Today we’re going to answer the burning question that everyone has on the internet right now! What is Bitcoin? Where did it come from? How does it work? Is it a scam? And is it worth buying or is it just silly internet money only used by criminals?? Ok, let's get into it today!! Learning Bitcoin is simple.
Let's start by understanding what Bitcoin is and the differences it has to other currencies. If we compare normal money like the Indonesian Rupiah or the American or Australian Dollar, we know that these currencies are created and backed by a country, a government, and its central bank. Used by its citizens inside its borders and has an unlimited supply… meaning that more of this money can be printed or created at any time. Which causes inflation. This is what makes Bitcoin different. Bitcoin has a limited supply of 21 million… that's it. Never more to be created, making it more scarce than Rupiah or Dollars. And it's not attached to one specific country, government or central bank. Meaning it’s not controlled by anyone and can't be stopped by anyone. The limited supply of 21 million, that's it forever. But I know what you're thinking. "How is this so and how does it work?" What do you mean 'it can't be stopped'? Well, to understand this we need to focus on where bitcoin came from, and what is the technology that powers it.
That technology is called ‘Blockchain’. Bitcoin was first created 12 years ago from a person called ‘Satoshi Nakamoto’. We don't know who this mystery person or persons are, whether it's an individual or a group of people. Because once the process was started and bitcoin was established, they disappeared. And we still don't know the true identity of Satoshi to this day. What Satoshi (whoever they are) created though… has changed the history of the earth and the internet forever. Satoshi used the concepts by a few earlier internet cash pioneers, but make it work by investing the technology which he/they called ‘The Blockchain’ So, what is the Blockchain? The Blockchain is often sometimes referred to as a distributed ledger. Distributed because everyone has access to it.. and ledger because it's the way that the accounting of Bitcoin takes place. Those with an accounting background must be familiar with this jargon of 'ledger'. If we use a bank as an example. Millions of people can hold bank accounts at any certain bank. They all have individual accounts and their money and the ledger of those accounts are held by the bank.
Often with only the bank having access to it. For the bank to be ‘hacked’ someone would need to get access to that bank's internal servers and change their ledger. If you wanted to send money to someone else, you consequently inform the bank. The bank makes the change and credits someone else's account and deducts that money from your account. If you withdraw money from an account, the bank gives you cash from their reserves and minus the amount from your account.
This is where Bitcoin and ‘The Blockchain’ are totally different, compared to the common currencies. A Blockchain is exactly as its name. It's a chain of blocks all linked together. These blocks contain information or transactions. They're time stamped and verified by a type of math called Cryptography. This works a little bit like a notary, verifying their position and time in the block. Then that block is linked in a chain with all the previous blocks of information and transactions… and will stay in its place and be attached to all future blocks containing their transactions and information. The information contained in the Blockchain is unchangeable and incorruptible. Once it is there, that's it. That transaction is there forever. Now what makes this Blockchain unique is that it’s not all saved and stored in one location, but rather the Bitcoin Blockchain is housed on millions and millions of computers all over the world.
These people storing and adding blocks on the Blockchain are called ‘miners’. They're paid a small fee of Bitcoin for providing the power and processing power of the Blockchain, with their computers. This gets a little bit technical, so we will make a whole video on Bitcoin Mining in the future. So, because this Blockchain of information is being stored on millions of different computers all over the world… when a new transaction or piece of information is added to a block, the system talks to all the other computers running the Bitcoin Blockchain. When enough of them have recorded the transaction, then it is locked in place and the entire network is updated that that transaction took place. This process normally takes around 10 minutes. So, if I wanted to send 1BTC to my friend the transaction would be recorded and then shared with many other computers all over the world.
And then 10 minutes later that Bitcoin would appear in my friend's Bitcoin wallet. This is why Bitcoin is so amazing. You don't need a bank or middle man like BRI, BCA, or PayPal to process the transaction. The network is un-hackable and incorruptible, because for someone to ‘hack’ Bitcoin, they would need to have access to more than 51% of all the computers in the world.. which are running the Bitcoin Blockchain. So essentially impossible. Making Bitcoin the most safe and reliable way to send any valuable transaction information. Now the price of Bitcoin has risen sharply over the years and has had many boom and bust cycles. The first ever transaction that took place was a man in May 2010, who paid for 2 pizzas using 10,000 Bitcoin. Which at the time of this recording, it is now worth over $140 million US Dollars! Eye Watering…
To think of spending that amount of money just to get 2 pizzas. Now, because the price of Bitcoin is now so high you might be thinking you have missed the opportunity to buy one. This is where you are mistaken. Each Bitcoin can be divided up into 8 decimal places. (or 8 digit number after the comma) So, you can essentially hold 0 . 0 0 0 0 0 0 0 1 of a Bitcoin. This small fraction of a Bitcoin is called a ‘Sat’, named after the mysterious founder Satoshi. Now, while we can’t give out financial advice here at Republik Rupiah, as we are not your financial advisor.
But we can share educational information. If you look at the price of Bitcoin, it has continued to rise and rise. Always recovering from its boom and bust cycles. We have only scratched the surface of its adoption worldwide. And now with the pandemic in 2020, you can see that people are losing faith in their domestic currencies… as they lose power because of inflation and mass money printing. Bitcoin has held firm and has even been institutionally adopted as legitimate payment options.. by many banks out there and even PayPal. Imagine what would happen if even 10% of the earth's 7 billion population wanted to try and hold some of the 21 million Bitcoin. The price could still go much much higher, possibly making it one of the best investment opportunities of a lifetime, as this new form of digital money starts to become more adopted. And who knows, eventually may take over as the preferred method of online payments or store of value. A little bit like a digital gold. Well, now over to you. What do you think? Have you already bought Bitcoin? Do you think it will catch on more mainstream than what it has already? We will be constantly updating more videos about the best ways to buy, hold, and use Bitcoin and other Cryptocurrencies.
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