What is Bitcoin?

However, in order for something to represent value, people have to trust that it is indeed valuable, and we’ll stay valuable long enough for them to redeem that value in the future. As of recently prior or thereabouts we generally confided in something to address cash. Be that as it may, something occurred en route and we’ve changed our trust model from confiding in something to confiding in somebody. Let me explain. After some time, individuals viewed it as too awkward to even think about strolling all throughout the planet conveying bars of gold or different types of cash. So paper money was invented. Let us know how this worked, a bank or government would offer to take possession of your bar worth $1,000, And in return, that bank would give you receipt certificates which we call bills on $1,000 Were the pay much easier to carry, but you could spend $1 on a cup of coffee and not have to cut your gold bar into 1000 pieces. Also, on the off chance that you needed your gold back, you just counted on $1,000 In Bills return to recover them for the genuine type of cash for this situation that gold bar, whatever you required. And so began it’s just as money as an instrument of practicality and convenience. Time moved on, and because of macroeconomic changes this bond between the paper receipt and the gold it stands for was broken.

Now, the path that led us away from the gold standard is extremely complex, but suffice to say that governments told their people that the government itself would be liable for the value of that paper money. Basically, we all said, Let’s just forget trade paper instead. So, people continue to trade with receipts, backed by nothing but the government’s promise. And why did that continue to work well because of trust, even though there was no actual commodity backing paper money? People trusted the government and that’s how fiat money was created.Fiat is a Latin word that implies, by declaration, which means the dollars or euros or some other currency besides, have value because the government orders it to its what’s known as legal tender coins or banknotes and if so the value of money from all the status given to it by a central authority in this case. And so the trust model has done. Someone in government fiat money has two main effects. You have a focal position that controls and issues it. In this case the government or central bank, and to its limited quantity, the government or central bank can print as much as they want, Whenever heated and deflate money supply on the market. The problem with printing money. Is that because you’re funneling more money, the value of the dollar drops worthless. When you see this rising throughout the years, it’s not necessarily that prices are rising, as much as that the purchasing power of your money is, you need more dollars to buy something that used to cost low. Once fiat money wasn’t placed the move to authority issues money so why not make money, digital and keep track of who, today we mainly use credit cards, wire transfers PayPal, and other forms of digital money, the amount of physical gold is almost negligible and is getting smaller with each year that passes. So with my digital, I have a file that represents $1 What stopped me from copying it a million times and counting in dollars. The double-spend problem. The rectification that banks use today is concentrated rectification, they keep a record on their PC which monitors who claims what. Everybody has a record, and this ledger keeps a tally for each record. Everybody believes in the bank and all banks believe in their customers. Thus the arrangement is brought together on this record, in this computer. You may not know this but there were many attempts to create alternative forms of digital currencies. However nobody succeeded to solve the double-spend issue without a central authority.

Whenever you give anyone control over the Wi-Fi, you’re giving an enormous power, and this creates three major issues. The first issue is corruption. Power corrupts. And absolute power corrupts absolutely. At the point when banks have a command to make money or value, they essentially control the progression of significant value when the world, which gives them almost unlimited power a small example of how power corrupts can be seen in the Wells Fargo scandal where employees secretly created millions of unauthorized bank and credit card accounts in order to inflate the bank’s income stream without their clients thinking about it for quite a long time. The second problem of a centralized system is s bad management, if the central authority’s interest isn’t aligned with the people it controls, there may be a case of mismanagement of the money. For example, printing a lot of money in order to save a certain bank or institution, same as what happened in 2008. The problem.

And basically, you have the citizen’s money. Venezuela is one a good example, where the government has printed so much money, and the value of it has dropped so much that people are no longer counting money but are weighing it instead. The last issue is controlled, you’re basically giving away all control of your money to the government, or bank at any point in time, the government can decide to freeze your account and deny you access to your funds, even if you use only cold hard cash. The government can demonetize, as was done in India, a few years ago. This was the state of material until 2009, making an alternative to the current finance system seemed like a lost cause, but then everything changed. October 2008, a document was introduced online by a guy known as Satoshi Nakamoto. The document also known as a white paper suggested a way of making a system for a decentralized currency called Bitcoin. This system creates digital currency that solves the double-spend problem without the need for central power. In deep, Bitcoin is a transparent ledger without a central power. But what this means? Well, let’s compare Bitcoin to the bank, since most money today is already digital, the bank basically manages its own ledger of balances and transactions. However, the bank’s ledger is not transparent, and it’s stored on the bank’s main computer, you can’t sneak a peek into the bank’s ledger, and only the bank has complete control over it. Bitcoin, on the other hand, is a transparent ledger, at any point in time, I can sneak a peek into the ledger and see all of the transactions and balances that are taking place. The only thing you give out is one who was behind you.

This means point is, everything is open, transparent, and trackable, but you still can’t tell who sent what to whom. Let’s explain this with an example. You can see on your screen certain rows from the bitcoins ledger, We can see that a certain bitcoin address sent 10,000 bitcoins to another bitcoin address in May of 2010. This specific transaction is the first purchase that was ever made with Bitcoin, and it was used to buy two pizzas by a guy named Laszlo Laszlo published a post back in 2010, requesting somebody to sell him two pizzas in return for 10,000 Bitcoins. Well, someone did, and now the price of these two pizzas is worth well over $100 million today. Bitcoin is also decentralized, there’s no one computer that holds the ledger. With Bitcoin, Every computer that system is also keeping a copy of the ledger, also known as the last thing. So if you want to take down the system or half ledger, you’ll have to take down 1000s of computers that are copied and constantly updating it, most money today, Bitcoin is also digital. This means there’s nothing physical that you can touch in Bitcoin, there are no actual coins. There are only real ones and balances. When you own Bitcoin, it means that you own it to access a specific Bitcoin record in the ledger and send funds from it to a different. So, what is it, why is it such big news? Well, for the first time since digital money came into existence, we have an alternative to the current system. Bitcoin can not be controlled by any government or bank. Think about the time before the internet, how centralized the flow of information was, basically, if you wanted information from like the New York Times, The Washington Post.

Today, thanks to the internet, formation. right, interact, and consume information from around the globe with just clicking a button. Bitcoin, the internet, money, and it’s offering a decentralized solution to money. Advantages of Bitcoin. First, it gives absolute control over your fund With Bitcoin. You and You alone can access your, how you actually do this will be explained in a later video. No administration or bank can choose to freeze your record or seize your possessions. Bitcoin removes the role of middlemen in the process of transferring money. According to this in most cases, Bitcoin is cheap and easy to use than traditional wire transfers or money orders. Also, unlike fiat currencies Bitcoin was designed to be digital by nature, things you can add additional layers of programming on top of it and turn it into smart money, but more on that in later videos. Finally, Bitcoin opens up digital commerce to two and a half billion people around the world who don’t have access to the current banking system. These people are unbanked or underbanked because of where they live, and the reality that they’ve been born into. However, today, with a mobile phone and a click of a button, they can start trading using Bitcoin, with no permission needed data, such as online and offline that takes Bitcoin or book a hotel through Bitcoin if you wish. Bitcoin Debit cards allow you to pay at most of the stores with your Bitcoin balance.