This video is an animated conversation that explains what is Bitcoin and how it works. This is the part 2 of Bitcoins Office Series.
Transcript
Transcript generated by YouTube auto-captions. May contain errors.
wow that is quite a racket what did you do install an app on everyone's computer to have them mind Bitcoins for you I have no idea what you are referring to wink wink hint hint nud nud know what I mean right but seriously is it really productive to have all those computers running consuming all of that power in hopes of winning some Bitcoin Lottery well it would be if that was all they were doing the miners serve a very genius purpose in that while they are mining they are also processing all of the transactions on the network I see think of it like this how much money is spent every day on electricity hardware and bandwidth to run all the bank's Payment Systems a small fortune I suppose correct but with Bitcoin all those costs are shared by peers in the network and they are awarded with voluntary fees from the network but if the fees are voluntary why would anyone pay them because all Bitcoin transactions providing fees will be processed first by the system over ones that don't so if you add a tiny fee to your Bitcoin transaction you will be given priority by the network I see also Bitcoin miners provide the computational resources required to protect the network how's that because the decentralized nature of the network and its proof of work scheme guarantees that an attacker will not be able to overpower the network why is that because computational resources are scarce you vote with work to rig the vote an attacker would need to control more computational power than the honest noes okay so to ensure that it is more expensive for an attacker to purchase the computational power needed to attack the system Bitcoin adds an incentive scheme users who contribute computational power get rewarded for their work incentive if the value of a Bitcoin Rises and thus attacking the system becomes more profitable it also becomes more profitable for honest users to add computational resources so the system is self-regulating how so at any given point one would expect miners to invest as much resources into mining as is profitable for them Bitcoin needs incentives to protect the consensus process from attackers this computational process is not Wast at all but an incredibly efficient way to make a tax economically unprofitable Bitcoin never uses more computational resources than necessary to protect the Integrity of its interactions I see so this is what makes Bitcoins valuable Bitcoin makes consensus possible in highly distributed large scale systems which would otherwise never be able to reach consensus okay so what you are saying is that one of the many values of Bitcoins is their system of decentralization correct as well as the fact that they can never be counterfeited correct as well as the fact that they allow for secure digital exchanges correct as well as the fact that they are limited in number so central banks and governments can print them to nothing correct wow Bitcoins sound like the gold standard of digital currency you got it so you better get some quick before their price Rises higher than gold I will by the way hey what's the password to that loud computer running over there LS