Bitcoin: What is it?발음듣기
Bitcoin: What is it?
But what I wanted to do in this video is talk about what a bitcoin is in more general terms and what differentiating characteristics they have compared to other approaches.발음듣기
By electronic payment system, I mean it's just a vehicle, a conduit, by which two parties can transact over the internet.발음듣기
And this may be because she owes Bob money, or maybe Bob is a merchant and Alice is buying something from Bob.발음듣기
So there could be many reasons why Alice is trying to pay Bob over the internet in some capacity.발음듣기
Now, if Bob is willing to accept bitcoins, which are a form of electronic payments, then Alice can go ahead and send Bob some value in bitcoins.발음듣기
And really, a bitcoin transaction between Alice and Bob amounts to a specially constructed sequence of numbers that Alice will basically send over to Bob.발음듣기
They make it hard for someone to really defraud the system or to conduct some type of nefarious action on the system.발음듣기
And the way that Alice is actually going to conduct this transaction in practice is either by installing a special piece of software, which we call a bitcoin client, or she can work with a third-party service that can handle these mechanics for her.발음듣기
But in either case, either the client or the service is going to generate these numbers for Alice.발음듣기
And on the flip side, Bob will also typically either have a piece of software installed or he'll use a third-party service that will take these numbers and allow him to do something else with those numbers.발음듣기
For example, Bob can in turn buy something on his own with those numbers, or he can trade those numbers in for real money and so on and so forth.발음듣기
Now, one of the first questions you might have - and I kind of alluded to this earlier - is why would Bob even want to accept bitcoins in the first place?발음듣기
There are also bitcoin exchanges, places where you can go and exchange bitcoins for more mainstream currencies.발음듣기
Now the current price of a bitcoin, the current value of a bitcoin in US dollars as of this video, is approximately US 100. per bitcoin.발음듣기
But as people understand the currency better, the hope is that that fluctuation will decrease.발음듣기
But I think ultimately, the thing to keep in mind is that the value of a bitcoin is going to be derived from the faith that you have in the value of what you can procure with that bitcoin.발음듣기
Now another question you might have is why do people even bother with bitcoins in the first place.발음듣기
Why not use one of these other approaches that are more well understood, that are more mainstream, that are more established?발음듣기
It turns out that within the bitcoin ecosystem, within the bitcoin network, people can transact without divulging who they are in the real world.발음듣기
From the perspective of bitcoin, Alice's identity is just going to be a sequence of numbers.발음듣기
And this is kind of but not quite like what you would get if you bought something using cash.발음듣기
In that capacity, when you buy something using cash, then you don't have to provide any details or proof regarding who you are in the real world.발음듣기
And that's different from, let's say, using a credit card, where you have to provide your name and your billing address and so on.발음듣기
Or let's say providing an electronic check, where you need to tie that electronic check, typically your bank account details.발음듣기
Now, I do want to also mention here that sometimes when you have a cash list or a transaction that uses cash, there is now the possibility that people might try to use these transactions for malicious purposes to buy illicit goods and services.발음듣기
But there are certainly legitimate reasons why somebody might want to conduct a transaction privately and not have the whole world know what they're transacting.발음듣기
And all you need to do to get started is, as I alluded to earlier, is download this special bitcoin client.발음듣기
But the short of it is that anyone who has a bitcoin client or who has an account with an exchange like Mt.발음듣기
All the user has to worry about - all Alice needs to worry about - is how much money she has and whether she can give that money to Bob.발음듣기
The actual software underneath will take care of all the underlying mechanics of making that transaction work.발음듣기
When you think about a traditional currency like a dollar, if I want to transact something online, typically I need a bank account, I need a credit card, and so on and so forth.발음듣기
Then we often take it for granted that there are people out there who may not have access to a credit card, who may not have a bank account.발음듣기
For example, in the United States alone it turns out - and I just looked this up - the number of households without a bank account, I read it, is somewhere north of about 8%.발음듣기
There are a lot of people out there who wouldn't be able to conduct a traditional internet transaction, but who can conduct a transaction using bitcoin.발음듣기
And literally it doesn't matter where you are in the world, as long as you have an internet connection, you can start transacting bitcoins.발음듣기
There's no bank or centralized entity that can really control what's happening in the bitcoin ecosystem.발음듣기
And what that means is that when you do a transact - or when Alice transacts with Bob over the internet, that transaction doesn't have to go through a third party.발음듣기
For example, that means that no one entity can directly control the money supply of bitcoins.발음듣기
Or for that matter, no one entity can reverse a transaction, which is definitely desirable for certain merchants.발음듣기
And if you have a system where the transactions cannot be charged back easily, then from the merchant's perspective, they may be able to inhibit fraud and thereby that might enable their business entirely online.발음듣기
Now I want to point out that this last property of decentralization definitely causes concern among some people or not in bitcoin after all.발음듣기
When you think about it, a central authority like a bank does perform an important function in the context of a traditional currency.발음듣기
Now, in bitcoin, this validation is basically done in a decentralized way by the other parties, the other nodes, in the bitcoin network.발음듣기
Now, the goal of the remaining videos in this series is to walk through the underlying mechanics of bitcoin transactions and really how they're validated, even though the system is decentralized.발음듣기
So I suspect that at this point, you may have a ton of questions about bitcoin, and that's entirely to be expected.발음듣기
And I think it's critical when you're trying to understand something as complex and wrap your head around something as sophisticated as bitcoin, it's important to get exposed to all the parts first so that you can ultimately get a flavor for how they fit together.발음듣기
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