Introduction to Bitcoin, Blockchain and Cryptocurrency | Cointelligence Academy | Skillshare

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Introduction to Bitcoin, Blockchain and Cryptocurrency

teacher avatar Cointelligence Academy, Crypto Education For Everyone

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Taught by industry leaders & working professionals
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Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

3 Lessons (3h 28m)
    • 1. Session 1: Intro & Background to Bitcoin

    • 2. Session 2: Bitcoin Continued: Mining & Wallets

    • 3. Session 3: Crypto Market: Beginnings & Overview

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About This Class

Cointelligence Academy is a unique online cryptocurrency education platform. Our courses are very hands-on and taught by professionals actively working in cryptocurrency research and other aspects of the industry.

We are now offering our classes as pre-recorded sessions so that you can watch them on your own schedule and pause, fast forward, and rewind at will. We will also be offering live Q&A chats for each session, so that you can ask your questions about the topics covered, or any other crypto subject you're curious about.

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Cointelligence Academy

Crypto Education For Everyone


Cointelligence Academy is a unique online cryptocurrency education platform. Our courses are very hands-on and taught by professionals actively working in cryptocurrency research and other aspects of the industry.

We are now offering our classes as pre-recorded sessions so that you can learn crypto currency on your own schedule and pause, fast forward, and rewind at will.

