hello this guide for beginners about what bitcoin is and how it works we will break down bitcoin into simple concepts together so by the end of this video you will understand why bitcoin was created in the technology behind Bitcoin I’ve broken this guide into seven easy chapters so feel free to use the time stamped table of contents in the description area below to hop around this video before we get started please take note of all of my official crypto accounts listed here on the screen many scammers are making impersonation accounts pretending to be me as well as other crypto content creators so it’s crucial to double and triple check the URLs and the account names you’re accessing to ensure they’re the correct and official ones cryptocurrency I also do not engage in direct messaging on Instagram as there are a lot of impersonators and I don’t want to cause any confusion every Wednesday I conduct a weekly AMA or ask me anything on Instagram at Instagram calm /script Oh so please use the link to my Instagram account listed below in the description area to follow me and ask me anything you want every Wednesday awesome now that we’ve got that covered let’s learn about Bitcoin

chapter 1 what is Bitcoin

Bitcoin has been a hot topic this year and will likely remain a hot topic into the future due to reasons that will become clear throughout this video what’s interesting is when you google search what is Bitcoin you get answers like bitcoin is a crypto currency okay great so what is the crypto currency or another answer you get as Bitcoin is a digital currency okay well I can access and transfer my US dollars online isn’t that pretty much like digital currency or this answer is my favorite bitcoin is the first decentralized open-source peer-to-peer network that is powered by its users with no central authority or middleman using blockchain technology awesome that tells most people absolutely nothing Bitcoin may seem like a difficult concept to wrap your head around yet it’s actually way simpler than most people think when we describe it using analogies so first let’s think about how easy it is to shake another person’s hand give them hi-5 or interact with them physically as long as you’re within an arm’s length of the other person it’s easy to just simply reach out and shake their hand or imagine if you had a bottle of water in front of you how easy it is to simply reach out and have a drink of water pretty straightforward right now let’s imagine that in order to shake someone’s hand you had to shake another person’s hand who then shook that person’s hand for you we’re imagine that in order to have a drink of water from a bottle right in front of you another person had to pick it up put the water in their mouth and then put it in your mouth that’s just

crazy right well that’s essentially how banks credit cards and our traditional financial system currently works when you swipe your bank card to pay for groceries at the store your bank is taking your money from your account and giving it to the grocery store for you and then charging you for it this is the case with checks credit cards debit cards ACH transfers and any exchange of money really it’s so ingrained in our society and the way that we think about money that it seems completely normal and okay for the most part the reality is the only person who has anything to gain in this arrangement is not even a person really it’s the banks they make a profit from storing transferring rolling and issuing loans off of money you deposit into banks under the guise that one it’s safer there which is not the case in two you aren’t smart or qualified enough to manage your own wealth without their services so this case of someone basically profiting from shaking a person’s hand for you that you could just as easily shake directly yourself is how our modern financial system works so what about Bitcoin well bitcoin is just like shaking someone’s hand directly or taking a drink of water from the bottle directly except with value exchange and the best part is you don’t even have to be an arm’s length away to do it with Bitcoin you can send and receive value directly to anyone from anyone around the world anytime one of the hang-ups people have with understanding bitcoin is just another thing we’ve been conditioned to accept as standard business practice

which is seperation between value and storage or transference of that value so we own and hold fiat like US dollars as something representative of value yet use completely separate mechanisms to actually use it store it and move it around for example you have US dollars representing value and you have a Bank of America account to store it in and you have an American Express credit card to spend it and maybe even a PayPal account to buy sell and manage value as well this is a very normal concept we are accustomed to because that’s pretty much what’s been available until the past decade so instead of having fiat represent value and paying financial businesses like venmo and JP Morgan Chase to move it around and store it Bitcoin is both value and a means to transfer store and manage that value this is because Bitcoin is both digital value and it’s a network that can store and transfer the bits of digital value value and usage of the value is simply one unified system in the case of Bitcoin

