Welcome to oromia History.com I'm umar jemal
and I'll be your guide through this text series Bitcoin whiteboard Tuesday. We're going to cover a lot of topics such as Bitcoin mining Bitcoin wallets, how to trade, Bitcoin and a lot more. Today we're going to start from scratch answer the third most searched term on Google today What is Bitcoin if you're worried that we're going to get too technical and use a lot of complicated words, don't hear at 99 bitcoins we translate Bitcoin into plain English so even if you have no technical background, you'll be able to understand everything. By the end of this course you'll know more about bitcoin and how works then 99% of the population. So let's get
before we talk about Bitcoin, I want to take a moment and talk about money. What is money Exactly? At its core money represents value. If I do some work for you, you give me money in exchange for the value I gave you. I can then use that money to get something of value from someone else in the future.
Throughout history value has taken many forms and people have used a lot of different materials to represent money solve We shells and of course Gold have all been used as a medium of exchange. However, in order for something to represent value, people have to trust that it is indeed valuable and will stay valuable long enough for them to redeem that value in the future. Up until 100 years ago or so we always trusted in some thing to represent money. However, something happened along the way, and we've changed our trust model from trusting some thing to trusting in some one. Let me explain. Over time, people found it too. cumbersome to walk over Around the world carrying bars of gold are other forms of money. So paper money was invented. Here's how it worked. A bank or government would offer to take possession of your bar of gold, let's say worth $1,000. And in return that bank would give you receipt certificates which we call bills amounting to $1,000. Not only were these pieces of paper are much easier to carry, but you could spend $1 on a cup of coffee and not have to cut your gold bar into 1000 pieces.
And if you wanted your gold back, you simply took $1,000 In Bills back to the bank. To redeem them for the actual form of money in this case that gold bar would ever you need it and so paper began it's used as money as an instrument of practicality and convenience However, as time progressed and due to macroeconomic changes this bond between the paper receipt and the gold it stands for was broken. Now, to explain the path that led us away from the gold standard is extremely complex. But suffice to say that governments told their people that the government itself would be liable for the value of that paper money base We all said let's just forget about Gold and trade peace instead So people continue to trade with receipts that are backed by nothing but The government's promise and why did that continue to work well because of trust even though there is no actual commodity backing paper Money people trusted the government and that's how fiat money was created Fiat is a Latin word that means by decree meaning the dollars or euros or any other currency for that matter have value You because the government orders it too It's what's Known as leak tender coins or banknotes that must be accepted if offered as payment. So the value of today's money actually comes from a legal status given to it by a central authority, in this case, the government. And so the trust model has changed from trusting some thing to trusting someone in this case the government fiat money has two main drawbacks one it is centralized you have a central authority that controls and issues it in this case the government or central bank and too it is not limited by quantity At the government or central bank can print as much as they want whenever needed and inflate the money supply on the market. The problem with printing money is that because you're flooding the market with more money, the value of each dollar drops so your own money is worth less. When you see prices rising throughout the years, it's not necessarily the prices are rising as much as that the purchasing power of your money is dropping. You need more dollars to buy something that used to cost less What's up Money was in place the move to digital money was pretty simple we already have a central authority that issues money so why not make money mostly digital and that data authority keep track of who owns what today we made We use credit cards, wire transfers, Pay Pal and other forms of digital money. The amount of physical money in the world is almost negligible, and it's getting smaller with each year that passes. So with money today is digital. How does that even work? I mean, if I have a file that represents $1, what's to stop me from copying it a million times and having a million dollars. This is called the double spend problem. The solution that banks use today is a centralized solution. They keep a ledger on computer which keeps track of who owns what everyone has As an account and This ledger keeps it tally for each account We all trust the bank and the bank trust their computer and so the solution is centralized on this ledger in this computer you may not know this but there were many attempts to create alternative forms of digital currencies however number six cessful in solving the double spend problem Without us central authority Whenever When you give anyone control over the money supply, you're giving them enormous power and this creates three major issues. The first issue is corruption. Power corrupts, and absolute power corrupts absolutely. When banks have a mandate to create money or value, they basically control the flow of value in the world which gives them almost unlimited power. A small example of how power corrupts can be seen in the Wells Fargo Go scandal where Employees secret We create a million Have unauthorized bank and credit card accounts in order to inflate the bank's revenue stream without