Above: Our Founder & CEO On Yavin at Kent University, UK

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1. Session 1: Intro & Background to Bitcoin: Hey everyone and welcome the co Intelligence academy. As you may already know, this course will take you through the most fundamental topics required to understand today's crypto currency industry and market, and will bring you to a basic level of understanding from which you can go on your own journeys, toe, learn, invest and do whatever you want to do in this new and exciting world. My name is Ray, as I will talk about myself in a second. You have my details right here next to the video. And first off, I do want to think our sponsor This session of the economy is sponsored by Puma Pay, which is the first comprehensive crypto payment solution for businesses combining the flexibility of payment cards with the advantages of Blockchain technology. We are excited to be partnering with a company that genuinely wants to increase adoption of cryptocurrencies and help people pay less fees and have more control over their money. So today in our first session, we will talk about the background to the invention of Bitcoin. We'll see what we even consider as money and how Bitcoin is built, and where does it fit into this entire discussion. All right, let's get started. So I do want to talk a little bit about this course before we begin and a little bit of what we're gonna learn. We will see what Bitcoin is. In the 1st 2 sessions, we will actually see how a Blockchain works. What? What what a Blockchain even is and why everyone is talking about it. We will learn about other cryptocurrencies, how they're different from Bitcoin and how they work. We will see what a crypto wallet is and you will see the difference between a digital currency, wallet and a crypto wallet. How to operate such a wallet? We'll see how crypto currencies are traded, how to trade them online in the Internet and how to manage your portfolio, how to see how much money you've made or you've lost basically, how to manage your crypto investment and finally, how to research and come to ah conclusion as to if you want to invest some in something or not. And this is very important to note that we're not going to tell you what to invest in. We are not financial advisers, and I will elaborate on that in a second But I can tell you what to invest. Also legally. And also because this is not my job. I'm not sure to tell you Hey, buy this asset because it will appreciate. I can't say that. All I can say is all I can teach you is how to do that. Process yourself and come to, ah, decision, investment decision on your own terms. And what are you gonna need for this course? Well, you're already watching me, so you probably have some sort of computer toe watch just on. Maybe it's, ah, PC or a Mac or even a mobile phone. So that's what we need. And you'll need a basic knowledge in computers and Internet, right? How to use email, how to navigate yourself around the Web, stuff like that. Um, I do want questions. I do wanna to hear questions from you guys. Um, so everything that you asked me that I don't have the answer to right then. And there is I will get back to you with an answer, because it probably concerns me, too. And whenever someone asked me a question Ah, that I don't immediately know the answer to I will research it until I have answers for myself. Even not not for that person. Necessarily. Um, and finally, the final thing. And the most important thing about this course, we need to come here with the right mindset. Many people here about Bitcoin here about people that made a lot of money and Bitcoin and they want to come and and and go into this world for quick and easy money making. And there is no quick and easy money making in many places in the world these days. Ah, especially in crypto. It's it's very easy to lose money in crypto getting, ah, contrary to popular belief, making money in crypto is not that easy unless you're a scammer. And that's what we're trying Teoh, um, to do away with here. We're trying to, um, eliminate scammers from this industry. That's what co intelligence does. And that's why we want to bring, um, solid and reliable information to you through this academy. So the responsibility means that everything you do as part of this course which involves moving your own money interacting with your finds, uh, everything you do that you learn here is up to you and under your responsibility we call intelligence, we will never and me personally. We will never ask to give us funds which we will invest for you or anything like that. We will always teach you, give you the tools to do things. And it's gonna be up to you to decide if you want to actually do them. And if you decide to do them, you take on responsibility that whatever happens is under your for responsibility. If you've done everything right. If luck played Ah, in your behalf, on your behalf and and you've made money, that's great. We're really happy for you. But if you've lost money as a sort of the consequence of something you've done as part of this course, it is also your responsibility. It's the coin has two sides, right? So, uh, this course is built using sessions off around one hour and 20 minutes for each session in each session will have a different topic, of course, in the in today's session, in our second session, we will be talking about Bitcoin because getting Bitcoin right is essential to understanding everything else and afterwards will go into what I've said. The crypto market, um, other assets what exchanges are, how to be secure around exchanges and we'll announce further sessions down the road. But that's currently what we want you guys to know because this is the most important thing going into crypto. Okay, A little bit about core intelligence. So we were founded in 2017 and we are focused on getting ah on making analysis of the crypto market, using data, using insights and and getting information that you can't find anywhere else and creating that Ah, these insights and these ah products. So we offer to things in general. We have our website co intelligence dot com, where you can go and learn about crypto. Learn what wallets are recommended for each each person. You're going to learn that in the academy course as well. You can. Ah, we are. We publish various articles about different things. We have an exchange rating system where we rate exchanges based on a on a system that we developed. You know, we have our asset list. We have R I C O ratings. Basically, we offer a very wide range of products on our website for everyone to access and it's all for free, and we do also offer private solutions for private customers who have very, very specific needs. And we know how to fill fill these needs, whether it's research, whether it's due diligence, whether it's auditing, Um, that's our offering, so you'll probably know us. Mostly former on websites in our online activity, we are known for exposing scams. We are known for Ah, searching for who does the bad things here in this industry and letting all everyone letting the community know who these people aren't to stay away from them because we believe community is one of the biggest engines of that drive forward, um, the technology and in the industry a little bit about myself. Well, I'm the head of research at co intelligence. I got into crypto in late 2016. I did hear about Bitcoin much before that, but I really started, you know, but really got hooked as I write here in late 2016. Um, and ever since I've been researching crypto how it works, the technology, not just the technology, also the economic theory, which you'll see a lot of it. Ah, lot of Bitcoin is based on economic theory, not only computer science, right And I was a lecturer in an Israeli, an Israeli local college in 2018. And as the market died down, um, well, I moved on to co intelligence, and right now I'm head of research here, and I couldn't be happier. So a few things, but I'm sure, will be I promise we'll be starting the the session. In a minute, I promise Will be starting the session in a minute. But right now, let's note a few things first. Again, I've said it, but I want to stress this point. This is not investment advice. I am not a financial adviser, not legally and not even, you know, as a hobby. You can't have that as a hobby, obviously. But everything that I say here is either my own opinion or stuff. That is not a recommendation for you, right? We're not gonna tell you what to invest in. The only thing we're going to teach you how to do is give you tools to do these things. We're gonna We're going to give you the tools to research on your own and to come to conclusions on your own. But everything you do as part of this course, and as a result of attending this course of taking this course, everything you do is your responsibility. And I do want to hear your questions in the academy. We want to have community engagement. And as I've said, if I don't know the answer to a certain question, I will get back to you with an answer. So, finally, I do want to measure the success of the academy as part by using feedback from you guys. So I want to hear how the sessions were. What you felt could be better. What you felt. It was good that we focused on. So we want to hear your feedback, and after each session we will send you a link to fill out feedback. I very much ah would like it if you could go on there and give us your quick feedback. It helps us bring you better content. So, uh, please do. That's what I've said right now. Feedback. So of we finally finished our introduction and let's begin. We begin with a quote by a famous economist, Adam Smith, which says all money is a matter off belief. So a few words about Adam Smith It says here that he is regarded today as the father of modern economic theory or one of the founders of modern economic theory. And I'm Adam Smith wrote a very famous book and economics called The Wealth of Nations, and published it in 17 76. So he is considered, as I've said, one of the greatest economists. And do you know of anything else of very big significance that happened in the year? 17 76 right? It's the same year as the American Independence, and this is, ah, time where the world is changing capitalism. The philosophy of capitalism just was just starting out with Adam Smith, and he is considered one of the fathers of capitalism. And, ah, friend, the French Revolution was to come few Ah, like a decade after he decade in a few years after he published this book. And so this is a time off very big, uh, very big changes in the world. Great nation states the move from from Mawr of ah, um, monarchies to two democracies, as we've seen and moving back to the quote, all money is a matter of belief. It means that money is worth what it is worth because of people believing in that worth. It is not an absolute value. If people weren't around but the paper notes were around, nobody would have given value to these notes, right? If animals were walking around money they wouldn't do there, there would go out of their