Hi, this is Wayne again with a topic “How Does Bitcoin Work?”.
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 check out away luggage. They cut out the middleman to bring you premium quality suitcases at lower prices. Not only do they offer their suitcases in nine colors and five sizes, their carry-on models come with two usb ports and a high-capacity battery. So you can keep all your gadgets charged when you’re traveling uh all models feature 360-degree spinner wheels, so you can navigate the airport with ease and a compression system so that you can fit in all the spare sandals or whatever it is that you carry with you Away luggage suitcases are theft, resistant with tsa approved, combo locks built in they’re, made with impact resistant, german polycarbonate, and they have a lifetime warranty, not only that they come with a hundred day.
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