we're not guys baby Gabe Ekemezie here and welcome to my channel what is
cryptocurrency why's everybody like up and about about this kind of stuff if
you are a beginner and you have no idea what's going on in this space I'm gonna
help you understand what's going on so you could have the knowledge that you
need in order to figure out what you want to do and whether you want to be a
part of this or not so in this video what we're going to be covering is the
very basic question which is what the heck is cryptocurrency in the first
place why is cryptocurrency this global phenomena that has people rushed into it
and arose and uh half of them don't even understand themselves what's going on
now my goal by the end of this video is to break it down so well that you're
gonna understand it without a doubt so let me know in the comment section after
this video how I did let's jump right into it if you were to google
cryptocurrency right now on Google what would you find on Google it pulls up a
definition that sounds something like this
cryptocurrency is a digital currency in which encryption techniques are used to
regulate the generation of units of currency and verify the transfer of
funds operating independently of a central bank what what does that even
mean the way my friend you're in the right place if that sounded like
gibberish let's break this stuff down so I wanted to properly define what could
go crises let's take it back way back to when it was first created by a guy named
Satoshi Nakamoto that's atashi when he first created cryptocurrency and he kind
of did it by accident he actually released a PSA basically saying hey I
created a peer-to-peer electronic cash sharing system so what does that mean
well it means basically what it sounds like peer-to-peer meaning that he
created some kind of system where a person could share money with somebody
and you don't have to go through a middleman or some other organization or
agency in order to do that so for example if you wanted to send money to
your friend or if you're in that area like me and you need to send money back
home to your family and relatives instead of having to wire money and go
through Western Union or go through some kind of Bank or go through these
third-party apps like PayPal and all that kind of stuff you can literally
just send the money directly to them which actually sounds pretty good but
most importantly what Stassi did was he created
a decentralized caste system okay so what does decentralized mean so
essential eyes system is basically what you're used to in the centralized system
there's basically a entity that helps to regulate and make sure everything is
going smoothly and to plan and we'll say for this example banks or a centralized
system let's say for example you want to give me 50 bucks thank you very much and
a centralized system or a bank what you would do is you would take that money
from your account and send it to me and it would be approved and the centralized
system is able to keep track of what's going on they're able to see that you
had 50 books and then now you gave me 50 bucks so now my account is 50 bucks
richer you're 50 bucks pour the transaction
went through and everybody's happy and we go our separate ways a centralized
system can also regulate in the sense that say I had a hundred dollars in my
account and I wanted to take that to go buy some shoes and those shoes cost a
hundred dollars so once I purchase those shoes that cost $100 the centralized
system tells me hey you now have zero dollars in your account good job you're
broke as well but in a decentralized system it's decentralized so there's no
governing entity that's there to really regulate and make sure everything is
going as planned and that's what's actually created now I know it kind of
sounds like why would we want to do that that kind of sounds very chaotic but
here we go I'm gonna explain just a second see the problem that needs to be
solved with this new decentralized frontier was how do you regulate people
who don't have anybody regulating them right and one of the major problems is
how do you stop from double spending meaning let's take that example of me
having a hundred dollars and wanting to buy some shoes when I purchased those
shoes in a centralized system the bank for example it tells me that I now have
$0 but in a decentralized position there's nobody there to tell me that I
have zero books in fact there's no one there to really tell me I even spent the
money so I can buy the hundred dollar shoes and they say no I didn't spend a
bunch of dollars and I'll just go buy some more shoes and buy some more
stuffing and really there's no law and order to the whole thing in the same
sense how do you regulate transactions between us like say for example I want
to give you 50 bucks you're welcome but an essential
system when I give you the 50 bucks the transaction is approved there's a
history of activity there's - 50 bucks in my account 50 plus on your account
everyone goes away happy but in a decentralized system I could just give
you 25 bucks and say I give you the 50 bucks and there's nothing you can really
do about it like waiting that I do to come to my house and beat me up for the
other 25 no you can't cuz you don't know where I live you see where this see what
the problem isn't this like that's why it's kind of like the wild wild west out
here so how do you solve this problem this this is all sounding bad like very
bad so in a centralized system where the bank is kind of like judge and jury and
a decentralized system we as the peers or the members do that job and how that