way to acquire this money because money is worth Onley to us to people, because we believe in that we believe in the social contract that money represents. We believe that as long as I keep thes paper notes in my possession, I have this value. And when I want to buy a new house or to buy a cup of coffee or to pay for a certain service, I can transfer that value over to someone else. So we have to, um, stop and and think about how money is on Lee, a belief in a certain contract that we have. So I do want to talk a little bit about the history off money before we move forward. And since we started out as, ah as, ah, a new intelligence species, we exchanged valuables first. It wasn't that Ah ah that, um intricate and interesting and advanced as we have today, like credit cards. It Zaveri technological advancement. In the beginning, you know, it was rocks. It was seashells. It was life stock we'll see in a minute. But all of the value that money ever had was derived from the belief that people had in that value. If more than one person considered something valuable, it could have started to be considered money, right? So as we've said money as a social contract, it's a sort of infinite contract, a perpetual contract that as long as I have the value, someone else will accept that value. Why? Because they know that someone else will in the future. Except that value because they know and so on and so forth and so on and so forth. Right? So in the beginning, what we used to transact value was precious metals that you can find anywhere. Ah, not just anywhere like obsidian Jade. We use livestock, right cows and horses to trade. We used seashells, like I said, and eventually we found these rare earth metals silver, gold, diamond, all of that in which we started to transact value. But even these things like gold, why is gold um so, so, so rare, so, so expensive, so valuable. It's because it's it's scarce, right? There's not a lot of gold. If gold was just lying around on the ground, it wouldn't be worth as much. Gold is also very, very heavy. It is very, very hard to transport gold, so you kind of see where they were. The disadvantages of these monies are right. You can pay for coffee and gold, even if you you came up to your local Starbucks and gave them a gold. I don't know, announce of gold. It's it's it's very valuable, but they wouldn't know what to do, right? They they are, Ah, they know how to deal with a certain money, which is which is not gold. So eventually we moved on to coins, right? Which, um, monarchs and and rulers standardized the money. They made the money just ah, one thing that everyone agrees on, which were coins, right? It's something the king issued. And it had mostly the picture of a king, the portrait of a king, and they were calculated using weight units. So that was a big technological advancement and ah, bit of nice trivia about us humans. The earliest writing that archaeologists were able to find is from around 3200 BC in modern day Iraq. In this writing records transactions between people. So basically the earliest writing that we could find is a spreadsheet isn't an accounting spreadsheet, which just says, Who has how much, Who has, how many? And it's kind of it's kind of, Ah, boring, right? A spreadsheet is the is the earliest thing we could find. But it also goes to show how routed it is in our culture and in our, um, advancement just to to have this accounting of value between people. Right? Who has how many who has, how much so moving on from there We started to see the gold standard. It's It's a pretty big leap, I know. Ah, but we started to see the gold standard in which money that are just issued by governments and specifically the U. S. Dollar. We had the gold standard, which, uh, pegged the U. S dollar to actual gold that the Federal Reserve is holding in their vaults. And if you walked up to the further reserve vault with with ah, this this bank note that says here. $20 in gold coin payable to the bearer on demand. If you walked up to the Federal Reserve, gave them this note and said, All right, give me the equivalent in gold. They would have done that. You could have just redeemed this note for gold. This didn't last very long because in 1933 after the Great Depression, the President Roosevelt he just got rid of the gold standard because people Ah, because he was afraid the government was afraid that people would just redeem all the gold in the money, wouldn't have any gold reserves. And this was what what's called a gold run right where people just run to grab as many goals as they can because they start to lose faith, they start to lose the social contract that we talked about. So, um, in 1933 the U. S. Starts to depart from the gold standard. The departure won't be finalized until the 19 seventies, but this marked the biggest point of departure from the gold standard in following that in 1946 we had credit cards for the first time. And this let the merchant knew that the customer is not the one that is paying them when you pay. When you paid in the credit card, when you still pay with a credit card, Essentially, you're saying OK, so I'm going to take this product now. I'm going to take the service now, but I'm not going to be the one paying you. The credit card company will be the one paying you and they will do that either now or tomorrow. Ah, and I'm going to, you know, to to settle this with my credit card company on my side. You don't have to worry about it. I'm here. I'm taking your product. The credit card company is paying, and me and the credit company will settle things between ourselves and as credit cards. And in 1998 big leaps I know. But in 1998 pay pal is founded, and essentially, we get the first digital representation of money. PayPal puts us dollars on the Internet and enables people to transact in U. S. Dollars in a digital way in Ah, in Ah ah, over the internet. Right. So, people, what it does is takes care of offline settlement and just lets people send US dollars to each other, and it breaks down many, many barriers. Mel, mostly political and geographically barriers. And finally, in 2000 and eight, we see the publication of the Bitcoin white paper. Now let's unpack that publication. Who published it before we even talk about what it is? But who published the Bitcoin white paper? Where did they publish it? We'll talk about who in a second. But where was this paper published? It was published in a mailing list. It was published in Ah ah list of people who subscribed to a newsletter that is in a community off cryptographers, right, cryptography. Cryptography is a field in mathematics that deals with the encryption of data using mathematics and a few, um, hobbyist cryptography is were on this mailing list, which on it was the Bitcoin white paper was published. Now again, we'll get to who and what a white paper is in just a second. But what else do you remember happening around that time? Around 2000 and eight? And the answer is, of course, the global financial crisis. The banks in the US they gambled high stakes, right? There was a lot to leak to win. But there was also a lot to lose, and they gamble with money that wasn't their own money. Eventually they lost. Eventually, this house of cards came tumbling down and the public paid the price right. Bankers didn't go to jail. Bankers weren't weren't punished for losing the the public's money, weren't weren't punished for losing thousands of houses. And who paid the price? Were the people the people, mostly in the U. S. But many people around the world there was a global recession. Um, many people will focus on the U. S. Lost their houses. People came as far as is taking their own lives. And it's It's mostly because of the bankers greed. And this led many people to completely lose faith and completely lose trust in banks. And it came. The Bitcoin white paper came exactly in the time where public trust and faith in banks is at a new all time low. So we will talk about, um who really Baha is behind Bitcoin. So the person who wrote this paper, this white paper, um, it is signed by a person called Satoshi Nakamoto sounds Japanese, right? Well, the real identity of this person is unknown. No one has heard of a person called Satoshi Nakamoto. No one was able to confirm this identity anywhere in the real world. Aside from you know, just the place is that he appeared on on the Internet in the first time that this this identity this alias appeared online was when he published the white paper. And in this white paper, which is a paper that describes Bitcoin, he references to many other systems that tried to achieve certain things before him. There were systems, um, like Digicash by Professor David Chalme, which also tried to take cash Digital. Back in the 19 eighties, there was Nix's a Bose a bit gold which again started a tried to to create a system of digital gold. Right, um, back in the late 19 nineties. But Bitcoin was the first time that, um, these ideas actually caught on in a massive scale. But it wasn't the first attempt to create such a thing to create such a borderless currency or borders, Borderless transaction of value. And many, many people spent countless hours trying to search for a clue on who Satoshi is who who he really was and the fact that he referenced all of these systems and and knew what he was talking about is signals that presumably this person is part of the cipher punk movement and that is, of movement of people with ideals of privacy and liberation, from tyranny and surveillance through the use of tech and specifically, cryptography. Specifically, what we said cryptography. The field in mathematics, in which you use meth to encrypt data. So that's what we know about this person. And again, we I refer to him as a male person. But ah, I don't even I don't know if it's a male, a female. I don't know if it's a group of people, and I don't know if anyone on this planet knows, but basically we don't know who Satoshi is. We don't know the real world identity of this person. So, as I've said identifies with the cipher punk movement, which are people who want to use technology to gain back individual liberties. And last time anybody heard from Satoshi was in late 2010 and that was in direct talks with Bitcoin developers after Bitcoin started to actually gain traction and and work in the real world. But That's when people stopped hearing from from Satoshi. No one heard from him since, and it went on to be Bitcoins largest mystery. So people know if Satoshi they some people worship Satoshi. You might find that weird, but it's it's happening. There are T shirts about this guy and everything. Um, and it's It's Bitcoins. Largest mystery. It's what it's the biggest thing about Bitcoin. No one knows. And some people find it romantic, right? It says that appealing to some, some people find it romantic. The fact that Bitcoin's anonymous creator will never be, um will never be, um, no one will expose him right will never be exposed. We'll always have this this sort of, ah, secrecy about him. Others find it terrifying. Others find it. Ah, wrong, right? Others