chapter two

who create a Bitcoin and why at the time of this video the creator of Bitcoin is our very own modern-day Shakespeare mystery as the only thing we know about this person or persons is their pseudonym Satoshi Nakamoto the true identity of this person or group of people has remained at animus satoshi nakamoto created Bitcoin in the Bitcoin network using blockchain technology and blockchain is simply a method of record-keeping using math and computer science as opposed to accountants and bookkeepers what most people don’t know is the concept of blockchain was actually outlined back in 1991 and Satoshi was the first one to apply blockchain use just under 20 years later in 2009 with Bitcoin we will talk about how the Bitcoin blockchain works in more detail and

chapter 3 of this video guide so why did Satoshi create Bitcoin in the following section we will point out the problems with our financial institutions in our current monetary system that prompted Satoshi to create Bitcoin Bitcoin was created as a way for people to store and send value around the world anytime anywhere at virtually no cost without using a financial business or fiat currency in our current financial system bank accounts and credit cards are luxuries most people around the world don’t qualify for don’t have access to or simply can’t afford even if you do have bank accounts and credit cards they can be frozen restricted and closed at any time without warning and except for each and every holiday known to mankind most banks only operate 9:00 to 5:00 on weekdays and even if all of your accounts are clear for the moment the only thing you store in them or use within them are debt repayment instruments yes our hard-earned money stored in bank accounts is just debt repayment instruments created by the government so you can pay debts like credit cards mortgages bills loans etc but doesn’t this money have inherent value as well isn’t it backed by something representative of the issuing company’s GDP or something similar well let’s talk about what all this money in our bank accounts really represent money is a bit of an abstract word and it’s true definition is a medium of exchange in the form of coins and banknotes in addition to being assets property and resources owned by someone or something the type of money

that is stored in traditional bank accounts is called fiat and the basic definition of fiat is this is a pronouncement arbitrary decree or command given by a person or group of people that have absolute authority to enforce it so when you combine the word Fiat with the word money the definition of fiat money is a legal form of money issued and it backed by the government and backed by the government means that the government made an arbitrary decree that fiat money or our US dollar is to be used in our economy as a medium exchange for goods and services essentially the US government has commanded or told us that Fiat u.s. dollars should be used to buy goods and services in our country if you’re not convinced just check out the simple bullet proof list on Wikipedia explaining Fiat any money declared by government to be legal tender state issued money which is neither convertible by law to any other thing nor fixed in value in terms of any objective standard intrinsically valueless money used as money because of government decree an intrinsically useless object that serves as a medium of exchange so all of them money or US dollars we have in our bank accounts is intrinsically useless valueless and is only a form of debt repayment or medium of exchange Satoshi knew this and created Bitcoin to mitigate the following one banks credit cards and other financial instruments are not widely available to everyone around the world to value and the means of exchanging the value are separate systems by design to generate profit for financial institutions three financial institutions are in complete control over people’s money and banks and their credit cards in that they can reverse transactions freeze or close any accounts any time for no reason and for all the Fiat and bank accounts is a debt repayment instrument and not an actual form of value awesome now let’s break down how blockchain works because once you understand the core principles of bitcoins underlying technology you will start to see how bitcoin is far superior to both fiat money and our current financial system at large

