Hello, in this lesson we are going to cover what is Bitcoin? I'm sure you've heard it on the news from your friends in the newspaper somewhere you've heard of Bitcoin. So what is it? Well Bitcoin if what is called a crypto currency and a cryptocurrency uses cryptography. So using advanced mathematics to essentially ensure the validity, the security, the transactions of this currency, have got a separate video covering exactly what cryptocurrencies are exactly what cryptography is hashing and all of that good stuff. So I won't be anything rehashing all of that because I've got separate lessons covering that.

So cryptocurrencies are Essentially a digital currency and they are not backed by a single authority namely the government, theoretically a fear like currency which is essentially what the dollar is, could be backed by an organization that is in the government but usually they are backed by the government. So, a cryptocurrency I mean Bitcoin is a cryptocurrency, which is a digital currency, not backed by a single party, okay. The government so that's one of the ways that it differs to the conventional currency. A number difference is less To the Firebase not backed by a single 40 is that it's the centralized and distributed. Again, I won't cover in too much detail what each of these terms exactly mean, because I've got a separate video covering them. But just a brief overview, essentially not controlled by similar 40. that not one single point of failure.

And there are a network of users that essentially help the running the processing of this system plus essentially, the essence of decentralized and distributed networks. They're no different is it's not issued. We have conventional currency, a government would issue if they need more of it, which would lead to deflation. And we're where the crypto cryptocurrency they are created using a process called Mining so they all mined so in my thinking what is mining? Exactly? We're separate video covering what exactly mining is but an overview of what mining is mining is is the process of very fine transactions validity so transaction will be Bob sent five bitcoins so if Bob sent five bitcoins so BTC is a shorthand term for bitcoins of five bitcoins to Joe.

This needs to be validated to ensure that Bob did actually send it so mining is the process of lot and my thinking okay mining is the process of verification of transactions, but how does that lead to more coins being issued? Well, very simply new coins are generated as rewards for very, very fine a certain number of transactions so that's how new coins are issued. And they are reward simply because the process of mining especially for the Bitcoin cryptocurrency Say it's quite intensive on your computer. So, you generally need a specific computer hardware like a thick card to be able to really do mining effectively and profitably. Another thing worth noting is the creation rate. So, the amount that all coins are issued for the creation rate is auto magically heart every few years as more Bitcoins are generated so this is similar to The physical method for mining gold because there is a finite amount of gold, the more gold that is mined thank you the Hydra harder you get because there's a scarcity in on mind Gox essentially, the process is essentially what Bitcoin is trying to simulate and there is a maximum number of bitcoins and that maximum number is the maximum number of bitcoins will be 21 million and based on the difficulty of mining and the way the creation rate is automatically being harmed.

It is estimated Is that all? All terrible be for bitcoins? Well, the generated by 2140 so that the estimation of when or 21 million bitcoins will be mined anymore thinking, Okay, if there's a finite amount of bitcoins, how will transactions occur afterwards? If If I can only transact X amount of bitcoins in the future, then want to limit the number of users theoretically, but the other way around this and this is built into the Bitcoin protocol itself. Part of a coin can be transacted. So you don't have to transact a whole Bitcoin you could transact 0.00407 of a Bitcoin.

And whatever that value is, whatever you're essentially comparing it to whether that's a fear currency or gold, that is the amount that would get transacted. And you might also thinking, how small can Bitcoin be devised boy and the smallest, smallest denomination, the Nami nation is one Toshi Satoshi. And if named after the Creator, whether it's an organization or individual, we do not know Satoshi Nakamoto and that is eight decimal points of 0.00000001 and confirm it correctly. So 1234567 so Seven, eight, obviously including this one, so that this is the smallest Bitcoin or denomination of Bitcoin that can be transacted at any given time. Another key feature of Bitcoin is something called the public ledger. And the public ledger stores.

All transactions and is shared by users on the network. And the final piece of Bitcoin and other cryptocurrencies is something called exchanges and wallet, an exchange offense essentially facility They take the sending and receiving of the coins, and a wallet essentially stores the bitcoins, a lot of exchanges and wallets actually operate vice versa. So there are plenty of exchanges out there that will store your coins as well. This is just to move the most amount of friction as possible. so users can get into it and they have to manage several different services for storing the coins and for sending and receiving. So this has just been a overview of what Bitcoin essentially is.

It's a cryptocurrency, which is a digital currency not backed by the government. It's decentralized, distributed, and yeah, there's not much more to know about it. And if you're interested to know more about exchanges, more about mining and all the other stuff like decentralized and distributed networks and cryptocurrencies and cryptography in general, feel free to check out my other lessons. As usual, if you have any questions, feel free to reach out. There were any concepts in the video that you didn't quite grasp, feel free to go over them again. And I will see you in the next lesson.