think it's a coward Move. It's ah, it's It means that, um, that he could have put, um, malicious stuff in Bitcoin that people don't know about until today, and that at one point he can take over the entire thing and steal all of the big coin. As we will see, this is not the case. Bitcoin is built in such a way so that everyone can see what happens at all times. And there is no way that some backdoor or or ah evil thing could have been inserted in the first place. So we will see exactly how, but again Ah, some people find it very, very, uh, great. Very appealing for and some find it terrifying. And finally, the bottom line is today no one in the public knowledge. Of course, no one knows or even agrees if this person is dead or alive out there has their Bitcoin doesn't have their Bitcoins. No one can agree on anything. Many people claim to be him. Many people say, Hey, I'm Satoshi. Look at me stuff like that. But no one has been so far able to prove that they are actually Satoshi Nakamoto. And, um if you ask me, I don't believe he is alive anymore. And I'm I'm sad because great person. But, um I'm to me I'm in the part of people to which it's appealing Teoh the fact that he is not ah, that he is anonymous. Um, so that's it about Satoshi. And we will move on to the Bitcoin white paper What it is. What exactly is a white paper and what it describes. So here's a short screenshot of a light paper. And if you go to the link here, which is simply Bitcoin dot org's slash Bitcoin that pdf or even simpler, just search Bitcoin white paper in your favorite ah search engine and you'll see that you come to this exact document and we'll start by explaining what a white paper is. And a white paper just generally, um, describes a problem and a system that proposes a solution, right? So the bright white paper was released to the world as a proposed solution to the problem off transacting over the Internet. That's the simplest way you can describe the Bitcoin white paper. So it is. Ah, it is considered a short document. It's only nine pages long and describes the entire system around Bitcoin in the thorough description. It contains a thorough description of a software system designed to enable its users to transact value over the Internet in a way that resembles cash. Paper notes, Right, So I'm gonna I'm gonna list a few a few properties of Bitcoin a few key properties. So the first thing is, Bitcoin is a peer to peer. The Bitcoin transaction system is peer to peer, which means every user in the system every person in the system deals exactly an end and exclusively with the person that he's dealing with. There is no one in the middle. There is no central party needed. And this is Ah, this may seem kind of a given, right? Many, many systems that we use, um are like that many systems that we use. Basically, it's a peer to peer everything that we use. Right When you send a WhatsApp message, you send it to a person and they're the only one reading it. Um, well, it's not actually the case. The case in a WhatsApp message telegram Facebook. Any of these things when you send a message we're taking, Ah, the example of an instant message and messenger stuff. Ah, excuse me. Such as WhatsApp. When you send an instant message, it first arrives at when you send Ah whats app message, for example. At first, a first arrives to the what's APP servers and only afterwards if the phone of of your person that you were interacting with if their phone is available the WhatsApp client is available only then it arrives at their clients. So there is a party in the middle, which is what's up When you say into Facebook message, it doesn't arrive physically. The data doesn't arrive at your friends Ah, at your friend's computer without passing through anywhere in the middle. It passes through the Facebook servers in the middle, so most systems that we use today are not pude appear. And if you look at at and money systems at value transaction systems that use today, they're incredibly not peer to peer. In fact, there is. There are so many stops in the middle before the money reaches its final destination. It's crazy there got payment processors and you have credit card companies and you have banks. And all of these things just make it more cumbersome off a chain right of, ah value chain of, ah, supply chain. Even you could call it so peer to peer means. When I send value to someone else, I send it exactly to them. No one else in the middle. The second thing is, Bitcoin is a decentralized system, which means there is no central party, not only between me and the person that I am transacting with which is the definition to peer to peer. The decentralized part means that no central entity on the also controls the system. No central entity can, um confirm or deny, agree or disagree about anything in the system. Whereas if I upload to Facebook a photo or any other content that is against Facebook's terms of service, they're going to remove my photo. But if I do anything on Bitcoin which people don't like or ah, my friends don't like or even ah, government doesn't like no one can do anything about it because they don't have anyone to talk to. The Bitcoin network is simply a network, and no one governs it. There is no Bitcoin company. There is no ah person who controls Bitcoin or a group of people controlling Bitcoin. There are no there is no Bitcoin board of directors. And let's say I speak out against the U. S. Government. I speak out harshly against the U. S. Government. For the record, I I don't I'm not a political activist. Um but let's say I or someone else does. The U. S government can come and silence me, right? If they want to They're they're a powerful body. But if I send money, if I send Bitcoin is someone else using the Bitcoin network and the U. S. Government wants to deny me that that option they cannot. They cannot because they cannot control the Bitcoin network. And another system that we know which is decentralized is the Internet, right? The Internet itself, in its most basic, the most basic way it is built is decentralized. There is no air net company, right. There is no place that if if it's if it's gone, then the internet has gone forever, which is called a single point of failure. Right, So that is the meaning of decentralization. So the other thing ah, that Bitcoin ease is Sue Don Imus now about, huh? Hard word. I know what pseudonymous, um is kind of like anonymous but anonymous means that your identity is hidden. Pseudonymous means that your identity, you have an identity on the Bitcoin network. It is just simply, ah, very different identity, a completely different identity from what you have in the real world. And that is synonymous just the separation of identities between the real world and the Bitcoin network. So your Bitcoin network identify her, which will see how it looks, is very. Is this connected entirely from your real world identity? And Bitcoin is also self sustaining, which means it doesn't eat anything external in order to keep operating forever. It's a system that can sustain itself. The only thing AH required for the system to continue working is just to keep going, to keep people in the system and then and working in the system. It doesn't require servers. It doesn't require regulatory approval, anything, just Internet connections and people using the software. Bitcoin is also trust lis, and that is a key component of Bitcoin. All of these are, but you have to understand that Bitcoin's value premise is to operate without any of the transacting parties having to trust each other. I don't need to trust anyone else that they've sent to me Bitcoin. I can verify that this transaction has happened. It's a bit abstract, but we'll see exactly what this means. And as we've said, Bitcoin employs cryptography, the encryption of data using mathematics. It employs cryptography to achieve much maximum fund security, and Bitcoin's cryptography has gotten to the level that if you take the best computer, the fastest, the most advanced computer on earth right now. And you try to crack the encryption that Bitcoin uses. You won't succeed in thousands of years, right? It's not viable. It's not feasible to try and crack Bitcoin security simply because the mathematics used to to encrypt to secure Bitcoin are much more advanced than any ah computer science venture out there. So moving on from that, we start to ask. Okay, so what is Bitcoin exactly? And the first thing that Bitcoin is And this is very important that I'm going to repeat that for of the entire course, even when talking about different ah assets completely Bitcoin is before it is a currency before it is a value, uh, transfer Bitcoin first and foremost as a protocol based network, a protocol based network, it's a network that uses a protocol which protocol is a set of rules to operate. And let's unpack that So a protocol is simply a set of rules, and the network is operating according to this protocol. The network, the users of the network, are operating according to this protocol, and the protocol is hard coded in the software And it is. It is the set of rules that are making the Bitcoin software, and the software can be run by anyone who wants to join the network. And so we see here that the requirements to participate in a network are simply a Bitcoin client. And I specifically didn't say software, uh, or app because a client can be operated on any computer, even not on computers but, uh, any any device connected to the network and what the other thing that you need here is to follow the rules right to follow the protocol. That's the only way people will accept you into the network so participants can operate in the network. The the network only accepts participants who play by the rules anyone trying to gain an unfair advantage over anyone else in the network, which means not following the rules, breaking the rules, the system, the network will reject these people. So that means that people who are trying to do things that will effect uh, other users of the network badly they are punished. They're disincentivize. Disincentivize means that basically, it's it's not beneficial to them to do these bad things anymore, right, so This creates a situation where most participants excuse me. Most participants will always want to play by the rules. If you won't play by the world's, you will be punished. So you are better off playing by the rules. You'll gain more that way, right? Thieves? Burglars gain more by by breaking into houses. But in Bitcoin, you can't do that because you will only be punished and you will be punished harder than then you will. Ah, well, The ratio of what you'll gain against what you will be punished with is worse than what you'll just gained by simply being a rational actor so rationally. Participants are encouraged to play by the rules. So this begs the question. Who makes these rules? And are they? Are they changeable? Well, the rules are basically what the Bitcoin network and the users of the Bitcoin Network. What they decide will be the rules and that is it. Nothing else, and the rules