Chapter three how blockchain works the primary element that makes Bitcoin so unique as a digital currency and payment network is its underlying blockchain foundation so let’s talk about how blockchain makes Bitcoin possible using principles of the universe like math and science without the need for accountants bookkeepers banks or governments the most plain and simple way to understand the word blockchain is by separating the work block from the word chain so imagine a list of transactions showing payments sent to and from people getting listed one after the other as they occur then once a maximum amount of transaction data and the list has been reached the list of Records becomes a block of data this block of data is then added behind a previous block of transaction data linked together with a chain nice so the word blockchain simply represents groups of transaction data linked together so the most plain and simple explanation of the Bitcoin blockchain is that its records of Bitcoin transaction data stored on a network of computers around the world and there are three pillars of blockchain technology that make it unique decentralization transparency and immutability pillar 1 decentralization the word decentralization in blockchain is twofold one it means that instead of data being stored in one place like one computer in one office data is stored on multiple computers around the world and two decentralization also means that no one person Corporation government authority or any entity controls any aspect of the data recording and storage process for example currently we have a central banking system controlled by the government a central authority who issues Fiat that can reside in accounts controlled by a Bank of America or similar centralized entities each of these entities are in complete control over where and how their data is recorded stored and managed they can decide what types of servers to use where the servers are located and how their security protocols work and contrast blockchain allows transaction data management to be decentralized on a network of computers around the world using open source software and any changes to the blockchain protocol have to go through a consensus process that no one person or company or government has control over to protect the integrity of the network so instead of a centralized entity like the IRS deciding how and where their data is stored on certain servers in certain locations a decentralized blockchain network is distributed on many devices all over the world that is the essence of the decentralisation pillar pillar to transparency transparency and blockchain describes how transaction data is recorded on a public ledger that is available for everyone to see this ledger of transactions is saved on a network of computers around the world which makes it impossible for the data to be changed or altered to better understand the value of transparency and data recording storage and management let’s compare these two scenarios currently most citizens of the United States do not know how every stimulus dollar for coronavirus aid was spent we just have to take the government’s word for it or draw our own conclusions from media stories and even if the government had to show us where every penny went it would be very easy for them to Forge or manipulate any data they chose to share with us since they control their own data and create their own reports you can see how the scenario is not exactly transparent nor trustworthy so let’s imagine a different scenario where all US citizens had access to a live running ledger where every single stimulus dollar was spent by the government at any moment in time basically everyone could see a full disclosure of how our government is managing our money and this scenario is more trustworthy and transparent the second pillar of blockchain technology pillar 3 immutability immutability means that the data recorded and stored on the blockchain cannot be changed forged or altered this is achieved through math and computer science more specifically and blockchain hashing processes if you would like to watch a more in-depth video explaining what blockchain is and why it was developed click on the link above to check out my blockchain video guide so to recap blockchain uses math and computer science to record and store data in a way that ensures once the new data is verified it is unmodifiable it’s distributed across a vast network of computers around the world so it’s hard to destroy and no one person or entity controls the data or network creating a transparent environment and bitcoin is a use case of this blockchain technology it’s use being a digital currency that people can use as a form of payment to send to and from each other or hold as a store of value similar to gold nice now that you are familiar with some of blockchains important features let’s talk about some of the technical details specific to how Bitcoin works

chapter 4 how Bitcoin works so the Bitcoin blockchain is basically a live running ledger of all the Bitcoin transactions the structure of the Bitcoin blockchain is a network of computers around the world with Bitcoin software installed on them each time a Bitcoin transaction occurs the data is transferred throughout the network of computers computers that maintain the blockchain networks are commonly referred to as nodes and these computers or nodes validate transactions add the transactions to their copy of the ledger and then broadcast the ledger changes to all of the other computers on the network in the form of a block each block of transactions has a programmed maximum amount of data it can store so on average every 10 minutes or so a new block of Bitcoin transactions is created validated and published to the Bitcoin blockchain so who are all these people with Bitcoin software installed on their computers around the world validating transactions and why would they want to do this well Bitcoin transactions are verified and broadcasted to the network via a process called mining and this process is completed by miners miners are these people or pools of people that use computers with Bitcoin software installed on them to maintain the Bitcoin blockchain maintaining the blockchain involves keeping the Bitcoin transaction ledger clean consistent and permanent by grouping new transactions into blocks and publishing them to the rest of the network for verification so for a new block to be accepted by the network miners compete with each other using computing power to verify transactions in exchange for rewards these rewards are in place to incentivize miners to participate in the mining process to ensure the Bitcoin network continues to be audited and essentially maintained the technical details of mining are complex so I break it down in another video guide all about mining so without losing sight of this video the basic concept you need to understand about Bitcoin mining is that miners are rewarded with Bitcoin each time they verify a new block of transactions in mining rewards are a combination of newly minted bitcoins that were not previously circulating and transaction fees of Bitcoin that were already circulating there are existing bitcoins currently in circulation and there are some Bitcoin not circulating right now which brings us to the next chapter let’s talk about the supply of Bitcoin

