We’ve moved away from traditional money. We want to talk about one of the alternatives.
What is Bitcoin?
Bitcoin is a digital and global money system. It’s a currency you can use it to spend but it is a bit more than that. It allows people to send or receive money across the Internet even to someone they don’t know or trust.
This is known as borderless payments so you can send money to someone in the likes of Australia in a matter of minutes, not days not hours. Massive money can be exchanged without being linked to a real identity.
The mathematical field of cryptography is a basis for this bitcoin security and Bitcoin is also a store of value.
Who Created It?
A software developer going by the name of Satoshi Nakamoto proposed Bitcoin in 2008, as an electronic system based mathematical proof of payments.
The idea was to produce a means of exchange, independent of any central authority, that can be transferred electronically secure, verifiable and immutable way using the blockchain.
- August 2008, bitcoin.org was officially registered
- 3rd of January 2009 – 30,000 lines of code were spelled out as the beginning of Bitcoin.
Hal Finney was one of the earliest Bitcoin enthusiasts and offer to mine the first 10 bitcoins, 10 original bitcoins from block 70, which Satoshi sent over as a test. If you are there some further information and read in on a bitcointalk.org.
On that, you can see old conversations and Hal Finney, unfortunately, is not with us anymore but he was one of the key players and we don’t fully know who Satoshi Nakamoto is.
But Hal Finney would’ve known given the reasons. I understand fully why no one will want to be responsible for what it is.
So decentralization one of the main things that are viable and when people talk about it they don’t quite understand what decentralization is.
Bitcoin’s most important characteristic is that it is decentralization
There’s no CEO there’s no one running it. There are developers on it but no one knows exactly the full degree of it. No one controls it. Which is good.
No single institution controls the bitcoin network
There’s no single network or institution or governing body or anything that controls the whole bitcoin network.
It is maintained by a group of volunteer coders and run by an open network of dedicated computers spread around the world (what is known as bitcoin miners)
As I said community-based volunteer developers all that good stuff. It’s brilliant. So can you imagine going a little bit? It is maintained by a group of volunteer coders and these run an open network on dedicate computers around the world. To allow that they use miners and bitcoin miners are elements within this. But the most important thing you need to get from this is. These coders, who develop the codes so out the bugs to do the transactions, they’re done on computers.
This attracts individuals and groups that are uncomfortable with the control that banks or government institutions have over their money.
This attracts individuals and groups that are uncomfortable with centralized and controlled government bodies such as banks. These have their money. They hold your money and even now today they hold your money what you pay us to get this cause you’re using the bank because we don’t use cryptocurrency for obvious reasons. We can’t just yet because the world isn’t set up for it. This is kind of how it is it’s just one of those things. And over time they’ll change.
Bitcoin solves the “double spending problem” of electronic currencies (in which digital assets can easily be copied and re-used) through an ingenious combination of cryptography and economic incentives.
Bitcoin solves the “double spending problem”. Double spending is really easy to explain if you’ve got an image on your phone and you send an email to someone. There are two copies of that image now. So say for example you take a photo of a computer you send it to your friend. They have got the same photo that you’ve got on your phone. That is a double spend. There are no double spend problems with electronic currency such as cryptocurrency Bitcoin, Ethereum and others like it.
The biggest problem you’ve got with money we don’t know how much this is. There’s no element of scarcity and this is why the combination of cryptography helps.
In electronic fiat currencies, this function is fulfilled by banks, which gives them control over the traditional system. With bitcoin, the integrity of the transactions is maintained by a distributed and open network, owned by no-one.
In electronic Fiat, as it is mentioned there it’s fulfilled by the banks. The banks have a reason for that traditional system. They make money off people. They give people loans and stuff like that, but it is maintained and the government maintains that. They set the interest rates to set this up never. And with bitcoin, there’s no issue with that. It is done via the miners are more people that use it, the more secure you become. However, it will become more expensive. The more people are also put money through as well due to the usage of the network absolute scarcity.
