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Bitcoin for newcomers

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Posted June 10, 2014

This video is for Bitcoin beginners. It is a story, covering the failures and difficulties of creating a digital currency.

“The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve,” said Satoshi Nakamoto, the creator of Bitcoin, in February 2009.

Instead of one central party controlling the ledger, every user on the Bitcoin network is recruited to maintain an instantly updated copy of the ledger. This is a block chain – public record of Bitcoin transactions in chronological order. Any Bitcoin transactions with even one comma not agreeing with the masses would be discarded, leaving fraudsters powerless. It is used to prevent double spending (if a malicious user tries to spend their bitcoins to two different recipients at the same time). Bitcoin mining and the block chain are there to create a consensus on the network about which of the two transactions will confirm and be considered valid.

Bitcoin mining is the process of making mathematical calculations for the Bitcoin network to confirm transactions and increase security. As a reward for their services, Bitcoin miners collect fees for the transactions they confirm. A Short video to illustrate this:

 

Sources: Wikipedia, Bitcoin.org, Youtube

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