these days it's difficult to go very far without coming across some discussion regarding cryptocurrency rappers rap about them celebrities talk about them on Twitter leaders in their fields have opinions about them and only recently For the First Time The Internal Revenue Service began asking us on one of its tax forms if we had invested in them However the fact that cryptocurrency appears to be everywhere does not mean that it is simple to comprehend or that it is suitable for you here is a beginner's tutorial to help you better understand the ins and outs of the cryptocurrency that most people are familiar with that is Bitcoin hello and welcome to Alpha Finance this is the channel to watch if you want to learn more about personal finance investing in cryptocurrency so what exactly is Bitcoin Bitcoin which is commonly abbreviated as BTC is the first and largest form of decentralized digital currency in the world decentralized refers to the fact that it is not supported controlled or owned by any particular government Central Bank Corporation or other Institution Bitcoin is not maintained by a central Authority but rather by a piece of software that can be downloaded by anybody who has access to the internet and used to track and verify transactions contrasted with for instance a dollar which is issued by the United States government and controlled by the Federal Reserve of the United States Bitcoin refers to the distributed network of interconnected computers that serves as the host for the digital token the soul form the currency can take is digital which means that it cannot be extracted from its Associated digital Network as a result there is no physical representation of the currency such as bills or coins even if you purchase a physical Bitcoin from a Bitcoin ATM you cannot store it in your wallet Bitcoin is a decentralized digital currency that may be used to make transactions but in addition to these uses it can also be held as an investment and utilized as a store of value even though there are thousands of different cryptocurrencies the one most often kept and exchanged is Bitcoin how does Bitcoin work blockchain is the technology behind all cryptocurrencies including Bitcoin imagine blockchain as an enormous digital database also known as The Ledger that records the specifics of each and every Bitcoin transaction and sends them out to computers all over the internet that are running the Bitcoin software blockchain is also referred to as the public Ledger most digital currencies run on their own individual blockchains the computers that handle the software organize transactions into groups known as blocks which are then added to the database or Ledger in chronological order building a chain using cryptographic functions hence the phrase's blockchain and cryptocurrency there are tens of thousands if not hundreds of thousands of computers throughout the world that are currently operating the Bitcoin software these computers are also referred to as nodes let us now look at Bitcoin mining and how it works Bitcoin mining is the process of validating new transactions on the Bitcoin Network Bitcoin miners compete with one another to solve cryptographic puzzles in order to validate any Bitcoin transactions as a result transactions take between 10 and 60 Minutes on average depending on how much you want to pay in fees and how certain you want to be that the transaction is fully confirmed although this is far quicker than electronic fund transfers which can take several days to complete it is not anywhere close to being as quick as transactions made with a credit card which can be completed in just a few seconds Bitcoin mining creates new Bitcoins as a reward for miners who devote computational power and electricity to securing the Bitcoin Network by confirming transactions new Bitcoins are likewise released on a schedule that was pre-programmed into their programming when they were created but why is mining required in first place because Bitcoin is still a currency you must exchange labor for payment Bitcoin mining serves this goal but it also AIDS in the mitigation of certain challenges specific to digital currency you can't for example hand someone The Identical five dollar bill many times or keep debiting the same amount from your checking account an endless number of times you either don't have the money anymore or the bank won't let you withdraw more than what's on file Bitcoin mining not only adds new currency to the pool but it also verifies previous transactions using the blockchain's decentralized record if there was no cryptocurrency Ledger anyone could spend the same amount twice which is known as double spending with no way of knowing whether they actually had the cash to back up their transactions when Bitcoin originally came out this practice was widespread among scammers and because Bitcoin uses the blockchain rather than a Traditional Bank there must be a means to keep track of transactions without allowing any one person to fake or conceal them that is why having many concurrent copies of The Ledger is critical solving proof-of-work equations contributes to the verification of transactions on the blockchain by adding them to the record when the blockchain is updated the complete Ledger is updated for everyone on the network ensuring that all miners always have the most up-to-date version of The Ledger this helps to maintain the Ledger's integrity and eliminate discrepancies you're probably wondering who invented Bitcoin in 2008 a person or group known as Satoshi Nakamoto issued a paper detailing the principles that govern Bitcoin technology then in 2009 BTC was introduced nobody knows who Satoshi Nakamoto is to this day so how many Bitcoins are there it is impossible for there to be more than 21 million Bitcoins in circulation at any given time as specified by the Bitcoin code because of the way the rules are managed and the software code that governs Bitcoin it is extremely improbable that this limit will be raised there are presently a little more than 19 million Bitcoins in circulation and the pace at which new Bitcoins are issued is typically halved every four years this means that there is a possibility that there will be a total supply of 21 million Bitcoins in the future additionally Bitcoin is easily split which enables the purchase of a smaller quantity of the cryptocurrency at any one time a Satoshi or sat 4 short is the name given to the smallest component of a Bitcoin because one Bitcoin is equal to 100 million SATs this makes Bitcoin divisible to eight decimal places which is further than most other currencies go if the value of a single Bitcoin were to reach one million dollars then the price of a single set would be equal to one cent supply and demand are the primary factors that influence the price of Bitcoin just as they are the primary factors that influence the price of shares of stock or other currencies the acceptance of Bitcoin by Enterprises and individuals the sentiment of investors the monetary policy of central banks the rate of inflation and the exchange rates of various foreign currencies are all factors that have the potential to influence the supply and demand of Bitcoin people are now able to transmit money to one another directly over the internet using Bitcoin eliminating the need for a third party such as a bank or credit card firm to be involved this kind of transaction is known as peer-to-peer business on the Bitcoin Network Bitcoin transfers can be made over the Internet or using a smartphone app in a manner that is analogous to the way that certain other digital wallet providers such as venmo PayPal cash app or Zell permit electronic transfers with traditional currencies Bitcoin in contrast to the other digital wallet providers is an open system meaning that everyone in the world is able to access and make use of it buying Bitcoin can also be done for investment purposes since its Inception in 2009 at a price of nine cents bitcoin's value has skyrocketed to an estimated all-time high of over 68 thousand dollars in November 2021.
despite the fact that price fluctuations of this magnitude are commonplace investors need to be very certain that they are able to withstand such a high level of volatility and risk of loss well that's it from this video thanks so much for watching we really appreciate it if you like this video and want to see more please like share and subscribe to our Channel and if you have any questions comments or suggestions for future videos leave them in the comments below we'll see you next time [Music].