Bitcoin is the only asset in the world with absolute scarcity
This is one of the main reasons why I started investing in bitcoin. It sounds a bit you know odd but at the time I was looking investable assets that would go up in time. And the obvious ones that stand out for me are Gold, Silver and other time property. Not base has changed since finding into cryptocurrencies. But the fundamentals are key. There’s only gonna be so many bitcoins. Which is why I class this as the only asset in the world to have absolute scarcity. That means we know exactly roughly give or take. How many are lost? But we also know how many were fully kept in circulation.
Fiat currencies have an unlimited supply, banks can issue as many as they want, and can attempt to manipulate a currency’s value relative to others
Fiat currencies have an unlimited supply. Banks can issue as many as ones and can attempt to manipulate other currencies’ values. Recently at the time a record in this. China has to devalue its currency and so America their trade war going on.
With Bitcoin, on the other hand, the supply is tightly controlled by the underlying algorithm
Candidate of the currency, one of the things great with their client, on the other hand, the supply is tightly controlled by an underlying algorithm. These are done by the miners block Halving rewards. Most recently Litecoin has just had a Halving and every four years. The next one for Bitcoin is in May 2020.
So if you’re reading this now. You got a better time yet before the next Halving reward meaning block Halving will happen roughly the 20th-24 May and it’ll go from 12.5 coins per reward to 6.25
What is mining ( Proof of Work)?
Mining, or processing, keep the Bitcoin process secure by chronologically adding new transactions ( or blocks) to the chain and keeping them in the queue.
I’ve just kind of briefly touched on it but mine is computers it is processed and it keeps the process of bitcoin secure. And yeah just as transactions to the blocks as simple as that to a chain keep them in a queue in an ordered fashion. I’m going to come to a blockchain in the next lecture. If you’re wondering so we’ll talk about that in more detail but ultimately the proof of it is in the pudding. Simply how it works.
Blocks are chopped off as each transaction is finalized, codes decodes, and bitcoins passed or exchanged
Blocks are chopped off as each transaction is finalized. Code decoded and bitcoins are passed through or exchanged.
The reward is agreed-upon by everyone in the network but is generally 12.5 bitcoins as well as the fees paid by user sending transactions
The reward is depending on the network. However, as I mentioned before 12.5 bitcoins as a reward at the moment. It will be 6.25 to five in roughly 9 months’ time to prevent inflation.
To prevent inflation and to keep the system manageable, there can be no more than a fixed total number of 21 million bitcoins.
And to keep the system manageable. There can be only 21 million bitcoins that won’t anymore. There is a lot lost and the last mineable coin in bitcoin will belong. Well, when this future? A hundred and twenty years or so it was quite scary for. I think so. Your grand children’s children’s children will probably understand a lot more than what we do right now in terms of the future of Bitcoin. But the last time would be mined will be then.
This changes every 14 days, changing the algorithm of the puzzle
This is what happens every 14 days depending on the algorithm to puzzle. Cryptography is a mathematical sum and that’s what the miners are competing with each other to do. Their company competing with each other in the quickest possible time to unlock the code, to allow those rewarded bitcoins to come onto or into your wallet essentially because you’ve done the process.
Each time this changes the miners have to solve it, to then be rewarded
The process is simple, validate and verify the blocks. So whenever bitcoin goes onto the block. It takes a bit of time to do that. Once it validates and verifies which is puzzle solving. It is then passed through the chain, verified. Cool. You get rewarded for doing that each time. This change changes minds to solve and underwater as I’ve kind of mentioned.
The difficulty of Bitcoins network is getting tougher each time
The difficulty of Bitcoin’s network is getting tougher each time, mean and it’s harder to solve the puzzles, meaning it’s more secure. Therefore it can be unlikely to get hacked.
This means that it is costing more money to mine Bitcoin, however still a lot less than mining gold and other commodities
This means that it’s costing more money to mine Bitcoin. However, it is a lot less than mine in gold and other minerals Silvers, etc. commodities.
Well, one thing I’ve said to me a lot is bitcoin cryptocurrency is used for crime. That is very uneducated it responds in answer and it’s someone who doesn’t fully understand what cryptocurrency is.
