With the rise of Bitcoin surpassing $30,000 in January 2021. I created this video to explain the basics of Bitcoin for all beginners to understand.
What is Bitcoin | Explained for Beginners
What is Cryptocurrency?
Cryptocurrency can be described as the internet’s money, it is a digital currency that can be used for the exchanged of goods and services. Like in my other videos, I will be using beginner friendly terms to help you understand how Bitcoin and other cryptocurrencies work
In 2008, a mysterious person by the name of Satoshi Nakamoto developed and deployed Bitcoin, it was created right after the aftermath of the 2008 Financial Crisis. According to Investopedia, In July 2010 a single Bitcoin could be traded for 8cents. Now keep this number in mind as you watch this video Bitcoin was created for the soul purpose of peer-to-peer cash transaction, without the need of any sort of central authority such as Banks or any Third Party institution.
What is Cryptography?
Cryptography is simply the practice of techniques to secure communication, so it basically converts ordinary plain text into random texts, it encrypts the message by replacing ordinary letters with other letters. Bitcoin is 100% digital, anyone can exchange this currency through a peer-to-peer network, such as sharing files, pictures, and videos. Bitcoins cannot be duplicated, it is an entry in a collection of financial accounts, also known as a ledger.
What is the Blockchain?
The Blockchain is a huge global ledger and was created as a decentralized way so not a single soul or a group of souls have control of bitcoin, but instead every single user retains control. Hence, peer-to-peer network. The way transactions are recorded is sort of simple but still confusing, but let’s stick to the “simple” Category. The Blockchain collects a group of transactions in a block, and when it is filled due to its limited capacity, the block is then chained onto a previous block in chronological order.
What is a Private Key and a Public Key?
So Private Keys are meant to be kept a secret and not be shared with anyone else, these will allow you to decrypt all the messages and transactions that are sent to you. On the other hand, your Public Key is meant to be shared publicly, this enables you to receive encrypted transactions from other people, that only your private key can decrypt. The Private Key is almost impossible to hack, making it more secure than a credit card number or bank account number. The Public Key is also used by users all around the world to validate the legitimacy of your Bitcoin Transactions. This is done by solving complex math problems that cannot be done by hand.
What are Miners?
Miners solve complex math problems to make sure that all transactions are accurate, then these transactions are put together into blocks and are added into the blockchain. Miners also prevent other Bitcoin users from double spending, in other words, they prevent fraud from occurring by disallowing the same bitcoin be used to make different purchases. Mining consumes a lot of energy, and it’s really costly, some miners spend thousands of dollars on high powered computer equipment and rack up a hefty electricity bill in order to solve complex math problems.
What is the purpose of Mining?
The purpose of bitcoin mining is important not only because it discovers new bitcoins, but also because it allows the payment network to remain trustworthy and continue verifying transactions all around the world. Once a complex math problem is solved, a new bitcoin is discovered and is awarded to the miner who found it.
How are Miners Awarded?
In 2009, miners were awarded 50 bitcoins by successfully completing math problems. As of May 11th, 2020, miners are now awarded 6.25 Bitcoins, the reward is cut in half every time 210,000 blocks are solved.
How many Bitcoins are there?
There are a total of 21 Million Bitcoins, some have been mined, while others are yet to be discovered.
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Disclaimer: This content was made for entertainment and education purposes. I am not a financial advisor, a legal or tax expert. I recommend you taking the time to do your own research, I am just here to plant the seed regarding investing! Keep in mind, any past performance in the stock market or investing does not define or guarantee future results. I hope you enjoy the video. #Animations were made for #entertainment and #education if you could consider it animations, I guess? #Animated
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