What is Bitcoin? #Helpful Post

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.