board the Dao launched in 2016
was one of the first high-profile daos
though it suffered from a notable
hack daps decentralized
applications applications that run on a
peer-to-peer network of computers rather
than a single
computer using a Dap is like using any
other app but no single entity has
control over the app’s data or
operations some daps allow users to play
games or participate in social networks
while earning
cryptocurrency decentralized exchanges
decks platforms allowing users to trade
cryptocurrencies without an intermediary
like a farmers market for crypto where
buyers and sellers transact directly
without a grocery store in the middle
Unis Swap and Sushi swap are among the
most popular decks facilitating billions
in
trades decentralized
identity systems that use blockchain to
provide users control over their own
digital identities like having a digital
ID card that’s universally accepted and
completely in your control Microsoft’s
onen is an example of a decentralized
identity Network running at top the
Bitcoin
blockchain defy decentralized Finance
Financial Services on the blockchain
allowing for transactions without
traditional
intermediaries it’s like using an online
banking app where you can lend or borrow
money direct with others no Bank needed
def platforms have locked in billions of
dollars worth of crypto showing rapid
growth in this
sector defi
aggregators platforms that optimize
trades across multiple defi services to
get users the best
rates using a def aggregator is like
using a travel site to find the best
vacation deals across multiple Airlines
defi aggregators have gained popularity
for their ability to reduce fees and
slippage in token swaps
defi lending
platforms platforms that allow users to
lend out their cryptocurrency or take
out loans themselves it’s like a
peer-to-peer Lending Club but for
cryptocurrencies offering loans or
earning interest on your digital assets
a and compound are leading defi lending
platforms offering various crypto
lending and borrowing
Services
exchanges platforms where you can buy
sell or trade cryptocurrencies like a
stock market for digital currencies
exchanging USD to bitcoin is as simple
as using an online brokerage platform
but for digital instead of fiat currency
the first Bitcoin exchange started in
2010 and now there are hundreds
worldwide Fiat
gateways services that allow for the
exchange of cryptocurrencies for Fiat
currencies and vice versa they act like
currency exchange booths letting you
swap dollars or Euros for Bitcoin or
other cryptocurrency
currencies coinbase is one of the most
popular Fiat gateways allowing users to
buy cryptocurrencies with traditional
money flash
loan loans in defy that are taken out
and repaid within the same transaction
borrowing money to flip a house in the
same day but in the crypto World using
smart contracts for instant
transactions flash loans have been used
for both legitimate Arbitrage and
controversial exploits
gas fees the fee required to conduct a
transaction or execute a contract on a
blockchain network imagine paying a toll
to use a road here you pay gas fees to
compensate for the Computing energy used
gas fees on ethereum can fluctuate
wildly depending on network
demand governance in
blockchain the use of decision-making
processes and structures within
blockchain
ecosystems token holders voting on
decisions is like having a say in
decisions akin to a digital Co-op daos
are a prime example of blockchain
governance where all decisions are made
by consensus of
members governance
tokens cryptocurrency tokens that
represent voting power within a
blockchain projects governance structure
holding governance tokens is like having
a say in a company’s decisions in
shareholder meetings compounding yields
from defi protocols often distribute
governance tokens as part of the
reward Hardware Ware wallets physical
devices that store cryptocurrency
private Keys offline think of a hardware
wallet as a personal Vault that can
connect to your computer to access your
digital
currency Hardware wallets are considered
one of the safest options for storing
cryptocurrency Ico initial coin offering
a fundraising method where new project
tokens are sold to raise Capital akin to
crowdfunding imagine supporting a
startup by buying its tokens early
hoping they’ll increase in value as the
project
succeeds in 2017 a project named EOS
held an Ico that lasted a year and
raised over $4 billion impermanent
loss loss occurring when the price of
tokens in a liquidity pool changes
compared to when they were deposited
like a fruit stand where you must sell
your fruits at today’s market price not
the price when you bought them
impermanent loss is a risk in providing
liquidity to defy platforms but can
sometimes be offset by fees
earned initial Dex offering a
fundraising approach where a project
launches a token directly on a
decentralized exchange it’s like
crowdfunding for crypto projects where
investors can buy into a new project
early through a de idos are seen as a
more open and Democratic form of
fundraising in the crypto space compared
to
icos interplanetary file system
ipfs a peer-to-peer Network for storing
and sharing data in a distributed file
system like a global peer-to-peer
Dropbox or Google drive without relying
on a centralized server ipfs aims to