are changeable. We can change the rules being that requires, um, consensus and a majority of the network, which means the majority that's half the people in the network, plus one right just won over half of the network, and we will see how, ah, how people will change the Bitcoin protocol if if they you want to. And the protocol has been changed a little bit throughout Bitcoins. Ah, more than 10 year history, but we'll see how it's done whenever we want to do it. So Bitcoin um Secondly, after it's a protocol based network on Lee, then it is a value transaction system, which means it's a system on which people consent and receive value from other people. And technically, participants in the network are called a node and on the network notes consent Bitcoin. And here we do the separation. We have the network itself, which is called the Bitcoin Network, and we have the asset, which is called Bitcoin the Bitcoin asset. And these are two different things. And then because the network is where these people transact and the asset is what they transact with. So whenever you see these abbreviations of three letters, it's a short for the asset, right? When I say BTC, it's short for Bitcoin like USD for us dollars. But when I say BTC, I'm mostly referring to the asset, not the network. When I want to talk about the network. I write the entire world the entire word Bitcoin. So Bakwin transfer is called the transaction right? When someone sends over some but point to some other person, it's called the transaction, and these transactions are recorded in a Bitcoin ledger. Now, a ledger to those of you who don't know is simply a ah database of who has how many, right? A spreadsheet, if you will. Ah, I have this amount and he has that amount. And they have that amount. And banks keep ledgers. PayPal keeps ledgers. Everyone who deals with with value keeps ledgers. And these transactions are recorded in the Bitcoin ledger in the form off a Blockchain. So the block chain and its most basic l 2. Session 2: Bitcoin Continued: Mining & Wallets: everyone. And welcome back to co Intelligence academy. We are super happy that you decided to join us for a second session. And today we will be talking mostly about Bitcoin mining and wallets. As you can see right next to me, we'll talk about how many Bitcoin are there. How many will be how Bitcoin while it looks like and how big new Bitcoin are created. And for those of you who missed our first session, my name is Ray, as I am head of research at co intelligence and I'm teaching this course at the Academy. I've been researching crypto for the past three years and I'm glad to be with you guys for this journey. I'd also like to take this opportunity to thank our sponsor, Puma pay, which is Ah, you can see it up top there for allowing us to offer this course for everyone who wants to learn who will pay is actually the first comprehensive crypto payment solution for businesses. And they combined the flexibility of payment cards with the advantages of Blockchain technology. We're very excited to be partnering with a company that genuinely wants to increase adoption of cryptocurrencies and help many people pay less fees and have more control over their own money. I'm reminding everyone that you guys can ask questions using the life chat on YouTube. That's right. That's next to the video. And when we finish, our lesson will do a Q and A and I'll answer all questions that you guys had. All right, So what do you say we get started? Let's talk a little bit about what we learned in the previous session and for you guys that weren't here. That's gonna be Ah, a small recap. So we've learned the background to what led to the invention of Bitcoin with the 2000 and financial crisis that originated in the US but affected the entire world and the global economy. And it made a lot of people lose faith in banks and the traditional financial system. So we also learned that Bitcoin was born out of this Ah, out of this crisis, right? It was ah, made by a person called Satoshi Nakamoto. He published a Bitcoin white paper in 2008. He published it for a small AH group off cryptographers, which are people who deal with encrypting data. And since then, Ah, it's been it's grown in in Ah, a huge ray, Right. Bitcoin is huge around the world right now. A lot of people know about it and they had around 10 years to do this. Ah, this Ah impressive growth. So we also saw how Bitcoin works on a technical level and what enables it to be a network that follows a protocol Bitcoin we talked about this Bitcoin is first and foremost protocol based network. So after that only after that it's, ah value transaction system. And finally we saw what a Blockchain is, how it's built and how it is shared between everyone who uses the network and the Blockchain the the state of the network that the most people have at any given time is the true state of the network, right? It's what most people agree on. And, um, we saw that transactions in Bitcoin are grouped into blocks and in order to be added to the chain of blocks, you have to chain the new block to the block before it. So that's a quick recap of everything we learned at the previous session, our first session, and I wanna just jump right into what mining is. So we've heard a lot about mining, right? It's ah, it's this weird name for something that you don't actually use pick axes to mind. So let's see what it is. So let's talk about it. Think about regular mining for a second before we we we jump in. Uh, you take physical stuff like axes, and you you throw them at at the Earth to try and get some valuable stuff out of the earth , right? That's the most basic level of mining. You you you just keep on hacking until you find something and you hope to find no one never told you. You know, this place is gonna have 10 grams of that, and this place is gonna have 100 grams of that. So you generally just just trying stuff and hoping that it will come out. And sometimes nothing comes out. Sometimes you hit the jackpot, right? So how is it like in Bitcoin will, every Bitcoin has to come from somewhere and Bitcoin are actually generated. And in order to generate Bitcoin, you have to to to follow a set of rules. We talked about how Bitcoin is a network that participants in the network have to follow rules in order to use it. So we can't let just anyone make new Bitcoin because then everyone will make as much Bitcoin as they can, and then it won't have any value, right? It will be like sand. Sand doesn't have a lot of value. You go to the beach, there's a lot of sand and think about it. If everyone could make gold in their home, gold wouldn't be worth more than sand, right? So mining is the process of creating this new Bitcoin by solving computational problems. And that's people used computers to operate. Programs, operate software that are continuously solving computational problems, and that way they are mining. They are creating new Bitcoin. So whenever someone wants to send a new transaction, the transaction is created alongside a mathematical problem that needs to be solved as long as it isn't solved. Everyone in the network is waiting for the solution. Any transaction is considered pending after a minor comes in. A person who's doing this mining after a minor comes in to the situation and uses their computational power to solve the problem on Lee. Then the transaction is considered confirmed and the Bitcoin is sent over. So we were never knew. Transactions are being broadcasted a network. They are waiting to be mined. They are waiting to be confirmed and they sit in a place called the waiting room. And in the technical aspect of Bitcoin, this place is called the memory pool or the meme pool. You'll see many people talk about the meme pool and that's essentially this waiting room that transactions sit in to wait to be confirmed. So in order to f for everyone to know, ah, that the minor didn't just confirm the transaction without actually computing the solution . They include, along with Isa Lucien what's called a proof of work, which is a piece of data that everyone in the network can see and verify themselves so they can know that the minor did in fact, do the computational work required to confirm the transaction. This way, we can ensure no one is confirming as many transactions as they can write this this way, we we we ensure that people aren't just saying Yeah, this transaction is confirmed. This transaction is confirmed without actually putting their computer to use and doing the work that's needed for everyone to know that it happened. So that's about that. And we've gone over the process. But we talked about it. It seems a bit ah, hard understand. At first I know. And that's why we have this. Ah, cute animation that will help us understand. And we'll see it slowly because it's super super crucial to understanding. So an animation for him. This is how the mining process works. So, Alice, we have to two persons. We have Alice and Bob, and they want to transact in Bitcoin. Alice wants to send her Bitcoin over to Bob, so And Bitcoin this is this how this process works. So Alice initiates a transaction, right? She broadcasts to the network. Hey, I want to send my Bitcoin over to Bob. So with the transaction there is presented a mathematical problem. We can see it here. And, um, this is not the actual, um, way they transact. The problem looks, but it's the easiest way I can explain mining for everyone to understand. So the transaction is presenting a problem to the network. Only then a minor comes in and tries to solve that problem. And how does he do it? He just operates his computer. The computer is working is generating, um, but computational power. It's using power. It's using electricity to work and produce solutions to the problem. No, here is the point where it's exactly like traditional mining, because the minor doesn't do computations like you do on a piece of paper, right? You don't follow steps. The minor just randomly throws solutions at the problem. Exactly like meh. Randomly throwing an axe at the wall until you find something. So the minor picks up the wall. The physical minor picks at the wool. The Bitcoin miner picks at the software, right? Just throws solutions. And this is how it looks it through a solution at the problem, and we can see the solution doesn't fit right. This one starts with an 07 This one starts with an E three ends with an E f e. This one ends within 8 55 It's not the same thing. The software knows that. So it discards what the miners sent its. Nothing is done with it. Okay, The minor then tries again. It throws another solution at the problem, and again, this time it's also not the same solution, right? So nothing happens, right? It's not the solution to the problem. Onley in the third time, the minor, um, manages to throw Ah, solution. That is exactly right. Okay, This if you look at it, believe me, I copied and pasted. But if you look at it character by character, it's the exact same thing and the network knows that. So the transaction is on Lee then confirmed, and the ah Bitcoin is