thanks for watching techwiki click the subscribe button then enable
notifications with the bell icon so you won't miss any future videos so unless
you're that lady fishing around in her gigantic purse for a checkbook in the
grocery lineup you've probably gotten used to the idea of a paperless
post-cash economy by now i mean who
wants to carry around a bunch of bills and coins when you can just
tap your card and get the same adrenaline rush followed by the same
instant regret so maybe it isn't surprising then that completely
digitized forms of currency namely cryptocurrency are becoming more popular
we gave a high level overview in this episode but today we're going to discuss
bitcoin specifically in a bit more detail because it's the most recognized
cryptocurrency at the moment what is it that makes bitcoin
transactions different from shopping on amazon with a credit card digitally
well you might already know that while normal electronic transactions still
involve conventional money bitcoin is
decentralized meaning that its distribution and exchange aren't
controlled or regulated by a government or other authority and the technical
side of things is also very different traditional currency goes through a
central payment processor like your credit card company but all bitcoin
transactions whether you're purchasing goods or just sending bitcoins to a
friend because you're a nice guy are processed by a large distributed
network of computers running special software so whenever a transaction
occurs the network records the senders
and receivers bitcoin addresses and the
amount transferred and enters this information onto the end of a ledger or
record called a blockchain the blockchain is updated over a hundred
times per day and is sent to every computer that processes bitcoin because
each transaction is encrypted with public key cryptography which you can
learn more about here and verified by
multiple points in the network to ensure that every computer that processes
bitcoin is using identical correct copies of the blockchain it is virtually
impossible to counterfeit this verification process is performed
by what are called bitcoin miners computers or other processing devices
that individuals like yourself connect to this large processing network
the mining software that runs works by grouping recent transactions into blocks
which are only accepted by the rest of the network if the block is hashed
correctly which requires the computer to find correct numerical values a
time-consuming and compute-intensive process
but what's in it then for the members of the processing network
ah i'm glad you asked so once a computer
does successfully process a block it's added to the blockchain and the system
generates a new bitcoin that goes into the miners digital wallet as a reward so
your computer ends up literally creating money for you out of nothing
so wow where do i sign up you can just mine
bitcoin and never work again
well it's a bit more complicated than that it takes a lot of processing power
to generate an appreciable amount of bitcoin and since the system is designed
for it to take about 10 minutes to successfully process a block the
difficulty of mining generally increases
as more nodes join the network not to mention that the costs of entry are
fairly high in the early days you could mine on your
spare laptop then for a while high-end
graphics cards were popular choices thanks to their highly parallelized
number crunching optimized architectures but these days
though it should be noted that this doesn't necessarily apply to other
cryptocurrencies these days bitcoin can
only really be profitably mined using specialized mining appliances called
asic miners unlike graphics cards these can only be
used for bitcoin mining in most cases and they can cost thousands of dollars
each oh yeah and they suck a ton of power too
which due to high electricity rates in many parts of the world can kill any
chance of profitability for the average person so it's obvious why people are
mining bitcoin i mean there's profit to be made
but why do other people want it
well some people are mistrustful of banks and governments to keep their
money secure and have a lot more faith in bitcoin's redundant blockchain system
especially as more and more retailers begin to accept cryptocurrency
others like the partial anonymity that bitcoin offers the only thing that
necessarily ties you to a particular bitcoin address is an encryption key
plus you could grab a new address for each transaction you make in fact many
paid vpn services except bitcoin payment for people who are concerned about
staying incognito online still others look at bitcoin as an
investment though you should tread carefully here
because bitcoin is completely unregulated there is no guarantee of its
value not even a flimsy one so investing
lots of money in bitcoin at least for now is considered
speculative level risk however the system is designed so that
by the year 2140 no new bitcoin will be
produced leading some to believe that down the line it'll be a more secure
virtual commodity of sorts that will provide a hedge against inflation of
traditional currencies kind of like how some people invest in gold bars for the
same reason which sounds cool in theory but right
now bitcoin is a bit of a roller coaster the value of one bitcoin recently jumped
from a few hundred dollars in 2016 to nearly 20 000 around the edge of 2017
and while watching the value of bitcoin spike suddenly can be thrilling if
you've got some in your digital wallet i would ask that you don't take out a
second mortgage on your home just to get in on the latest craze
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