make the web faster safer and more
open know your customer and anti-money
laundering regulations that focus on
customer identification kyc and
preventing money laundering
AML like going through a background
check before you can use a financial
service
strict kyc and AML regulations are
sometimes seen as at odds with the
anonymity and privacy of
cryptocurrencies layer 2
Solutions technologies that operate on
top of a blockchain to improve its
scalability and
efficiency think of it as adding an
express lane to a busy highway where
transactions can proceed faster than on
the main road the lightning network is a
famous layer 2 solution designed to
enable faster Bitcoin transactions
liquidity
mining a process where users receive
rewards for providing liquidity to defy
platforms like earning interest by
depositing your money in a bank except
its cryptocurrency in a liquidity
pool liquidity mining is a key component
of yield farming strategies in
defy liquidity
pools collections of funds locked in a
smart contract to facilitate trading by
providing liquidity participating in a
liquidity pool is akin to contributing
to a potluck everyone brings something
to the table liquidity pools are
foundational to defy enabling trades and
loans without traditional market
makers
metaverse Virtual Worlds where users can
interact play and conduct business
within a digital space participating in
the metaverse is like entering a video
game where you can live work and play in
a fully immersive Digital Universe
cryptocurrencies and nfts are becoming
integrated to buying digital land and
Assets in the
metaverse
mining the process of validating
transactions and adding them to the
blockchain earning cryptocurrencies in
return think of it as a complex math
contest where solving problems help
secure the network and winners get new
Bitcoins Bitcoin mining consumes more
electricity annually than some
countries multi- signature
wallets wallets that require multiple
signatures for
transactions it’s like requiring several
keys to open a bank vault enhancing the
security for transaction approval
multisig wallets are commonly used by
organizations to require consent from
multiple
stakeholders nft non-f funable
token unique digital items verified on
the blockchain like art or Collectibles
that you can own or sell buying an nft
is like owning an original digital
painting with a certificate of authentic
it that can’t be
forged a digital artist known as be sold
an nft artwork for $69 million one of
the highest prices for digital
art nft non-fungible token unique
digital items verified on the blockchain
like art or Collectibles that you can
own or sell buying an nft is like owning
an original digital painting with a
certificate of authenticity that can’t
be forged a digital artist known as be
sold an nft artwork for $69 million one
of the highest prices for digital art
oracles services that feed real world
data into blockchains to interact with
smart
contracts oracles act as Bridges
bringing external information like stock
prices or weather data into the
blockchain chain link is one of the most
widely used oracles connecting smart
contracts with outside
data privacy coins
cryptocurrencies that prioritize private
and Anonymous
transactions using a privacy coin is
like sending a sealed letter only the
sender and receiver know the contents
Monero and zakh are examples of
cryptocurrencies that offer enhanced
privacy
features proof of
stake a consensus mechanism where
validators are chosen based on the
amount of cryptocurrency they hold it’s
like earning interest in a savings
account the more you hold the more more
you might earn in transaction fees
ethereum is transitioning to POs to
reduce its energy consumption
significantly proof of
work a consensus mechanism that requires
participants to solve complex problems
to validate transactions miners compete
to solve mathematical puzzles securing
the network while earning rewards for
their efforts Bitcoin uses P which is
both praised for its security and
criticized for its environmental impact
scalability trilemma the challenge of
achieving scalability security and
decentralization in a blockchain network
trying to balance a three-sided scale
where improving one aspect may affect
the others vitalic butterin the creator
of ethereum introduced the concept of
the scalability
trilemma security token offerings
stto public offerings for tokenized
digital Securities subject to regulatory
oversight it’s like an IPO for
blockchain where you can buy digital
shares of a company stos provide a
bridge between traditional finance and
blockchain offering more security than
icos
sharding a database partitioning
technique applied to blockchain for
scalability sharding a blockchain is
like organizing a library into sections
to find books faster ethereum 2.0 plans
to implement sharting to drastically
increase its transaction through p
side chains blockchains that run
parallel to a main blockchain allowing
for additional flexibility and
scalability like adding side roads to
alleviate traffic from a main road side
chains can handle transactions or
contracts alongside the main blockchain
liquid network is an example of a side
chain designed to facilitate faster
Bitcoin
transactions smart
contracts self-executing contracts with
the terms of the agreement directly
