In today's video we're going to look at a topic deal with what many of you have wished for. Namely the subject of Bitcoin. We'll look at what Bitcoins are, how they are work a bit, what the technical implementation looks like, what the advantages and disadvantages of Bitcoins are and at the end we will look at each other whether it is worth investing in bitcoins or not. Have fun with this video. Hi, my name is Thomas von Finanzfluss and today we will meet deal with the topic of Bitcoin. In the past few years and especially in the past few months you know a lot about Bitcoin or hear crypto currencies.
Also There are now many other crypto currencies such as Ethereum, Ripple or Dash. Today we are going to take a look at the mother of all crypto currencies, namely Bitcoin. So let's start right away with the question: What is Bitcoin anyway. Even if Bitcoin has just been in the last two to three years The concept was much older than that in the media. In 2008, the first concept paper by the founder of Bitcoin, Satoshi Nakamoto, was published To date, the real founder is not known, as this name is a pseudonym, that the founder used on various forums. His true identity is not known. The Bitcoin is a digital monetary unit in one, worldwide decentralized payment system. Since it is a unit of money, you can pay with the Bitcoin. That means Bitcoins can be transferred from one person to another. The whole thing happens peer-to-peer from person to person without banks or other financial intermediaries standing in between, as is the case in our classic payment system Euro, dollar and pound sterling is the case This brings us to the features and functionality of bitcoin.
Bitcoins are stored in so-called wallets. They are digital Wallets that you can either have on your smartphone or download on your PC. Unlike the classic monetary system where your money is in a bank in a current account these wallets belong to you. That means they will also be with you on your PC or stored on your smartphone, which also means, conversely, that no one can lock these wallets. Your checking account can for example be blocked by the bank or a government, which is not the case with a wallet.
Also other restrictions, for example from your bank for safety reasons, for example can get imposed such as transfer limits, maximum amount of transactions. There are no such restrictions with the Bitcoin Wallet, since you yourself are masters of this purse. Another point with regard to the restriction also applies of course to the geographical restriction. While it is difficult, for example, or with a lot There is a high cost involved in transferring money to the other side of the world let's say for example to Africa or to Australia no problem with Bitcoin.
You can go from anywhere in the world if you have one there Internet connection have access to your wallet and money on any wallet anywhere in the world transfer. The programming code of the Bitcoin protocol is open source. That means Anyone can get it for free take a look and form your own opinion about how bitcoins work and whether it is a safe technology in his eyes. Of course, a certain technical understanding is required here.
In this open source protocol one can also read that the number of bitcoins total around the world is limited to 21 million. We'll look at the next step look at how these bitcoins are created. This development process is capped at 21 million. In this point Bitcoin differs from classic so-called fiat currencies such as the euro, the US dollar or the Japanese yen. This can be printed by any central bank and there is no upper limit. As I said, it is different with Bitcoin. Let us now come to the technical implementation, in order to understand how exactly such Transactions from one to the other Bitcoin owners take place and how Bitcoins are created. First of all, we have to look at the so-called miners, namely for the creation of the bitcoins and also responsible for the validation of the transactions. This is because miners are members of the decentralized network. You are responsible for it Validate transactions in bitcoins. That actually means confirming that a Bitcoin transaction from wallet A to wallet B. has taken place. Various Bitcoin transactions are accumulating all over the world in different blocks.
This is where the term blockchain comes from. To the security of this transaction, which are now in the blocks ensure these blocks in quotes must be cracked. To do this, very complicated arithmetic tasks have to be solved in order to quasi decode this block. First when the block is cracked, these transactions are released and the money was actually transferred from person A to person B. The task of cracking these blocks is now up to the miners. There are always many miners working at the same time to break a block. But only one person ever manages to do this and that person then receives for its work for the computing power that it makes available to the network is a monetary reward. And here we are already in the development process of bitcoins.
Out of the 21 million Bitcoins contained in the Bitcoin protocol will then a part, as it were, drained and credited to him. So you see that this decentralized network is carried by the miners, who then these Validate transactions between Bitcoin holders. It is therefore called decentralized, because theoretically everyone is a bitcoin miner can work and then make its computing power available to the entire network. Receives as a reward for it then you get bitcoins every time you crack a block. Cracking these blocks becomes more and more difficult over time and the So payout is the reward for the miner gets smaller and smaller until the 21 million are reached. The miners still have a possible second source of income namely the so-called Transaction fees.
So they are not only dependent on cracking the blocks, but can also be preferred transactions perform, with which you give a small tip. Another technical aspect that we need to discuss is the so-called ledger. It is namely the case that all transactions that have ever taken place in the Bitcoin network are stored. These transactions are stored in the so-called ledger, which is roughly referred to as a payment book in German could translate.
