What is Bitcoin?


– Hey guys, this is Austin.
If you bought a single bitcoin a year ago
you would’ve paid just under $1000 for it.
However, if you wanna sell that same
bitcoin today it is worth over $17,000.
Which really begs the question,
what exactly is a bitcoin?
The idea is that this
is a virtual currency
that isn’t backed by anything physical.
It’s important to know
that this isn’t a stock.
It is a currency.
Now mind you,
it’s a little bit different
than something like a
U.S. dollar, or a euro, or the yen,
which are all backed
by specific countries.
But the same idea still applies here.
And the maintenance reason why bitcoin is
skyrocketing in value is because everyone
wants to get their hands on them.
So how does this all actually work?
Well, unlike something like cash,
which is printed by a government and
I can hold it in my hand,
bitcoin relies on something called
“the blockchain”.
A simple way to understand this is
to imagine a ledger.
Every time anyone buys or sells anything
related to bitcoin is
recorded in this ledger
called “the blockchain” and then it is
copied hundreds of thousands of times
every single hour across
multiple computers
to make sure that everyone is
on the exact same page.
What makes this interesting
is the idea that
because it is copied across all these
different computers and
because it all is public,
before I say,
wanna go buy a bitcoin from Ken or
before he tries to sell me a pizza for
a whole bitcoin because he’s greedy and
wants to sell me a $17,000 pizza.
I can actually see exactly
how many bitcoin are
in his specific wallet and vice versa.
It is all totally public.
So say I wanna buy that
incredibly expensive and
yet hopefully delicious pizza from Ken
for a single bitcoin.
Well, it works out from his end because
he can look in my wallet and say,
“Hey look, I have one bitcoin there.”
I transfer it over to him,
he receives it into his wallet,
it’s all recorded in the blockchain and
everything is totally fine.
However, what happens when I decide to
cheat the system and pretend that I have
50 bitcoin in my wallet
when I really don’t
have any at all?
Well, the blockchain actually does a
really good job of
protecting against this.
Because that ledger and that list of
transactions is copied
across so many computers,
it’s updated multiple times per hour.
The idea that I can just say,
hey I have 50 bitcoin
and try to tell Ken that,
he can check,
and unless I can access
all of the thousands of
computers every few minutes and
change those numbers,
which is not remotely practical,
Ken is still going to be able to know
that instead of my 50 bitcoins
I have 0.001 bitcoin.
Because that blockchain
has to be double and
triple and quadruple checked by computers
all around the world you can actually
set your own computer
up to help mine bitcoin.
Essentially, every single time that you
help process a transaction and make sure
that it’s legit you mine what is a very,
very tiny amount of bitcoin.
If you were lucky enough to mine bitcoin
in the early days and
held on to what you mined,
you’d become a very,
very rich person today.
However, in 2017,
if you wanna set up a
bitcoin mining system
it really doesn’t make a lot of sense.
Bitcoin mining used to work best on
PC graphics cards,
which were originally meant for gaming,
can actually do this kind
of stuff fairly well.
However, nowadays ASICs have completely
destroyed that market.
And ASIC is essentially a small computer
that its sole purpose in
life is to mine bitcoin.
And when it does it does it a lot faster
than your actual computer which makes it
totally obsolete.
If you’re interested,
I did an entire video on crypto mining
a few months back.
Now even though it’s not profitable to
mine bitcoin anymore
there are other types of
crypto currencies that you can actually
some money on if you
have a pretty decent PC
and then trade those into bitcoin.
So if you guys want
more information on that
you can check it out right here.
By far, the easiest way of getting
your hands on bitcoin
is to simply buy them.
But this is where I have
to be very, very clear,
this is not a normal investment.
Not only does it just go up and down,
but it goes wildly up and wildly down.
So if you do decide to
put money into bitcoin,
please keep in mind this is a
super risky investment.
And that, honestly,
it could all disappear at any minute.
Hopefully it won’t but just be careful.
Prices really are wildly variable
on bitcoin right now.
So last week a single bitcoin was worth
about $10,000 but this week it’s worth
about 17,000 and next week it could be
worth 25,000 or it could be worth $2,000.
There’s really know way of knowing.
If all that hasn’t scared you off,
then it actually isn’t that difficult to
get your hands on some bitcoin.
So the first thing
you’re going to need is a
wallet to actually store them in.
There are a lot of different ways of
getting yourself a wallet.
So on the very secure side you can get a
hardware wallet that is going
to be fully off line.
But for most people the easiest way is to
create an account in an exchange
such as Coinbase.
The advantage with Coinbase is,
is not only do they give you a wallet
to store it in but you can also purchase
bitcoin from them as well as some
other crypto currencies such as
Litecoin and Ethereum,
which is the other two
major ones right now.
Alright, so after this
long and arduous journey
we finally have our bitcoin.
However, what can we actually do with it?
So some stores will actually allow you
to buy things with bitcoin.
However, the vast majority of people are
using it as more of an investment.
So you can buy some here,
hope that the price goes up and
then turn around and sell it later.
However, it’s not all just digital.
So there are some bitcoin ATMs that
you can go to in the real world,
put your wallet information in and
withdraw or deposit into them.
I don’t know if I would
really use these myself,
but it’s a cool idea.
Crypto currencies like
bitcoin are a really
interesting piece of tech to me,
and the idea that they
could be actual currency
is super fascinating.
However, how could it all go wrong?
The big one is absolutely price.
Well yes, bitcoin has skyrocketed in
value this year.
There is no guarantee that is going to
continue in the future.
And if you’re not okay
with a really, really
risky thing like that,
then bitcoin is probably not for you.
Even though the blockchain is secure,
there’s nothing stopping
someone from being
able to steal your own personal bitcoin
using your wallet.
So just like if someone grabs your
real world wallet and
pulls the cash out of it,
if someone has access
to your bitcoin wallet
they can absolutely pull
your bitcoin out of it.
And this actually happened
to me a few weeks ago.
So I used to use this
service called “nicehash”
to be able to mine some
crypto currencies and
then turn those into bitcoin,
and as I was in the middle of mining
they were hacked and all of the
bitcoin were stolen.
Mine included.
So, like anything,
if you have your entire life savings
under your bed,
probably a bad idea.
And if you keep all of
your bitcoin in one place,
an equally bad idea.
Hopefully you guys found
this video useful and
maybe learned a thing or two.
If you wanna know more about the mining
side of crypto currencies
you can check out my
video over here.
And I’m curious,
what do you guys think about bitcoin?
To me it’s really exciting.
But let me know in the comments below
and I will catch you in the next one.

100 Comments

Add a Comment

Your email address will not be published. Required fields are marked *