written into code imagine an apartment
rental agreement that automatically
releases your deposit when you move out
no disputes the first proposal for smart
contracts predated blockchain by several
years envisioned by Nick Sabo in
1994 social recovery
wallets cryptocurrency wallets that
allow users to regain access through a
trusted network of friends if you lose
access to your wallet your chosen
friends can help restore it like trusted
neighbors with a spare key ethereum
co-founder vitalic bin has proposed a
social recovery system for wallet
security soft forks and hard Forks
updates to a blockchain that are
Backward Compatible soft or create a new
path
hard a soft Fork is like a software
update that is Backward Compatible a
hard Fork is like a software update that
isn’t Bitcoin cash is a result of a hard
Fork from Bitcoin due to differing views
on trans transaction
scalability stable
coins cryptocurrencies designed to have
stable values typically pegged to Fiat
currencies using stable coins is like
spending digital dollars they offer the
benefits of crypto without the price
volatility tether usdt and usdcoin
usdc are two of the most used stable
coins staking holding cryptocurrencies
in a wallet to support network
operations earning more cryptocurrency
in return it’s akin to putting money in
a savings account that helps secure A
bank’s operations but you earn more over
time ethereum’s upgrade to proof of
stake called ethereum 2.0 aims to make
the network more energy
efficient synthetic
assets blockchain-based assets that
represent different underlying assets
like stocks or fiat currency synthetics
and crypto work like a stock simulator
where you can practi ractice trading
without owning actual stocks synthetics
is one of the leading platforms where
users can trade synthetic versions of
real world
assets
token digital assets created on existing
blockchains representing various assets
or rights tokens can act like arcade
tokens but for accessing specific
Digital Services or assets like virtual
real estate some tokens like
cryptokitties became so popular they
congested the network they were on
highlighting scalability
issues token
burning the process of permanently
removing tokens from circulation
reducing the total Supply it’s like a
company buying back stocks to reduce
Supply and potentially increase the
value of remaining stocks token burning
is often used as a strategy to introduce
scarcity and add value to the remaining
tokens token
standards rules for creating and issuing
tokens on blockchain defining their
behavior and
interaction token standards are like
different types of USB ports each
serving a specific purpose but all
connecting devices erc20 is the standard
for fungible tokens while erc721 is used
for non-fungible tokens
nfts
tokenization the process of converting
rights to an asset into a digital token
on a blockchain imagine owning a piece
of a rare painting or real estate
through digital tokens that represent a
share of the asset tokenization can
increase liquidity and accessibility of
various assets from art to real
estate
wallets digital tools that store your
public and private Keys allowing you to
send and receive
cryptocurrencies using a digital wallet
feels like using a banking app but for
cryptocurrencies instead of traditional
money some people have lost access to
their wallets and with it millions in
Bitcoin just because they forgot their
password wrapped
tokens tokens that represent a
cryptocurrency on a different blockchain
than the one it originally exists on
wrapped tokens let you use Bitcoin on
ethereum’s network similar to exchanging
foreign currency for local currency
while traveling wrapped Bitcoin wbtc is
a popular example making Bitcoin usable
in ethereum’s defi
ecosystem yield
farming the practice of lending or
staking cryptocurrency in exchange for
interest or rewards like depositing
money in a high yield savings account
but with crypto Assets in defy
platforms yield farming can be highly
lucrative but also comes with
significant risk including volatile
returns zero knowledge
proofs a cryptographic method where one
party proves to another they know a
value without revealing any information
like proving you have a winning lottery
ticket without revealing the numbers
zero knowledge proofs are a way to
ensure privacy and transactions on
blockchains like
zcash thank you for watching I hope you
learned new things which will help you
to get an understanding about the world
of Bitcoin and
cryptocurrencies I would appreciate if
you hit the like button this means a lot
to me and if you want to learn more
about Bitcoin crypto Finance the stock
market and similar topics subscribe to
the channel thank you very much
Learn about of Bitcoin and cryptocurrencies with our straightforward guide, “Bitcoin & Crypto – Simply Explained!” Perfect for beginners, this video demystifies the complexities of digital currencies, blockchain technology, and how to start investing in crypto. Whether you’re curious about how Bitcoin works, interested in the potential of cryptocurrencies, or looking to make your first crypto investment, this video has got you covered. Learn key concepts, understand the risks and rewards, and get clear, concise explanations of the most popular cryptocurrencies today.
#bitcoin #crypto #blockchain