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thanks for watching techwiki click the subscribe button then enable

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notifications with the bell icon so you won't miss any future videos so unless

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you're that lady fishing around in her gigantic purse for a checkbook in the

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grocery lineup you've probably gotten used to the idea of a paperless

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post-cash economy by now i mean who

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wants to carry around a bunch of bills and coins when you can just

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tap your card and get the same adrenaline rush followed by the same

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instant regret so maybe it isn't surprising then that completely

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digitized forms of currency namely cryptocurrency are becoming more popular

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we gave a high level overview in this episode but today we're going to discuss

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bitcoin specifically in a bit more detail because it's the most recognized

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cryptocurrency at the moment what is it that makes bitcoin

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transactions different from shopping on amazon with a credit card digitally

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well you might already know that while normal electronic transactions still

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involve conventional money bitcoin is

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decentralized meaning that its distribution and exchange aren't

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controlled or regulated by a government or other authority and the technical

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side of things is also very different traditional currency goes through a

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central payment processor like your credit card company but all bitcoin

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transactions whether you're purchasing goods or just sending bitcoins to a

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friend because you're a nice guy are processed by a large distributed

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network of computers running special software so whenever a transaction

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occurs the network records the senders

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and receivers bitcoin addresses and the

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amount transferred and enters this information onto the end of a ledger or

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record called a blockchain the blockchain is updated over a hundred

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times per day and is sent to every computer that processes bitcoin because

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each transaction is encrypted with public key cryptography which you can

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learn more about here and verified by

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multiple points in the network to ensure that every computer that processes

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bitcoin is using identical correct copies of the blockchain it is virtually

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impossible to counterfeit this verification process is performed

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by what are called bitcoin miners computers or other processing devices

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that individuals like yourself connect to this large processing network

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the mining software that runs works by grouping recent transactions into blocks

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which are only accepted by the rest of the network if the block is hashed

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correctly which requires the computer to find correct numerical values a

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time-consuming and compute-intensive process

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but what's in it then for the members of the processing network

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ah i'm glad you asked so once a computer

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does successfully process a block it's added to the blockchain and the system

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generates a new bitcoin that goes into the miners digital wallet as a reward so

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your computer ends up literally creating money for you out of nothing

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so wow where do i sign up you can just mine

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bitcoin and never work again

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well it's a bit more complicated than that it takes a lot of processing power

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to generate an appreciable amount of bitcoin and since the system is designed

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for it to take about 10 minutes to successfully process a block the

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difficulty of mining generally increases

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as more nodes join the network not to mention that the costs of entry are

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fairly high in the early days you could mine on your

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spare laptop then for a while high-end

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graphics cards were popular choices thanks to their highly parallelized

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number crunching optimized architectures but these days

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though it should be noted that this doesn't necessarily apply to other

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cryptocurrencies these days bitcoin can

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only really be profitably mined using specialized mining appliances called

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asic miners unlike graphics cards these can only be

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used for bitcoin mining in most cases and they can cost thousands of dollars

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each oh yeah and they suck a ton of power too

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which due to high electricity rates in many parts of the world can kill any

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chance of profitability for the average person so it's obvious why people are

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mining bitcoin i mean there's profit to be made

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but why do other people want it

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well some people are mistrustful of banks and governments to keep their

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money secure and have a lot more faith in bitcoin's redundant blockchain system

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especially as more and more retailers begin to accept cryptocurrency

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others like the partial anonymity that bitcoin offers the only thing that

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necessarily ties you to a particular bitcoin address is an encryption key

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plus you could grab a new address for each transaction you make in fact many

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paid vpn services except bitcoin payment for people who are concerned about

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staying incognito online still others look at bitcoin as an

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investment though you should tread carefully here

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because bitcoin is completely unregulated there is no guarantee of its

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value not even a flimsy one so investing

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lots of money in bitcoin at least for now is considered

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speculative level risk however the system is designed so that

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by the year 2140 no new bitcoin will be

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produced leading some to believe that down the line it'll be a more secure

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virtual commodity of sorts that will provide a hedge against inflation of

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traditional currencies kind of like how some people invest in gold bars for the

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same reason which sounds cool in theory but right

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now bitcoin is a bit of a roller coaster the value of one bitcoin recently jumped

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from a few hundred dollars in 2016 to nearly 20 000 around the edge of 2017

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and while watching the value of bitcoin spike suddenly can be thrilling if

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you've got some in your digital wallet i would ask that you don't take out a

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second mortgage on your home just to get in on the latest craze

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