transferred over. But let's slow that down and see what actually happens. So the system recognizes the match between the problem and the solution and the transaction is confirmed. The minor then receives a small fee out of the transaction. Okay, out of the the Bitcoin that Alice sent. Minor receives a small fee out of that, and the transaction is confirmed, and the Bitcoin that was sent reaches over to Bob. Now I'm rewinding for a second to see the Bitcoin here and in this state, right? As long as the transaction is not confirmed, we are awaiting for ah, my minor to come in and confirm it from the meme pool. Right? Remember, we talked about this waiting room that transactions weight and to be confirmed. So as long as the transaction is not confirmed, it is pending. It's in the meme pool. So what? This situation of the transaction is in the meme pool, and after it was transferred over to Bob, it's confirmed and we will talk more on that later in the course. Um, and we'll see different sorts of my transaction fees and all that, but this is the most basic way Mining works. OK, so just to make sure everyone understands, I'm gonna go over it again very, very quickly. Okay, so we have Alice and Bob. Alice wants to send Bitcoin over to Bob. The Bitcoin is then broadcasted the net transaction. Excuse me. The transaction is only then broadcaster the network, and the transaction is waiting in the meme pool. A minor comes in. There's a bug right here, but a minor Come. Oh, no, it's not a bug. Its the ah problem that the transaction presented. So minor comes in and tries to solve that problem with throws solutions at the problem until something happens. Right? And something that is happening is a match between what the minor through and the actual solution. So on Lee, then the transaction is confirmed. Ah, fi goes over to the minor and the Bitcoin is transferred over to Bob. So we talked about, um how ah block is a group of transactions. We talked about it in the last session. And when miners mine an entire block, When? When This situation that we just saw happens for ah group of transactions. Right on the group of transactions, as we said, is a block. So after a minor minds an entire block, they broadcast it to the network alongside a declaration. That new bit coin was minted out of thin air. Right? It didn't exist before, but it is exists now. That's what the minor is broadcasting. And the Bitcoin now belongs to the minor to the minor that did the computational work that confirmed all of these transactions and included the proof that he did the computational work, which is called the proof of work. So the Bitcoin, the minor broadcasts the block to the network and alongside it creates new Bitcoin out of thin air and sends them over to himself. All of this process that I just described is called the Block reward. Okay, Currently. Currently, it's the incentive for miners to use their electricity to buy all this hardware to use all this computing power to generate new Bitcoin. Right? You may have heard about the crazy, um, time back in the end of 2017 where people ran over toe by ah graphics cards, which gamers were very upset about because ah drove up prices. There was a big mess. But people use that to to create money. And the alternative for using this graphics card for gaming was to use it for Bitcoin, which was just much more lucrative and much more. Ah, created much more revenue for everyone who did it. So all over the world, miners are using their hardware. They're using very specific hardware. It's machines that their entire purposes to mind Bitcoin. It's not computers that have windows installed on them or a Mac or a West or anything. It's these machines that they do only one thing, and they the only thing that they do is mined Bitcoin Um So the Bitcoin network, um, gives each new block that his mind and broadcast of the network. If it followed the protocol correctly, the Bitcoin network rewards it with new Bitcoins that are made out of thin air. And the the entire process of creating a block takes around 10 minutes on average. Sometimes it's 12 minutes. Sometimes it's eight minutes on average. It's around 10 minutes, all the time in Saturday's and Holly days. Even in the Super Bowl, it happens every time all day long. Um, since 2009 new Bitcoin were being created every 10 minutes. So let's let's see how how many new Bitcoin are being created. And right now as we speak every 10 minutes, which means that it's gonna be around Ah, 88 times, Right? During the course of this Ah, this session Ah, there will be confirmed, uh, blocks and new Bitcoin will be created and sent over to the miners and the block reward, which we talked about right now it's what the miners create alongside the blocks. It's right now 12.5 Bitcoin so around every 10 minutes, 12.5 Bitcoin are being created, which is well, uh, around current prices have very written it. Ah, What? It's Ah, $8300 right now. Bitcoin, I can't do the math very quickly, but it's a lot of money, right? It's around $100,000 maybe more so that's happening every 10 minutes. Every somewhere in the world, someone created this amount of money out of thin air. So there is a catch to this block reward system, right? It won't keep happening forever every four years. This amount this 12.5 Bitcoin is being cut in half. It's being slashed from its current position to half of it, and the beginning one back in 2000 and nine, the first block reward that existed was 50. So 50 Bitcoin was created every 10 minutes, right? It seems crazy on and and it is. But it's only crazy in retrospect, because back then people who used Bitcoin considered it a cool little experiment. They didn't know it would be worth 18,000 or $20,000 1 date, right? So this mechanism of block reward have things right, making the block reward slash it in half. Ah, it's called the block reward having and it is meant to regulate the Bitcoin supply, which is our next topic. So the next having event will be happening in August 2020 which is less than a year away, Right? We've just entered into October. It's 10 months away. It will be cut in half to six and 1/4. Bitcoin pretend minutes and disregard Bitcoin price for a second. Don't try to compare it to dollars or euros or anything for a second. Just think about the amount of Bitcoin and with this mechanism that is being slashed every four years and it's lashed very very, uh, immediately in a very, very quick way, Right? One minute it's 12.5. 12.5 12.5, and the second it slashes its 6 25 And four years later, it's gonna be 3.125 right? So it's it's meant to create what is called a supply shock on its its Ah, we're getting it a little bit into economics, and I don't want to explain all that here, but it's meant to be there. It's meant to be once every four years, and it's meant to be very, very Ah, very, very shocking. So from the beginning of Bitcoin, like once we're when it first began, the maximum number of Bitcoin that could ever be created and that is written into the protocol and the maximum amount will ever be 21 million. Never will there be more than 21 million Bitcoins. So after we reach the amount of 21 million Bitcoins new coins will stop existing right. This this mechanism of block word will no longer happen. And this thing has been coded into the protocol from the beginning. I'm going to say something that, uh can confuse you. But I do think it's important. So listen up. This mechanism can be changed. If people in the network wanted to be changed, it can be changed, but it will not. People will not vote to change the amount of maximum Bitcoin, so it's safe to assume that there will only ever be 21 million Bitcoins. Now, I don't want to explain this this this sentence that I just said because it's two more hours of explanations, but 21 bill 1,000,000 Bitcoin is the maximum amount maximum amount. It can be changed. It won't be changed. Why? Because people just won't change it. So you might ask and you might have already asked him just not seeing the lifetime at the moment. Why 21 million? Why this number, right? Why not? One million? One billion? Some some nice number. Why not a very ugly number, right? Like Ah, 5,000,000,900 million. Ah, 822. Right. So there is an answer and it's not a very a very ah cool one or exciting one. It's just it has no special significance. The amount 21 million just fit in very well with the mathematics around Bitcoin, like every four years and which is actually every 210,000 blocks and a few other numbers that just fit in correctly with the entire system were entire mechanism of Bitcoin. And there is more to know about why 21 million Bitcoins and the only thing that you should do If if you're actually very interested in that is just Google, why 21 million Bitcoins. So we say that when the supply reaches 21 million, there will no longer be new Bitcoin, and this is a point that is one of the most important points of today's session. I want Teoh too for you guys to understand about the scarcity of Bitcoin scarcity. It's not an easy word, but it means that there is not a lot of something. There is a limited amount of something. How limited. Well, we already know 21 million is the maximum amount that will ever, ever be right. And put that aside for a second. Think about something else. How many U. S. Dollars are in the world? Anyone knows that? I'm not asking you. I'm asking if anyone in the world knows how many U. S. Dollars are going around the globe. The answer is no one knows for sure, because even the authority that Prince US dollars the Federal Reserve it has estimates it doesn't really know how many dollars air in the world and how many. How much gold is there in the world no one actually knows, right? Because there is not a very, um, efficient way to track and keep track of all of the gold or even all of the dollars. Think about, um, Mexican cartels dealing in the U. S. Dollars. It's It's outside the scope of law outside the scope of authority. And no one can track how maney Fiat money. How many government issued money is in the world and the fact that Bitcoin is software and everyone knows how much not Onley will there ever be, which is 21 million. But how much is at any given moment? Right? Because everyone has the Blockchain on their computer. Everyone is sharing the same data. It creates hard, hard scarcity. You'll see. Many times people say that Bitcoin is scarce. Bitcoin as hard money. What is this hard word? It means that it's only one sided. There are no question marks with Bitcoin. Everyone knows everything that is a key component of Bitcoin. So reaching this amount of 21 million will happen around the year. 2140. It's crazy, but think about it for a second. Every four years, the block reward is being halved. Well, at some point, the black reward is gonna be zero point 00 right? Very, very small. And this leads us to this. Ah, around the year 2140. According to current estimates, we don't know what will happen more than 100 years into the future. But this this is the current math. So as of this moment in circulation around the world there are in existence. Um, a