works is in a decentralized system everybody knows everything all
transactions all accounts it's common knowledge and it's out in the open so
everybody in this decentralized system can see transactions and see future
transactions and can really keep a count of everything going on because
everything is out in the open because there's no one thing that keeps all that
information but the problem with that is if me and you are supposed to be the
ones regulating me and you that's probably not good either
because how do you keep somebody from cheating the system or how do you keep a
law in order because if one person disagrees on a transaction like the
earlier example when I said I was gonna give you $50 but I only gave you 25 the
whole system will collapse on itself because there's no entity that really
step in and say no I was wrong like with other 50 bucks or not even let the
transaction go in the first place because I don't have to be bucks to give
you so the question is how do you keep a consensus of people or pierced honest in
a system where there is no central authority some dumber and everybody
that's what's the Tosti discovered and actually fixed with cryptocurrency okay
awesome so what is cryptocurrency now hold on we're getting that we're getting
there before I can break down what exactly cryptocurrency is we have to
actually break down the terms crypto and currency and trust me I'm doing this for
you because like we're beginners here I'm not stalling I just need to break
this down so you can over understand this and I want you to get
this so let's start with what exactly is currency so when you boil it down to its
pure essence of what currency really is to the very bottom of the pot all
currency really is is limited entries in a database that can't be changed unless
certain requirements or specific conditions are met and I know that
didn't make any sense so let me explain so the three main components when it
comes to currency accounts balances in databases and to break this down let's
talk in the centralize world so you kind of understand what I'm saying for us
before we bring it to the digital crypto world right so if you have a bank
account or even if you don't we have a couple of things in common we have
accounts we have balances and we have a database think about the money in your
bank account right now whatever it is all that is is a bunch of numbers right
there just entry points entry points in a database my bank is a database that
holds my account and my account holds my bound just like your bank if that one
has your account as well as your balance now when you think about the money in
your account what is that really all that is is just a bunch of numbers right
and you just hope that number grows every day all those numbers are entries
in a database or a numbers in a bank that can only be changed when certain
specific conditions are met meaning your number and your bank account is only
gonna change unless you ask for withdrawal deposit some money have some
money sent to you or get charged overdraft fees by the bank cuz you're
broken you just you don't have that right now trust me mine Stan we've all
been there and that's it when you boil it dances very basic they're just entry
points in the database that can only be changed when certain specific conditions
are met so you can't have $100 in your account and then one day wake up and
have $10,000 in your account if you didn't deposit nine thousand nine
hundred dollars in there because it doesn't meet the specific requirements
your bank account will stay the same hopefully if you decide to do nothing
with it so all money is or currency is verified entry into a database
it's permission enter your bank account let's make this
even more simple take my wallet for example my wallet or my database has
accounts either my credit cards debit card or cash and these are just entries
in my database and the only way my entries are gonna change are if specific
conditions are met those conditions being I take out a dollar and give it to
you you give me a dollar I find a dollar on the floor and put it in here and now
the entries in my account in my database have changed and that's all currency
really is now when we come to the digital world that's all digital
currency really is they're just limited entries in a database that can only be
changed by specific conditions now granted it's not physical cash that's
why it's digital currency but the same principles apply I hope that makes sense
I hope haven't lost you yet and if I have pause then go back a couple minutes
and hopefully it makes sense now that we understand what currency is and in a
centralized system of bank is the one that kind of regulates this stuff and
make sure everything is going okay and working the way it's supposed to who
plays Bank in the decentralized market well we've already agreed that if me and
you are supposed to play Bank huh yeah that's that's funny right like that's
not gonna happen I'd love to have more faith in people but not so back to this
problem of how do we regulate this decentralized system well like I
mentioned before città she figured this out by using cryptocurrency so the
answer to who plays Bank in this decentralized cryptocurrency
digital world is us the peers and crypto both crypto and the peer network both
together help to regulate the decentralized system so now that we
would find what currency is let's move a few letters to the left and figure out
what crypto really means but before I can do that I have to explain how
