hey what's up you guys, welcome back to the show. So! while everybody is hyped about the
price of bitcoins and all the gains you can make overnight let's take a step back and understand
how cryptocurrencies work so [ __ ] sequences like Bitcoin Ethereum and other altcoins are
blockchain-based projects this is a fundamental structure and backbone of these currencies,
so before we start trading or investing any real money I believe it's very important that we first
understand how these currencies work. so what is blockchain technology? if you ever use apps
like whatsapp facebook or twitter i'm sure you are aware that within these apps you can write
a post upload images upload videos these videos are then not stored on your local device like your
phone or your computer however they are stored on a server or a database so a database or a server
is an equivalent of a blockchain, a blockchain however differs from this typical of a database
as it stores data and blocks and these blocks are then chained together hence the blockchain as
new data is constantly coming in it is stored in fresh blocks once the block is filled with enough
information it is changed to the previous blocks new data is then stored to the next block and the
system keeps repeating itself over and over again so you may be wondering what data are we talking
about here? data just basically means information in case of bitcoin this could include bitcoin
transactions it can be anything images ,videos, information, critical information government,
identity information and all that stuff let's take for example this video you're watching right now
I filmed this video from my camera then edit it on my computer then upload it to youtube you can only
watch this video if I have successfully uploaded it from my computer to the youtube's database
if you are subscribed to this channel of which you should! youtube will then send you a push
notifications letting you know that Vusi designer has uploaded a new video and you should go and
check it out. Now let's make another example because if I'm honest with you I just made
that youtube example so that you know you should subscribe and turn on your post notifications
so you never miss a video from this channel if I actually type and send you an email I'm actually
not sending you the original email I'm sending you a copy of whatever that I've typed. anyway
when you send this email it doesn't go directly to the intended recipient however it goes to the
database the database stores the email and makes a copy of that then forwards the copy
to the intended recipient so let's recap I send you an email it doesn't come directly to you it
goes to the database the database stores the email then sends you a copy of whatever that I sent you.
Now in terms of the blockchain technology because Bitcoin uses a decentralized network that doesn't
really relies on a single database Bitcoin relies on millions of computers called miners to process
data and verify information like Bitcoin transactions, remember the email example
that i made earlier? that when i'm sending you an email I'm actually not sending you the original
email I'm sending you a copy. Now when it comes to Bitcoin or any form of money it's very important
that when I send you digital money or digital asset I still don't have the original and that's
I cannot send original money to someone else now in cryptography this problem is known as
double-spending. If I send you bitcoin I'll need a device like a phone or a computer a bitcoin wallet
then your Bitcoin wallet address once this transaction is sent it will then be broadcast
to the bitcoin network called the blockchain a group of computers called miners or nodes
will then verify this information once that information is verified you will then
receive your Bitcoin. So basically blockchain is a decentralized system of recording information such
as Bitcoin transactions that it makes it difficult for anyone to change cheat or hack, blockchain is
essentially a digital ledger of transactions that is duplicated and distributed across the
entire networks of computers so let's display a side-by-side example on one end we are sending an
email on the other hand we are sending bitcoin to send either an email or bitcoin will need a device
after that we'll need an application this can be a gmail application or a Bitcoin wallet to
send an email you need a recipient's email address similarly on Bitcoin you also need
a recipient's Bitcoin address type the email you want to send and input the exact amount of
Bitcoins that you're intending on sending and press send as mentioned earlier when sending an
email it will go from your phone to the server from the server then to the intended recipient.
When sending a Bitcoin it goes directly from your device to the blockchain network once your
Bitcoin transactions have been verified or at least confirmed by at least three confirmations
it will then reflect on the recipient's wallet. Basically that's how blockchain works with regards
to the bitcoin transactions, the computers or nodes that are responsible for confirming
Bitcoin transactions are called miners and the next episode will go in-depth on understanding
how does Bitcoin mining work now this was an oversimplified example of a blockchain technology
in the next video we'll look at Bitcoin mining as these are the nodes that secures the network
and validate bitcoin transactions it's very important to note that this is just one of the
many examples where blockchain technology can be applied, obviously in this channel we talk about
making money online and trading cryptocurrencies so I felt it was very important for us to only
look at the bitcoin aspect of the blockchain technology once again this was episode number
three of our crypto master class and I'll see you on episode four if you have any question
leave the comment on the comment section below and I'll see you on the next one goodbye for now
peace!