The system does not need to know his or her identity
The system does not need to know the person, right. However, I’m going to say something in a minute.
To purchase you (exchanges) are required by law to perform identity check before you are allowed to buy or sell bitcoin, facilitating another way that bitcoin usage can be tracked. Since the network is transparent, the progress of a particular transaction is visible to all
To purchase you need to require from the law. Now AML and KYC (know your customer) and all that kind of like institution, are kind of their verifications that you are set person to anti-money laundering laws.
Each user is identified by the address of his or her wallet
And the biggest fundamental problem you’ve got with bitcoin is it is the worst thing you can ever use as a criminal because each person has an address. If you go onto a centralized exchange now abiding by regulation and law. They have to put in your well you will find this anyways. You’ll know how to do this. in your passport and your ID to verify you are said person.
Bitcoin is not an ideal currency for criminals, terrorists or money-launderers.
When you are stealing cryptocurrencies are using it for crime or whatever and you go to these exchanges and that wallet has been flagged up which is very easy to do because bitcoin is on a public ledger i.e. you can see what is in someone’s wallet. The trust system and we’re gonna come onto that in more detail on the blocking side of things. But for criminals, it is the worst thing you can do. Fiat currency is still the best for criminal activity. It always will be in that respect because you can go to an A.T.M. machine and pull out some money, use a part of it to buy some things such as drugs, such as ammunition guns, whatever issue is one of those things with cryptocurrency.
If you are sending X amount a bit on to a wallet that’s been flagged for like a certain website, that sells harmful products drugs whatever you’re just gonna get it is given right back to you and that’s it. They will not use it so criminal activity. It is not a war at all. Yes, there are scammers out there. It is very very easy to scam someone with bitcoin and I want you to fully understand the full cost.
There is an absolute full hour talking about scams and how to avoid them but ultimately if someone says to you oh people buy drugs with bitcoin it’s not that don’t. They use cash. Simple as that.
Past Issues – Mud Sticks
Past issues mistakes devising love himself wrote an online place for drugs. Yes, mud sticks. Back in the good old day’s nothing happened.
- 2011 – Silk Road, an online market place for illegal drugs, used Bitcoin as its main form of currency
- Mt.Gox Exchange Hack in 2014 – Loss of 850,000 of Bitcoin
- Acceptance – Some countries have tried to outlaw Bitcoin
- They failed and it is hard to understand
So I mentioned a lover of our block saying I want to kind of go through a little bit more in a lab on the edge of this kind of arty knowledge.
Bitcoin transactions cannot be reversed, unlike electronic fiat transaction
Bitcoin transactions cannot be reversed. You cannot go Oh my God. Other than that wrong we’ll just go back in time and so now it’s gone.
This is because there is no central “adjudicator” that can say “ok, return the money.” If a transaction is recorded on the network, and if more than an hour has passed, it is impossible to modify
The footprint is on the block. It stays out forever. This means that there is no centralized adjudicator. That means that you know, you can’t move it, you can’t change it, you can’t record a backward action.
This does mean that any transaction on the bitcoin network cannot be tampered with
If you want to send you back someone who’s got send it back to someone. So if you send money out to someone. It’s on the blockchain. If you send it back to the other person. It is on the blockchain, you can not edit it. You cannot change what is on there. You can not change anything from the time, the day you sent it to you. How much it is. So it will never change. This means that any transaction on a blockchain cannot be changed.
I could put a message on the blockchain. I could write something really silly like a poem or something stupid in one of the text phrases in that when you send in any of cryptocurrency and I can know exactly what block it is on. I’ll know exactly what time I sent out and what is in the message for life.
Fast and Global
The transaction is propagated nearly instantly in the network and is confirmed in a couple of minutes
Now a lot of people to opt-in speaking it while Bitcoin is not fast. It’s not, bitcoin is quite slow in retrospect, however, it is a lot faster than sending money via Western Union to Uganda, Somalia, Senegal, places Lala, even America, Australia if someone hasn’t got back up. The quickest way to send money these days, still in 2019 is to jump on a plane and give it to that person.