cryptocurrency is actually made cryptocurrency is made from a process
called mining now for all you crypto gurus and pros that are out there that
might be watching this video just heads up I'm gonna dumb this down a lot so
don't be in my comments like oh like I'm just trying to make a point so
you can understand this conceptually right anyways so crypto currency like
Bitcoin is made within the peer-to-peer networks from a process called mining
and for this video we're just gonna take Bitcoin for
example but there's a bunch of other coins out there I'll get more into that
later every pier has a record of all completed
transactions since the dawn of the beginning of the coin to present moment
so let me use a similar example that I used earlier but in the digital world so
let's say I want to give you 50 bucks once again you're welcome so what I
would do with this cryptocurrency is say hey I want to give you 50 bucks so what
that is is a transaction right a going to be what happens is with that
transaction and I sign with my electronic signature and it's sent to
you the transaction is now broadcasted throughout the network because remember
within this decentralized system everybody knows about all the
transactions and all that kind of stuff so it's sent out through the network but
it's pending okay now when a transaction is pending all things can happen to it
people can mess with it because it's not complete yet it hasn't been solidified
yet in fact this transaction does not happen until it's absolutely confirmed
when it's confirmed it's locked tight it's sealed it's irreversible it's a
done deal you get the 50 bucks I sent you I can't
refund or ask for it back unless you want to send it back like it's complete
so in a way you can say crypto is all about confirmation because once I say I
want to give you 50 bucks of digital cash and I sign in with my digital
signature and it goes out to the whole network saying hey gais wants to give
you 50 bucks of this guy or gal it's still pending and the only way it can be
confirmed is by miners miners or people who do mining as in crypto mining or the
only people who can confirm transactions and basically they walk around with a
big stamp in their hand and they stamp and approve transaction and once a miner
approves a transaction they are rewarded with a token or a cryptocurrency which
in this case bitcoins so remember only miners can't
transactions and transactions don't mean diddly squat unless they're confirmed
all - do their job is to just confirm transactions and anytime they confirm a
transaction they get a Bitcoin their job is to take a transaction step their
approval on it and let the network know now once a transaction like me and you
decided to give or take money is confirmed that transaction becomes a
block link to this block as like indestructible it's it's done it's
written that stone transaction is approved it's completely can't be
reversed and that block is now added to the block change now if you don't know
what a blockchain is I'm just giving you a very general definition just for the
purposes of this video but all the blockchain is is a history of
transactions that people have made with this point because remember how I said
everyone in this decentralized network has access to all the transactions well
think about all these transactions all connected to each other and they form a
chain a blockchain and anytime that transaction is confirmed by a miner that
transaction becomes another block added to the blockchain so it's basically a
history of the lifespan of the coin as well as the activity that's happened
with that coin amongst the peers within the network so everybody's after the
Bitcoin and miners get rewarded Bitcoin just by approving transactions then I
mean why can't me and you become a miner and all honesty you can in fact anybody
can be your miner because see in this decentralized world there's no governing
authority that says you there are gonna be a modern you they're just gonna be
the people who trade and collect and spend the Bitcoin this there's no you
know building printing out dollar bills in us and establishing it throughout the
society it's it's kind of like everyone doing their thing it's decentralized
there's nobody really governing anything except us governing ourselves the only
problem with being miners that's really hard and really expensive and is this
it's a lot of work in that sense everybody can be a miner if they really
wanted to in theory so what's atashi the creative bitcoin
decided to do was he decided to set some rules and the rule was if you want to be
a miner and for Bitcoin meaning that if you want to
be a miner who approves transactions and as a result and reward earned a certain
amount of Bitcoin then you have to invest some computer power a lot of
computer power and once again dumbing this down a lot if you want a mind for
Bitcoin you're gonna have to invest a lot of computer power and play a game
now this game is a very algorithmic intense game that basically only
computers can figure out and the whole purpose of this game is to find
something it's think of it as like a key this kind of reminds me of that movie
ready player one if you if you watched it you know what I'm talking about if
you don't just ignore that but sitaji created this computer game basically
saying if you can find this key which is called a hash then you can approve
transactions and if you approve a transaction you get a Bitcoin I don't
know all the details about the game or the algorithm or all that kind of stuff
all know is that it's very hard it's very mathematical the game is a crypto