chapter 5 the supply of Bitcoin a characteristic Satoshi Nakamoto programmed into Bitcoin was a maximum supply so the total number of Bitcoin that can ever exist is 21 million Bitcoin Satoshi implemented a maximum supply of Bitcoin so it would mirror an inflation rate similar to gold and thinking back to the mining process we discussed in the previous chapter you will start to see many similarities between Bitcoin and gold which were all by design Bitcoin was created to be like a digital gold of sorts currently 18 million bitcoins are in circulation of the 21 million total supply new bitcoins are minted into circulation during the mining process when new blocks are verified currently the amount of new Bitcoin entering circulation is 62.5 Bitcoin per block and it takes approximately 10 minutes to verify a block another characteristic Satoshi program into Bitcoin are what’s called having events having refers to the reduction in Bitcoin block rewards issued to by half block rewards have every 210 thousandth block which on average turns out to be approximately four years May of 2020 was the most recent having which decreased the block reward from 12.5 bitcoins to the current rate of 6.2 5 bitcoins so at the time of this video about 900 new bitcoins enter into circulation every day until the next having event making the annual inflation rate 1.8% the advantage of having a fixed supply is that bitcoins inflation rate will eventually reach 0% once the last Bitcoin has been mine currently the last Bitcoin will be mined in the year 2140 which is about 120 years from now a fixed supply and high demand creates scarcity which typically increases the value of assets like gold and can be expected to play out in the case of Bitcoin as well based on its performance and previous having events which we will discuss in

chapter 7 another advantage of a fixed supply is you don’t experience issues like we will experience in the future with the US dollar Bitcoin was programmed in such a way that new bitcoins enter circulation at a fixed rate that halves over time to curb inflation and the new bitcoins are distributed to miners proportionally to the amount of work they produce the US dollar on the other hand doesn’t have a fixed supply so at anytime the government can print more Fiat and who decides who gets the money where does all this money go newly printed Fiat is not equally distributed to people who are producing in the economy like in the case of Bitcoin mining the people or corporations closest to the government’s money printer get first dibs on the new free money typically in the form of very low interest loans which is not a fair neutral way of adding US dollars into circulation in response to the corona virus pandemic the government has recently printed an unprecedented amount of fiat that will eventually result in hyper inflation and devaluation of the dollar which will basically greatly reduce the purchasing power of the US dollar over time in contrast Bitcoin over time will increase and purchase in power as the available supply continues to decrease so long as the demand remains study and most likely increases in these times of uncertainty but what if there’s not enough Bitcoin to go around what if 21 million bitcoins aren’t enough for everyone who wants to use or store it over time luckily similar to the US dollar Bitcoin is actually divisible so life the dollar can be divided into smaller units like quarters nickels dimes and pennies Bitcoin can also be divided here’s a chart showing the different denominations of Bitcoin from one unit of Bitcoin all the way to the smallest unit of Bitcoin which are called Satoshi’s or SATs for short one Satoshi is 100 millionth of a Bitcoin or Bitcoin to the eighth decimal place which is represented by a decimal followed by seven zeros and then a one smaller units of Bitcoin and standard denominations make using Bitcoin as a day-to-day currency much easier as it would be too limited to try and pay for things with one whole unit of Bitcoin which at the time of this video is worth around $9,000 that would be like trying to buy a bottle of water with a gold bar which wouldn’t really work at the time of this video 1 Satoshi is worth less than a US penny so you can actually see how Bitcoin is actually more divisible than the US dollar and most other fiat currencies as well as the smallest denomination of US dollars is a penny representing 1/100 of a dollar while Satoshi’s represent a whopping 100 millionth of a Bitcoin Satoshi Nakamoto knew that in order for a currency to work in a society as a medium of exchange it must be easily broken down into smaller increments so it can easily represent a value equal to any and all goods or services available in an economy for exchange and Bitcoin is more than sufficiently divisible as it allows for quadrillions of individual units of Satoshi’s to be distributed to anyone around the world pretty interesting stuff next let’s talk about how bitcoin is stored and transferred on the blockchain network