Takes up to 4 to 5 business days to send money via the likes of Western Union and that’s a problem. This is what’s going to solve it. Transactions are pretty much near-instant. Okay, a couple of minutes. Bitcoin takes up to 10 minutes into the block and then another network from that. It’s often less than 15 minutes.
Since they happen in a global network of computers they are completely indifferent of your physical location
You do not need to have a physical location for any computer, any miners. They can be anywhere around the world. Pretty cool.
It doesn’t matter if I send bitcoin to my neighbor or someone on the other side of the world
Doesn’t matter if you send bitcoin to a neighbor or someone on the other side of the world. They can be right next to you. They’ll get it. They can be 60 miles away. They’ll get it. They can be six thousand miles away. They can get it.
Cheaper to send large sums of money than traditional methods
It is cheaper to send large trunk large chunks of money. In Bitcoin, in other cryptocurrencies and it is by traditional methods. I withdrew from my cryptocurrency recently and it was our I transaction wasn’t too but a cost of it. Money it still costs money to go from Fiat into bitcoin and bitcoin to fiat. However, if you’re going from Bitcoin to bitcoin to someone etc. It is unbelievably cheap. It is hardly anything.
Bitcoin funds are locked in a public key cryptography system
Bitcoin funds are locked in a public key cryptography system I mentioned before is public. Public ledger i.e. you can see what is in someone’s wallet. If someone sends me a bitcoin address you can go into it and have a little look-see what’s happening. Pretty cool.
Only YOU or the OWNER of the private key can send cryptocurrency
You are the only owner of that. The only difference with this is if you put your money into an exchange is not yours anymore. You have the right to it but if that exchange gets hacked or you lose your I.D. and password, not good stuff, it’s now what they can keep it.
Strong cryptography and the magic of big numbers makes it impossible to break the scheme
Strong cryptography and magic of big numbers make it very very hard or virtually impossible to break this.
A Bitcoin address is more secure than Fort Knox
Bitcoin addresses most secure in Fort Knox
The larger the network, the harder it is to hack
the larger the network the harder it is to hack and hack would outweigh the cost of the reward.
The cost of a hack would outweigh the reward
The fundamentals are the bigger the difficult adjustment, the harder it will be hacked
it will be to adapting, so towards the end now and you’ve got to go back in time a little bit and figure out what’s adaptive what’s changed.
Now already spoke about money. What is money? What if and types of money have there been. But there’s also technology. You’ve got the horse. I know it’s not technology. It’s a horse. It’s living but you didn’t have a car.
Yeah, the latter. Before that, you had random stuff such as carbon and walls. We want to see it with a letter, letter, and email. Change
Text messages are automated messages and stuff like that through text message services.
It’s interesting to see where we’re going now. Digital content. But what was before digital content was VHS VOA via job papers and so for that VHS, tape recordings, buying DVD buying C.D…
It’s also changed now music film tv online YouTube is now the TV station. It’s crazy.
Your PayPal titles were a quick and easy way of doing things but it’s also very very centralized. And then you got Amazon as an example.
Jeff and to the convenience store driven to the corner shop driven to everything because it’s quick, easy, it’s lazy, it’s simple. Everyone likes it quick, easy, convenient. Bitcoin of the currency conveniently can send money very very fast and very very cheap.
Accumulate as much Bitcoin as you can understand, how it will work and how it works in the future. Use it, use Bitcoin or other alternative cryptocurrencies to see how you like it. Having Bitcoin as an alternative method to fiat currencies. See how quick it easy how funny it is. And educate as much as you can about everything to do with cryptocurrency investing.
This is the earliest phase of the market you’re going to get involved and if you need to cryptocurrency, welcome to the game. It is a game. It is a big game. It’s like a big monopoly bot you’re accumulating as much as you can you understand how the game works. You’re using the game to make it better and you’re learning on the way. So if you want to learn about cryptocurrency investing you’re at the right place. If you want to further that knowledge and learn about trade and you’re in the right place.