All transactions are listed here with their amount and wallet number. That means in this ledger we will see that a person A is with a certain wallet number an amount in Bitcoin to person B or has transferred his wallet number. All transactions can be recorded in this ledger understand, but it is not known who made these transactions, because, as I said, only the wallet number is represented and one is not can see who owns which wallet. When creating a wallet you have to you do not give your name or address. Payment with Bitcoin is in other words, just as anonymously as with cash. Today there are ways to find out who owns which wallet, the basic idea behind Bitcoin but is still that of anonymous payment. Finally, on the technical part, you have to say, of course, that it is absolutely not easy to understand how it all works with Bitcoin.
We also had our difficulties there to work out the technical subtleties and I hope that in this video we will explain the basic idea behind the technical realization of Bitcoin could map approximately. Now let's take a look at the pros and cons of bitcoin. One of the advantages of Bitcoin, which is why it is among other things were also launched that it was minor Transaction fees there. Especially when it comes to transactions this is also still the case across national borders. For example, when you transfer money from one country to another want to send in different Currencies can get very expensive. With the help of Bitcoins, the transaction costs extremely reduced become. Bitcoin also has the advantage that you can access it from anywhere the world can use as soon as an internet connection is available. Then another benefit is of course the decentralization. That means that you no longer rely on a third party is dependent, but that the transaction actually take place in the network and can also be saved in the network. The whole concept is on Established transparency. That means you can just do it Understand when which transaction took place and to what extent and at the same time that remains Privacy protected because the Bitcoin wallets are known but cannot be directly traced to whom which wallet belongs and is therefore not publicly known who does which transactions in which Amount at what time.
In addition, the payment with Bitcoins takes place completely without restrictions So can transfer at any time no matter what amount and no matter who. Now we come to the disadvantages of Bitcoins and they actually work with them Restrictions that are not there at the moment. Especially in the early years of Bitcoin, he did had a somewhat dirty reputation as it was mainly used in the so-called dark web and for illegal transactions were used. For example, drugs were bought with Human trafficking and so on. Especially the fact that you cannot understand who is doing a transaction started cyber crime on the Internet greatly relieved. Tax evasion and money laundering also fall into the illegal area, which were also made much easier by Bitcoin. Another disadvantage of Bitcoin is that it has significant price fluctuations and this is mainly due to that there are very many speculators in the market. Hence, it is not yet available as a payment system fully mature. Another disadvantage is that storing bitcoins can be very complicated and some technical understanding required. In addition, the security of your own Bitcoin wallet is in your hands.
That means every Bitcoin user has to take care of the security of his wallet himself, encrypt these and keep them as safe as possible. In conclusion, it can also be said that not yet so many shops or service providers accept bitcoins. For this reason, it is not yet very mature as an everyday payment system. Finally, let's think about whether it makes sense in such a technology, like investing in Bitcoin or other crypto currencies. In theory, this is relatively easy to do. Bitcoin is traded on so-called Bitcoin exchanges. Here the course is then set between one Bitcoin and a fiat currency such as the US dollar or the euro. You can then use this exchange to pay in euros, for example, and then transfer Bitcoins to your wallet get transferred.
Not all exchanges meet high security standards or are serious. The link to a reputable exchange, You can find where you can watch the whole thing in the video description below. In our opinion, investing in Bitcoins is not worthwhile as a long-term investment. It is of course a super interesting technology that can very well change entire industries. But it can also be too technical Difficulties, major hacks come and the Bitcoin will be worth nothing in a few years.
If you still want to rely on the technology, then you can use Bitcoins on such Bitcoin exchanges stock up. But be aware that it is pure speculation and not a long-term asset accumulation. If you want to invest money in it, you should definitely do it with money, which you don't need or if you would lose it where that wouldn't be bad.
How As already mentioned, there are many speculators on the market and Bitcoin in particular is extremely volatile. This means that there can be extreme price jumps but also price falls. You should definitely be aware of this and keep your emotions under control. I hope you enjoyed this video about the crypto currency Bitcoin. I know that it is not very easy to understand, so we look forward to your questions. Let us know in the comments below and if you want we will be happy to produce more videos on the topics for you Crypto currencies. Feel free to tell us what other questions you have in the area of bitcoins, if you would have liked to have introduced other crypto currencies and yes, if you liked the video, please like it and if you haven't subscribed to us yet, please do so. We would be glad. We produce every week new videos and tutorials on the following topics: financial products, investments and investment strategy so that you can have your finances under control yourself.
Thank you and see you next video..