chapter 6 storage and transference of Bitcoin to store and transfer Bitcoin you need to use Bitcoin wallets there are several types of Bitcoin wallets and some types are more secure than others the two general categories of Bitcoin wallets are hot storage and cold storage hot storage or software wallets are wallets that are on devices connected to the internet like a computer smartphone or an exchange cold storage wallets our devices not connected to the Internet like dedicated cryptocurrency hardware wallet devices like ledger treasure or BC vault other forms of cold storage include paper wallets and more durable materials like wood or fireproof metal wallets cold storage hardware wallets are the safest type of Bitcoin wallet to use since they are not connected to the Internet where you risk getting hacked and all Bitcoin wallets generally consist of two things private keys and public keys keys are also referred to as addresses so what is a private key or address a private key in regards to Bitcoin wallets is a secret 256 bit alphanumeric number that is randomly generated using cryptographic math functions the degree of randomness used in generating a private key is so random it’s been described that there are more possibilities of creating a unique private key then there are atoms that exist in the entire known universe so you can see how the odds of creating a duplicate private key are nearly impossible a private key is the most important thing to keep safe as a bitcoin holder because your private key gives complete and full control over any bitcoins associated with it using a private key anyone can make irreversible Bitcoin transactions meaning they can send Bitcoin to any other person or place without you being able to undo the transaction now from the private key a public key or address is generated so what is a public key public keys similar to private keys are also an alphanumeric number however it’s derived directly from a corresponding private key using cryptographic math functions and the function operates in such a way that it’s impossible to reverse engineer the public key to figure out the corresponding private key so a public or address is used only to receive Bitcoin from others you cannot use a public key to send bitcoins only you receive so you could post your public key on a public website and anyone who comes across it can send you Bitcoin in fact in the video description below of this video you can see the public keys for my channels Bitcoin and aetherium wallets in the donation section using those public keys or addresses anyone around the world can donate to the channel without gaining access to the funds stored with it so to put it simply private keys are for sending or spinning bitcoins and public keys are for receiving bitcoins let’s explore an analogy to better understand this concept think about your traditional bank account if you have one you can provide anyone with your bank routing number and account number to receive an electronic transfer from them however using just a routing number and an account number they cannot access your actual bank account to spend your money so think of the combination of a bank routing number and bank account number as your public key or address anyone can use it to send you money now let’s think about your online banking account username and password using your online bank account login credentials depending on how your bank operates someone could access your account and transfer funds from it so think of your online bank account username and password combination as your private key if someone logs in as you they could initiate transfers of funds out of your account simple enough right awesome so let’s take a look at this public Bitcoin ledger we’ve been talking about that shows all of the Bitcoin transactions that have occurred since its creation there are many different sources that show the Bitcoin ledger to choose from so in this video we are looking at blockchain comm forward slash Explorer and you will pretty much see what we’ve been describing throughout this video a list of bitcoin transactions under the mind column you can see the amount of time that has elapsed since each block of transaction data was mined which works out to be an average of ten minutes per block each block has a unique hash that is generated by the miners when validating the block so if you click on any of the items listed under the hash column it will show you all of the data associated with that block like the time stamp which minor verified the block the block reward which is that set of 6.25 Bitcoin per block we discussed earlier and much more if you scroll down you will start to see each of the individual transactions that make up the block each transaction shows the unique hash per individual transaction created by the miner as well as the public addresses associated with the transaction these public addresses represent a mix of wallets on exchanges software wallets Hardware wallets and all kinds of different wallets people are using the transfer Bitcoin as you can see this public ledger shows a lot of information about the transactions without revealing the identity of the person sending and receiving Bitcoin Bitcoin transactions are not completely anonymous though so if anyone had some knowledge about them out Bitcoin transacted the day and time and the public address involved you could use the public ledger to trace activity so as far as Bitcoin wallets go I highly recommend investing in a hardware wallet like the ledger backup pack or BC vault for storing and transferring bitcoins as they are a safe form of cold storage you can scroll down to the description area below and click on the links to access the correct official web sites safely and securely make sure you only buy hardware wallets from the correct official website to avoid getting a hacks device never buy a used Hardware wallet and always buy directly from the manufacturer when your device arrives feel free to visit my youtube channel and watch the corresponding wallets set-up videos if you need any guidance cool next let’s talk about bitcoins value and how to buy a bitcoins

