What is Bitcoin?

Key Takeaways

hello world SJ here Bitcoin is a currency just like the US dollar or the Japanese y except Bitcoin doesn't belong to anyone no one owns it no government Bank company or person it's just open source software that anyone can download and browse it's an invention that no one owns but anyone can use kind of like email it was created in 2007 by a mysterious person named Satoshi Nakamoto the search for Satoshi has been going on for years but no one has ever found him before and since then the total value of the Bitcoin network has grown from nothing to over5 billion US once you join the Bitcoin Network by opening a wallet it will generate you a 25 character along public and private key using cryptography hence why Bitcoin is called a cryptocurrency this is your Bitcoin address think of it kind of like your bank account number you can give your public key to anyone it's what they'll use to send money to you but your private key is For Your Eyes Only anyone who as your private key can access all of your funds so keep it safely hidden every time someone sends Bitcoin to another person the Bitcoin network is responsible for processing the transaction the Bitcoin network is maintained by a bunch of computers that verify all transactions to ensure that they are valid this process is called Mining and anyone can set up their computer to become a minor and get paid for maintaining the network all you have to do is download the Bitcoin client and start mining mining requires a lot of computing power so you'll need a really really good GPU chip an Asic computer would work best when anyone gets the client their computer will start downloading something called the blockchain the blockchain is a huge list of every single Bitcoin transaction that has ever happened in the network these transactions are bundled into units called blocks these blocks are all chained together in order of timestamps a chain of blocks blockchain get it when anyone makes a transaction each minor will check to see if the transaction was ever made before in its copy of the blockchain if it was never made before it will recognize it as a valid transaction if at least 51% of the network agrees that the transaction was valid it clears and is added to the blockchain the blockchain is stored on every Minor's computer there is no Central Computer whatsoever it's completely decentralized that means no one can shut down Bitcoin but what if a bad guy decides he wants to try to generate fake Bitcoins couldn't he just create a bunch of mining accounts and approve his own transactions as a new majority well yeah but Bitcoin has an incredible security system designed to defend against that type of attack also known as a civil attack there's an extra step that every minor has to do once it says that a block is valid it has to solve a bunch of randomly generated math mathematical problems using its computing power and once it's done solving them other miners can verify that it did indeed solve those problems this is called the proof of work algorithm miners have to prove that they've done a certain amount of computational work before their vote is valid what this means is that in order for a bad guy to spend money twice or double spend he has to control more computational power than 51% of the Bitcoin Network the total computational power of the Bitcoin Network is currently 13,000 times greater than the 500 fastest supercomputers in the world combined as Kanye says thanks Kanye no one person or entity has that much computing power so the network has never been broken before and it only gets stronger as more miners join by adding their computing power to it only 21 million Bitcoins can ever be created and at the current rate of creation the last Bitcoin will be mined in the year 2140 so when that happens miners will then be paid with just transaction fees instead of transaction fees and generated coins this makes Bitcoin a deflationary currency unlike the inflationary US dollar deflationary means that there's a hard limit on the amount of currency that can be created and inflationary means that more currency can be created but one isn't inherently better or more natural than the other there is no natural state state of money its natural state is neither inflationary nor deflationary money is not a natural thing it's a tool we use in our society to transfer debt amongst ourselves turning the dials on the economic models for money in either direction has both pros and cons Bitcoin can plug into the existing system of money transfer and make it faster and more efficient and more widely available there's so many ways to get involved check out the links in the description for more info and please subscribe for more technology videos thanks for watching