logic puzzle that miners compete the salt and anytime this puzzle is solved
it gets harder and harder and harder so you need more and more computer power so
you basically need these huge servers like there are literally buildings out
there of just computers hooked up to wires and servers that are so noisy and
all these computers are doing this a menteng a massive amount of energy to
play this game to find these keys to be able to confirm transactions to add to
this blockchain to be rewarded a Bitcoin or whatever cryptocurrency that they're
mining for at the time have I lost you yet I hope not
but if I did I understand go back and watch it again this is the only way to
create valid Bitcoin the only way is by playing this Cryptologic game that's a
lot of computer power now you can always buy for somebody else or you can always
trade bitcoins but to create them this is the only way to do it is by playing
Satoshi's game with a lot of computer power completing the missions basically
so the tie this all up in one big finale the heck is cryptocurrency remember my
definition of currency that just entries in a database that can only be changed
if certain parameters are met like the dollar bill in my wallet
basically cryptocurrency are entries in a decentralized peer-to-peer database
where the governing banking power of this decentralized system is very secure
strong cryptography crypto currencies are built on cryptography they're not
built by people or they're not made by trust they're made by hard solid cold
calculated math and that's it really hard algorithmic math that can only be
solved by supercomputers and you have a greater chance of having an asteroid
come from space and smash on your house blowing into a thousand pieces than
having somebody find a Bitcoin address and compromising it based off of this
cryptological game that miners have to play in order to get approved bitcoins
after approving transactions whoo that's a mouthful Wow and it doesn't
stop there I mean the rapaho just goes deeper and we'll be talking about this
in other videos like there different types of crypto currencies there's
Bitcoin man aetherium and litecoin and ripple and there's thousands of them out
there basically by now and the whole thing about this cryptocurrency like
which one is the best which one should I invest in all that
kind of stuff which we'll be talking about later videos the thing is these
cryptocurrencies have different properties and different components that
they all run on think of it like credit card rewards programs right like you
know there's some credit cards that they'll give you 2% cash back or 5% cash
back at certain restaurants and other credit cards give you travel points or
or miles there's a bunch of different credit card companies each have
different perks and you just pick one that you kind of like the best would be
the one you're gonna take more advantage of same thing kind of goes for all these
coins they all have different properties and they all have different benefits
then they all have different stuff that people believe in and people want to see
more of our people like and they that why they want to invest in that because
they're investing in the technology and the benefits that that cryptocurrency
is backing but we won't get to all that right now all right that's basically it
but here's a final thought just to have you think about this whole Bitcoin
decentralized thing and you know what's the big deal if you really think about
it cryptocurrency is more accurate and more currency than the stuff that we
have in our bank account because think about it think about the money in your
bank account oh that is our numbers in an account but these numbers in your
account are in a database that's controlled by people you don't know
never seen before that are controlled by rules that you may not even know that
could possibly change at any time you know and don't get me wrong I'm not
saying you know bring down the banks and all this kind of stuff like obviously
they're there for a reason but just to help you think about these things with
Bitcoin and crypto cars Ian what's becoming of this whole decentralized
thing we are the peers are the people of that kind of control of everything but
that's the guys thank you so much for watching I hope this video is helpful I
hope it gave you some insight on what cryptocurrency really is breaking down
some of the history and really kind of just helping you tie it all together so
hopefully you kind of understand it in a better way and hey if you don't
understand it still can't get it go back we watch this video but do me a favor
before you go out and do whatever else do you about to do here now if you like
this video give me a like it'll help my channel grow I really appreciate that
and also don't forget to leave a comment down below let me know what your
thoughts in the video was I might have missed something that was important or
not I don't know but leave it down in the comment section below let me know
share this video with other people people that are in the crypto space
people that you know maybe you want to get people into crypto space and you
need a video to help them understand it send them this video and finally don't
forget to subscribe to my channel where I'll be bringing you more tips go back
to the beginning of this video listen to that definition again and see if it
makes it look more sense I hope it does once again
guys my name is Gabe Ekemezie thank you for watching and I'll catch you on the
next video
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