Bitcoin has been around for almost a decade, but it’s no longer this weird, obscure concept
that only excites nerds.
Nope, it’s now this weird, obscure investment. And now it is making some people filthy rich.
So everybody wants in.
So sit back, relax, and I'll answer five of the most googled questions about Bitcoin
in under 5 minutes.
Seriously, time me.
Okay, that one’s easy.
Bitcoin is a decentralized, peer-to-peer digital currency backed by cryptography that bypasses
governments, central banks and other third-parties to facilitate transactions.
Next?
Okay, so that probably made no sense.
Let’s break it down.
Bitcoin was originally designed as a digital currency, and how it functions is what makes
it so unique.
Every time a bitcoin is bought or sold, that transaction is verified and recorded on a
public ledger of sorts called the “blockchain”.
Think of it as a list of every bitcoin transaction ever made, for all time.
All of that blockchain data is stored on a network of bitcoin users around
the world.
Each individual user has a copy.
It updates automatically, it can’t be deleted or altered.
So it's really hard to cheat the system.
And because it’s stored on a network, no single government, central bank or company
really own or control Bitcoin.
That’s why people say it’s decentralized.
It is also supposed to be anonymous, and that was a big part of the appeal originally,
but for all the wrong reasons.
People were using it to buy drugs, guns and other illicit things online.
Now law enforcement have better tools to track Bitcoin.
So if you started googling this in hopes of financing criminal activities—sorry, this isn't that video.
Let’s step back.
Mining is the term for creating Bitcoin.
Remember how I said every transaction is verified and added to the blockchain?
That whole process, which involves a lot of computational number-crunching, is what’s
called mining.
And miners are really just people using special hardware and software to crunch those numbers.
In return for that work, miners are paid with, surprise, entirely new bitcoin.
You used to be able to mine with just your desktop computer.
But not any more.
Now only the first miner to process a block of transactions is paid with new Bitcoin, so
miners are in constant competition and
to win, they need the fastest mining rig with the most computing power.
There are companies now that
operate huge warehouses packed with mining hardware
and they do nothing but mine around the clock.
So, your desktop, it doesn’t really stand a chance.
All of that computing power eats up a massive amount of electricity, too.
It’s been estimated that Bitcoin mining consumes as much energy as the entire country
of Denmark.
So miners are in an arms race not only to boost their computing power, but to get
the cheapest electricity prices.
Otherwise, they just lose money.
That’s actually the easiest part of all this.
The major Canadian banks aren’t providing this service yet, but there are a handful
online exchanges where you can buy and sell bitcoin, just like you would stocks.
You sign up and verify your identity, which takes around 48 hours.
After that, you're free to start sinking your hard-earned cash into Bitcoin.
You can still pay for things with Bitcoin if you want, but these days people are treating
it less like a currency and more like an asset, like gold.
It’s been a shockingly good bet so far.
A single Bitcoin is worth about $13,000 dollars (CAD).
That’s an increase of more than 1500% in the past year.
Whereas the Toronto Stock Exchange?
It only returned 5%.
Invest is probably the wrong word.
Buying Bitcoin is more like gambling at this point.
The price can swing hundreds—if not thousands—of dollars in a single day.
And nobody can adequately explain why.
There are well-founded fears that Bitcoin is a bubble, and that people are only buying
it because they believe it will be worth even more money down the road.
But we’ve never seen anything like Bitcoin before, so it’s impossible to know
what’s going to happen.
More importantly, if you don’t understand Bitcoin and you’re still scratching your
head after watching this video, you might want to think twice before hopping on
the crypto bandwagon.
What time am I at?
[Off screen: Four minutes.]
Yes!