What is Bitcoin?
– Hey guys, this is Austin. If you bought a single bitcoin a year agoyou would’ve paid just under $1000 for it. However, if you wanna sell that samebitcoin today it is worth over $17,000. Which really begs the question,what exactly is a bitcoin?The idea is that thisis a virtual currencythat isn’t backed by anything physical. It’s important to knowthat this isn’t a stock. It is a currency. Now mind you,it’s a little bit differentthan something like aU. S. dollar, or a euro, or the yen,which are all backedby specific countries. But the same idea still applies here. And the maintenance reason why bitcoin isskyrocketing in value is because everyonewants to get their hands on them. So how does this all actually work?Well, unlike something like cash,which is printed by a government andI can hold it in my hand,bitcoin relies on something called“the blockchain“. A simple way to understand this isto imagine a ledger. Every time anyone buys or sells anythingrelated to bitcoin isrecorded in this ledgercalled „the blockchain“ and then it iscopied hundreds of thousands of timesevery single hour acrossmultiple computersto make sure that everyone ison the exact same page. What makes this interestingis the idea thatbecause it is copied across all thesedifferent computers andbecause it all is public,before I say,wanna go buy a bitcoin from Ken orbefore he tries to sell me a pizza fora whole bitcoin because he’s greedy andwants to sell me a $17,000 pizza. I can actually see exactlyhow many bitcoin arein his specific wallet and vice versa. It is all totally public. So say I wanna buy thatincredibly expensive andyet hopefully delicious pizza from Kenfor a single bitcoin. Well, it works out from his end becausehe 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 andeverything is totally fine. However, what happens when I decide tocheat the system and pretend that I have50 bitcoin in my walletwhen I really don’thave any at all?Well, the blockchain actually does areally good job ofprotecting against this. Because that ledger and that list oftransactions is copiedacross so many computers,it’s updated multiple times per hour. The idea that I can just say,hey I have 50 bitcoinand try to tell Ken that,he can check,and unless I can accessall of the thousands ofcomputers every few minutes andchange those numbers,which is not remotely practical,Ken is still going to be able to knowthat instead of my 50 bitcoinsI have 0. 001 bitcoin. Because that blockchainhas to be double andtriple and quadruple checked by computersall around the world you can actuallyset your own computerup to help mine bitcoin. Essentially, every single time that youhelp process a transaction and make surethat it’s legit you mine what is a very,very tiny amount of bitcoin. If you were lucky enough to mine bitcoinin the early days andheld on to what you mined,you’d become a very,very rich person today. However, in 2017,if you wanna set up abitcoin mining systemit really doesn’t make a lot of sense. Bitcoin mining used to work best onPC graphics cards,which were originally meant for gaming,can actually do this kindof stuff fairly well. However, nowadays ASICs have completelydestroyed that market. And ASIC is essentially a small computerthat its sole purpose inlife is to mine bitcoin. And when it does it does it a lot fasterthan your actual computer which makes ittotally obsolete. If you’re interested,I did an entire video on crypto mininga few months back. Now even though it’s not profitable tomine bitcoin anymorethere are other types ofcrypto currencies that you can actuallysome money on if youhave a pretty decent PCand then trade those into bitcoin. So if you guys wantmore information on thatyou can check it out right here. By far, the easiest way of gettingyour hands on bitcoinis to simply buy them. But this is where I haveto 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 toput money into bitcoin,please keep in mind this is asuper risky investment. And that, honestly,it could all disappear at any minute. Hopefully it won’t but just be careful. Prices really are wildly variableon bitcoin right now. So last week a single bitcoin was worthabout $10,000 but this week it’s worthabout 17,000 and next week it could beworth 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 toget your hands on some bitcoin. So the first thingyou’re going to need is awallet to actually store them in. There are a lot of different ways ofgetting yourself a wallet. So on the very secure side you can get ahardware wallet that is goingto be fully off line. But for most people the easiest way is tocreate an account in an exchangesuch as Coinbase. The advantage with Coinbase is,is not only do they give you a walletto store it in but you can also purchasebitcoin from them as well as someother crypto currencies such asLitecoin and Ethereum,which is the other twomajor ones right now. Alright, so after thislong and arduous journeywe finally have our bitcoin. However, what can we actually do with it?So some stores will actually allow youto buy things with bitcoin. However, the vast majority of people areusing it as more of an investment. So you can buy some here,hope that the price goes up andthen turn around and sell it later. However, it’s not all just digital. So there are some bitcoin ATMs thatyou can go to in the real world,put your wallet information in andwithdraw or deposit into them. I don’t know if I wouldreally use these myself,but it’s a cool idea. Crypto currencies likebitcoin are a reallyinteresting piece of tech to me,and the idea that theycould be actual currencyis super fascinating. However, how could it all go wrong?The big one is absolutely price. Well yes, bitcoin has skyrocketed invalue this year. There is no guarantee that is going tocontinue in the future. And if you’re not okaywith a really, reallyrisky thing like that,then bitcoin is probably not for you. Even though the blockchain is secure,there’s nothing stoppingsomeone from beingable to steal your own personal bitcoinusing your wallet. So just like if someone grabs yourreal world wallet andpulls the cash out of it,if someone has accessto your bitcoin walletthey can absolutely pullyour bitcoin out of it. And this actually happenedto me a few weeks ago. So I used to use thisservice called „nicehash“to be able to mine somecrypto currencies andthen turn those into bitcoin,and as I was in the middle of miningthey were hacked and all of thebitcoin were stolen. Mine included. So, like anything,if you have your entire life savingsunder your bed,probably a bad idea. And if you keep all ofyour bitcoin in one place,an equally bad idea. Hopefully you guys foundthis video useful andmaybe learned a thing or two. If you wanna know more about the miningside of crypto currenciesyou can check out myvideo 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 belowand I will catch you in the next one.