their customers knowing about it for years. The second issue of a centralized system is mismanagement. If the central authorities interest isn't aligned with the people it controls, there may be a case of mismanagement of the money, for example, printing a lot of money in order to save a certain bank or institution from collapsing as what happened in 2008. The problem with printing too much money is that it causes inflation and basically erodes the value of the citizens money. One extreme example For this is Venezuela, where the government has printed so much money and the value of it has dropped so much that people are no longer counting money but are weighing it instead. The last issue is control. You're basically giving away all control of your money to the government or bank. At any point in time the government can decide to freeze your account In Nigeria access to your funds Even if you Use only cold hard cash The government can cancel the legal status The sub your currency as was done in in A few years back This was the state of things until 2009 Creating an alternative to the current monetary system seemed like a lost cause but then everything changed in October of two 2008 a document was published online by a guy calling himself Satoshi Nakamoto. The document also called a white paper suggested a way of creating a system for a decentralized currency called Bitcoin. This system claimed to create digital money that solves the double spend problem without the need for a central authority. At its core, Bitcoin is a transparent ledger without a central authority. But what does this confusing phrase even really mean? Well, let's compare Bitcoin to the bank. Since most money today is already digital, the bank basically manages its own ledger of balances and transactions. However, the bank's ledger is not transparent, and it's stored on the bank's main computer, you can't sneak a peek into the bank's ledger and only the bank has complete control over it. Bitcoin, on the other hand, is a transparent ledger. At any point in time, I can sneak a peek into the ledger and see all of the transactions and balances that are taking place. The only thing you can't figure out is who owns these balances and who was behind each transaction. This means bitcoin is pseudo anonymous. Everything is open, transparent and trackable. But you still can't tell who's sending what to home. Let's explain this with an example. You can see on your screen certain rows from bitcoins ledger, we can see that a certain bitcoin address sent 10,000 bitcoins to another bitcoin address in May of 2010. This specific transaction is the first purchase that was ever made with Bitcoin, and it was used to buy two pizzas by a guy named Laszlo. Laszlo published a post back in 2010, asking for someone to sell him two pizzas in exchange For 10,000 Bitcoins, well, someone did and now the price of these two pizzas is worth well over $100 million today. Bitcoin is also decentralized. There's no one computer that holds the ledger with Bitcoin. Every computer that participates in the system is also keeping a copy of the ledger, also known as the blockchain. So if you want to take down the system or hack of the ledger You'll have to take down 1000s of computers which are keeping a copy and constantly updating it like most money today bitcoin is also digital This means there's nothing physical that you can In Touch in Bitcoin there are no actual coins there are only rows of transactions and balances when you own Bitcoin It means that you own the right to access a specific bitcoin address record in the ledger and send funds from it to a different address so what does all of this mean why is Bitcoin such Big news well for the first time since digital money came into existence We now have an alternative to the current system Bitcoin is a form of money that no government or bank can control think about the time Before the internet how centralized the flow of information was Basically if you wanted information you could get it from a few major players like the New York Times the wall Jim post and others like them today thanks to the internet Information is decentralized and you can communicate and consume knowledge from around the world With a click of a button bitcoin is the internet of money And it's offering a decentralized solution to money Bitcoin has several advantages over the current system first it gets gives you complete control over your Money With Bitcoin you and you alone can access your funds how you act Do this will be explained in a later video no government or bank can decide to freeze your Your Account or confiscate your holdings Bitcoin also cuts a lot of the middlemen from the process of transferring money This means that in many cases bitcoin is cheaper to use than Traditional wire transfers or money orders also unlike Yeah currencies Bitcoin was designed to be digital by nature
This means you can add additional layers of programming On top of it and turn it into smart money but more on that in later Videos finally Bitcoin opens up digital commerce to two and a half billion people around the world who don't have X goes to the current banking system These people are unbanked or underbanked because As of where they live and the reality that they've been born in Too however today with a mobile phone and at a click of a button they can start trading using Bitcoin No permission needed today There are several merchants online and offline that accept Bitcoin you can order a flight or book A hotel with Bitcoin if you like there are even Bitcoin debit cards that allow you to pay at almost any store With your Bitcoin balance however the road to acceptance by the majority of the public is still alive As we continue in this video series We will break down exactly how Bitcoin works and how to use it we We'll learn about Bitcoin mining Bitcoin wallets How to Buy Bitcoins and more More the revolution of money began in two 1009 And these days we are seeing it change money.
.png)
.png)