little more than 17 million Bitcoin And this I'm saying that not because of estimates like the dollar are gold or silver or any other thing. Actually, the fact that more than 17 million Bitcoin exists a little more than that I can give you an exact number and we'll do that in a second. But this is something that everyone who uses Bitcoin knows. And you can't hide that from anyone. And you also can create Bitcoin that are hidden, that people don't know about their existence. You can't deal in. Ah, what's it called a dark market of big corn? There is only one type of Bitcoin and that is Bitcoin, right? It's It's a bit philosophical, everything I'm talking about, but it's the the core principles of what Bitcoin is and the value that it represents. So that means if you give, take the actual number. Believe me, I did and and you do the math. So around 85% of Bitcoin is already in circulation, so Ah, lot of people in the industry talk about early adopters, right, adopting early. But think about it more than 21 more than 25% of Bitcoin. Actually, it's the word is around, but I've recently seen an article that says that more than 85%. So the Bitcoin that is already in circulation is the vast majority of Bitcoin that will ever be created. So this is kind of a difficult situation, Okay, and 1800 new Bitcoin are being minted each day. That's what the current block reward of 12.5. Remember, In less than a year, it will be cut in half. And we've reached Let me hide my camera for a second. And we've reached the interesting graph of the day and it seems intimidating a little bit, but we're gonna go and walk you guys through it. So this graph shows the Bitcoin supply as a function of time, Right? How many Bitcoins are there? How many Bitcoins were and how many Bitcoins will be as time passes. And when you look at this axis that is supposed to represent time, you don't see years here. You see numbers like three million and 780,000 or 4.2 million. Right? So these numbers don't represent time. They represent blocks and when you see zero here and 210,000 here the's This is the amount of blocks that ah, that went through in this amount of time. But since a block as on average 10 minutes, you can just do the math quickly and understand the the ah, the wait time is going on here. So for our convenience, I've added small years. Right? So we have 2000 and nine here 2000 and 12 here 2016 here and this these years are this Ah, blue square on each of these things. So in 2000 and nine, we're talking about the beginning of Bitcoin. There weren't any Bitcoin before Bitcoin started, right? That's that's a given. So when Bitcoin started the block reward was at 50 and we see what the block reward was at each period by looking at this axis right here. So at the beginning, the block reward you see it here was 50 Bitcoin per block, 50 Bitcoin per 10 minutes. And when we look at that, this this blue line represents the time the block reward remained at 50. So for four years, which is this exact Ah well, actually, three years if you deduct Dad, but it's 210,000 blocks. So for this period every new block was awarded 50 new Bitcoin. And that's where we the red line, comes in. Right? So the supply of Bitcoin, which is represented by the red line, goes from zero to 10 million in less than four years from 2000 and nine 2 2012 It's almost four years because this is January and this is Ah, December. I think so. For this amount of time between zero and 210,000 which is around four years, 10 million Bitcoin was created. Look at the the the extreme. Um, I forgot the the mathematical ah, property. But look at it. It's It's an extreme increase in supply. But when it was half in 2012 2 25 right when it was Haft, the supply curve. It's called the curve. That's what I, uh, needed to remember. So the curve gets a little bit more less steep, right? So when it reaches 2016 which was the left half ing from 25 to 12.5, and this is the timeline that we're currently in, we're reaching the end of it. The curve is getting even less steep. And in 2020 when it will be, um six and ah, six point 1 to 5, it'll be even less deep and less deep and less deep and less steep. So each four years and each reward each block reward. Having that happens, the reward the Bitcoin supply curve is getting more and more approaching 21 million. So if we're here right and we we come to the Bitcoin supply curve, that's it's it's very very, um accurately. What? I said that there are little over 17 million Bitcoin in existence, So we are here on the curve. Look at it. More than 85% of Bitcoin are already here. Are already Don't. I would don't want to lose the cursor are already minted, are already switching hands on a day by day basis. Right? And And this is the best visual representation that I know of of the Bitcoin supply. And I want to ask you two questions right now and we are as we talk about this. So the first question what determines something's value? You know all right, We don't need that anymore. So being bring my camera back. What determines something's value in the most basic form? Supply and demand, right? Anyone who's been in the first ah lesson of economics, supply and demand determined something's value in people's eyes. So the fact that the Bitcoin supply is predetermined, which means everyone always knows that there will never be more than 21 million. And also everyone always knows how many Bitcoin are there at any given time. This fact, this is the This fact means that the only deciding factor about Bitcoin's value is its demand, because think about a demand and supply, supply and demand. We have supply, and we have supply in front of our eyes. Look, look at the graph. We know what the supply is. There are no question marks, no hidden, ah, stuff about the supply. We don't need to trust any authority not to print an insane amount of Bitcoin because it needs to. Right after the 2000 and eight financial crisis, the Federal Reserve printed insane amounts of money insane amounts of dollars. They call it quantitative easing right, and they did that for various reasons but it it's what's called inflation, and the other money that already existed was worth less because of it. And and Bitcoin, you know for a fact that none of this will ever happen because humans people don't determine what as happening on Bitcoin at every given. Second, the rules determine the protocol determines and people just follow the protocol, right? So this is a very, very, ah basic effect in Bitcoin and going back to the supply and demand thing. If if we know what the supply is, then the only deciding factor is the demand right and we can't anticipate or measure demand because it changes and it's it's what people think, right? It's way it when people want Bitcoin, but whether they want it more or there were, they want it less. The only deciding factor is the demand. You'll see people refer to Bitcoin as deflationary, and we are not hearing the word deflation a lot. We are hearing the word inflation a lot because that's what's happening around the world. In past few years, even the word hyperinflation we have Thea Argentinian government printing insane amounts of money Venezuela ah, Iran ah, lot of places in the world are are experiencing very accelerated inflation and Bitcoin. Many people argue that Bitcoin is deflationary. It is designed so that the supply is at a fixed position at 21 million. That's the maximum amount and so the only deciding factor as the demand. And as demand goes up by people, people need Bitcoin fleet for certain various reasons. Right? Everyone uses Bitcoin for a different reason. We know most of the music because they they speculative, they invest speculatively. But as demand goes up, the value must go up right. That is the boast basic premise of people who say that Bitcoin is deflationary. It means that the purchasing power of Bitcoin will increase in relation to other currencies . This is the economic definition. That was the first question. It was a long one. I know. I'll ask another one is gold deflationary? I shouted a little bit. Sorry about that. Is gold deflationary? Does anyone know how much gold is there in the world? The answer is probably not. Gold is being pulled out of the ground by actual mining right physical mining, and the inflation rate of gold is around 2% annually, which means that constantly new gold is being pulled out of the ground. No one knows when it will stop. And let me tell you a secret. People are going to start mining asteroids soon. I don't know if you've heard about that, but it's it looks like it's happening, so I don't wanna ramble on for for for forever. But it means that even gold is not as scarce as Bitcoin. Gold doesn't have this graph, and we don't know that in 2140 there will be no more gold. Right gold, as far as we know can be continued to be pulled out of the ground or asteroids forever. I don't know of any asset, and I'll be glad to hear from you guys. But I don't know of any asset in the world that has its scarcity very, very strongly and without a doubt coded into it right. The fact that Bitcoin has its scarcity as part of its core properties. That's one of the main reasons that I like Bitcoin and a lot of other people like Bitcoin, and that this real scarcity assures us that no more Big Quinn will be created and going back to. The first thing we talked about was that the only deciding factor of Bitcoin's value would be It's demand, right, because the supply it's out there. Everyone knows it. It's not changing any time soon. It's been long, I know, but let's continue. It gets pretty, very, very easy from here. So we're moving on to talk about Bitcoin wallets and how Bitcoins are stored. So we did talk about, Ah, that Bitcoin is basically a list, a ledger that records who owns how many. Bitcoin. It's essentially a list of I O. U's between the users of the network. So in order to join the network. And we said that also that all you have to do is to generate a wallet and in order to generate a wallet, notice the terminology, noticed that I'm using the word generate and not sign up for a wallet, and I'll explain in a second. But in order to join the network, all you have to do is generate a wallet. You don't need to provide any personal details. You don't need to say who you are. You don't need to say where you live, and you don't need to say about your phone number or your email address so you don't need to provide your email address. You don't need any personal information. And but going back to terminology I used generating a wallet is being done by a mathematical function. Remember the word cryptography, which is a field of mathematics which Bitcoin uses to encrypt data. Well, there are functions that you can use to create wallets on your own, and Bitcoin will accept these wallets. You can use Bitcoin. You can get the coin sent over to your wallet if you generate a wallet by yourself. Right. Remember when we talked about Bitcoin is a protocol based network. If you follow the protocol, if you generate a wallet using the right mathematical functions, your wallet is okay. The