Chapter seven investing in Bitcoin so what determines the price of Bitcoin the simplest answer is supply and demand as demand for Bitcoin increases and the supply decreases it causes the price of Bitcoin to rise okay nice but why would people want or demand Bitcoin in the first place why would anyone want to trade their valueless fiat debt repayment instrument for a magic internet nerd money well since the corona virus pandemic a lot of people have lost faith in the government stock market and financial system at large and since the printing of trillions of US dollars even cash reserves are a losing proposition because printing more money is the same thing as trying to cut a pizza into smaller pieces to feed more people it’s not going to end well and satoshi revealed his idea for bitcoin in 2008 in the midst of our last financial crisis and launched it the following year in 2009 so bitcoin was actually designed to be a hedge against our current financial system bitcoin was born during a crisis and was built to survive crises it’s been around for over a decade now and for the first time ever we are seeing Bitcoin decouple from the traditional stock market and prove itself as a safe haven in times of uncertainty in the past Bitcoin in the crypto currency markets performance typically correlated with the stock market however in recent months we are now seeing the stock market open and close at a loss while the crypto markets increase this inverse movement reveals like crypto currency is separating or decoupling from traditional financial assets and becoming more distinguished as a different type of financial asset one that people are just starting to flock to during times of uncertainty transforming their fiat into something they believe will retain its value over time and almost certainly increase substantially over time as we discussed previously programmed having events decrease the supply of a new Bitcoin entering into circulation and the price of Bitcoin increases when the supply decreases and demand increases so the new supply of Bitcoin decreased by 50% and demand for Bitcoin during these uncertain times is increasing if you look at the historical data of the price of Bitcoin

following previous having events you will see the price increasing nearly tenfold several months after the halving takes place after the first having in 2012 Bitcoin went from around $10 per bit going to over $1,000 per Bitcoin after the second having in 2016 Bitcoin went from 1000 up to 20,000 and settled back down to 10,000 per Bitcoin the third having happened in mid May of 2020 so is $100,000 per Bitcoin and the cards in the coming years is 1 million per Bitcoin possible in the future well if you reference data from past having events which occurred during the longest traditional market bull run and history and consider the most recent having event happened during one of the worst global financial crisis we’ve ever experienced anything is possible and crypto from zero dollars per Bitcoin to over a million per Bitcoin in the future and Bitcoin is proving to be one of the only source of value we have the opportunity to invest in where we can experience our wealth exponentially increasing over time in this guide we walk through the process together step by step making it as easy and as simple as possible and ensuring everything is set up safely and correctly or if you would like to start buying now scroll down to the description area below and click on the links to safely access my list of recommended exchanges you may like to use and that support your specific country of residence note that you will receive ten dollars worth of free Bitcoin

when you invest over $100 in crypto currency by using the coin base link below also remember it’s important to double and triple check the URLs you’re accessing to ensure you arrive at the correct official website there are many fake websites set up designed to look like an official site just to try to steal your login credentials and your funds so you can click on the links below and then bookmark the sites to ensure you always access the right ones another important thing you should do is invest in a hardware wallet like the ledger backup pack or BC vault you can also access those websites by using the links below awesome thank you for taking the time to watch my video if you enjoyed the content and would like to see more crypto videos in the future please make sure to like this video and click the subscribe button to support the channel also make sure you head over to my Instagram account at Instagram comm forward slash crypto KC for one minute daily videos and to ask me anything every week on my Wednesday amas so what do you guys think of Bitcoin is it something you’d consider buying what other questions do you have about Bitcoin let me know in the comments below be safe out there

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