network will respect your wallet. Okay, So when you generate a wallet using this function and we'll do that in just a minute, your wallet is okay. But you don't input into that function any other stuff. Any other data like name, age, phone number, email address. You don't need to give anything out to be quite in order to participate. All you need to do is generate a wallet using either free software or a mathematical function, your choice and you doing the network. You use your Internet connection you So identities on the Bitcoin network are completely, completely separate from your real world identity. And that's what we called pseudonym ity back in the previous session. For for people who remember so a small recap, you don't need anything. Teoh. You don't provide anything to create a wallet, and it's only done using a mathematical function. So let's see what a while it looks like. So after you used that function to create a wallet, it's made of two parts. The first part is your private key, and the second part is your public address. Private Key looks like this very long string of numbers and letters, both upper case and lower case. And this is exactly the same thing this QR code, the both of these QR codes air taken from a wallet that I randomly generated that has zero Bitcoin on it. But if you take this code, scan it, um, and and use a Bitcoin wallet or Bitcoin while its software you can see Ah, you can have control over this wallet that I generated Why? Because you have the private key, and that's what we're going to talk about now. When you generate a wallet, you have two things. You have the private key on the public address. Now the public address is public. It can be public, but the private key has to stay private. Does it remind you of any other thing that used on the Internet like an account which has sort of the email address or the user name kind of like the public address and the private key, which is your password, Right? So it does look very much like regular account that you guys know already how to use. But it's different on Bitcoin, mostly because you don't choose them. They have to be. They have to follow certain rules in mathematics in order to be eligible. If I change this de toe in F, it will work. It's not gonna be the same wallet. It's not gonna be a wallet at all, because mathematics don't allow it. It's it's Ah, it's a very advanced course from here, but it's just not gonna work. So two parts of a wallet private key, keep it private. Don't let anyone else see it and public address and the public address is crucial to the wallet. If you want to get paid in Bitcoin, if you want people to send over Bitcoin to you so public addresses are derived from the private key. But it's only one cited, and that means that if you have the private key, you can use another function to create your public address. And then you can share your public address. Right. You are a person that is getting paid in Bitcoin. So you share your public address with the person who wants to pay you. I've done the work. I want to receive payment, so I'm giving them my public address. I'm saying, here, this is where you should pay. This is where you should send the Bitcoin and they send the Bitcoin over to this using a regular wallet software, right. They just copy this address, paste it and their wallet software and send the amount of Bitcoin that they want over to you. I can share my public address, and I need to share it if I want people to send Bitcoin over to me. But the private key, the private key, is what I use to send Bitcoin out. And that means when someone has it, they will send my Bitcoin to their wallet. Right, Because whenever someone has someone else other than you has your private key nothing stops them from stealing your Bitcoin. Nothing stops them for using from using this private key to send the Bitcoin over to you. Now, I know some of you are saying Wait, So I have to input all this long string Any time I want to send Bitcoin is not very efficient I should use I should go back to use regular daily digital wallets. The answer is no. You don't need to manage your private key and ah, and put it any time right, Put in a password any time you want to send a transaction, it's not like that Modern wallet software is very, very, very easy and managing Ah, and managing private keys. You don't even come across with it when you want to send Bitcoin, you will just put in the public address of the person you want to send to and it'll go right after you. You insert some kind of ah fingerprint. If it's in your phone or something. But it's very easy these days to send Bitcoin much easier than a bank transferred. Trust me so we said that the public address is derived from the public key. But if you have someone's address, you can 3. Session 3: Crypto Market: Beginnings & Overview: everyone. And welcome back to co Intelligence Academy. We're very glad you're joining us for our third session in which will finally start to talk about what happened after Bitcoin, how the crypto markets started to evolve and which other interesting cryptocurrencies exist once again. My name is Roz. I'm head of research at Core Intelligence, and I'm teaching this course at the academy. I'd also like to take this opportunity to thank our sponsor Puma paid for allowing us to offer this course for everyone who wants to learn who will pay the first comprehensive crypto payment solution for businesses. They combine the flexibility of payment cards with the advantages of Blockchain technology . We're very excited to be partnering with a company that genuinely wants to increase adoption of crypto currencies and help many people pay less fees and have more control over their own money. All right, so without further ado, uh, let's begin talking about the crypto currency market. We'll start by taking a look at what we've learned so far, and so far we've only discussed Bitcoin. It was very important to get the basics of Bitcoin down before we continue to talk about the broader and the bigger crypto market. So we talked about what preceded Bitcoin and the background for its introduction, right. The financial crisis of 2000 and eight and the birth of Bitcoin that allowed people to be the masters off their own money and their own finances. We discussed how Bitcoin was built by Satoshi Nakamoto, which no one knows today who he is, right? Many people claim to be him. Many people claim to know who he is. Um who even the group of people? Um that presumably that person was No one knows. Ah, who Satoshi is. And if someone does know they're keeping in a very, very ah, they're keeping this secret very, very well. So we also said how Bitcoin is a peer to peer decentralized network, which means that no entities rule over it. And once transactions air made over the network, they're finalized and they cannot be reversed. We also discussed how Bitcoin uses cryptography to secure itself. And cryptography, as we've said, is a field in mathematics that deals with the encryption of data. And in our second session, we saw how miners are securing the network and confirming transactions because they earn money from it and that the Bitcoins supply, which will continue to increase until 21 million Bitcoins, are in circulation. Although the Nate rate of new coin minting is Haft every four years right now as we speak, every new block that is being created is being with it are being minted 12.5 Bitcoin for each block and there is approximately one block every 10 minutes on average. So that's around 12.5. Bitcoin being added to the total Bitcoin supply every 10 minutes. And a this amount of block reward was originally 50 Bitcoin per block. It was Haft to you, 25 Bitcoin per block. And then it was Haft once again to 12.5. And we are supposed to be having the the next block having should occur at around August 2020 right? So less than a year from now, we also talked about the supply curve of Bitcoin and how there will only ever be 21 million Bitcoins like we said. And we also saw how a basic wallet works what a basic wallet is. Um, it's comprised of right, the private key and the public E. The public key is your identify on the network. It is similar to your user name on any other website, and your private key is more like a password. It's something that you should keep, and this is the actual thing that gives you access to your Bitcoins on the Blockchain. Whatever you do, never let anyone else access to your private key, because then they have access to the coins themselves to your Bitcoins and when someone else besides you has access to your Bitcoin. It's simply a race of who manages to get them out first toe a wallet that only they control , right? In other words, theft. So keep your own private keys to yourself. Keep the private as their name implies and never, ever share their with anyone else. Unless, of course, you trust Ah, whatever person that is. So we're gonna be talking today about the beginning of the crypto market, right? The market that is other than Bitcoin and the background to its creation was that a few years into the coins Ah, beginning as the time progressed and Bitcoin was working for a while, some community members started thinking of new ways to use Blockchain technology to achieve goals that are similar to Bitcoin's goals, alongside other goals as well that Bitcoin didn't originally have. So the first set of ideas and the few first sets of ideas that were introduced were conceptually very close to Bitcoin. If Bitcoin in the beginning aimed to be more of a currency of a thing that people would use to transact value than the original set of values and ideas that were introduced were conceptually close to that, since the ability to create a decentralized currency was never available before and that was very, very promising. Too many people in various industries, not just the fintech industry, right, the financial technology. So with the introduction of Bitcoin, the introduction led many people to try and apply this technology and these ideas that behind it, which were radical at the time and are still considered a radical. Today they lead these people to apply them to other fields other than currency, Right? This is the branching out of Blockchain technology. Will how can we use distributed ledgers too? Facilitate better, better operations in other industries. And that's what many other coins tried to do when we moved on from the narrative of simply a currency or value transaction. So we'll discuss the first few ventures that took this approach, and we call them all coins. All coins is short for alternative coins, and basically the definition for all coin is any other. Ah, decentralized currency or digital currency, which isn't Bitcoin right. Every other crypto currency, which is not Bitcoin, is an altar coin. That's the basic definition. So since Bitcoin is open source, everyone can look at its code, take its code ah, modify it and build a new application using code that is either exactly like Bitcoins or modified from Bitcoins. Because, as we said, open source means Hey, the world, this code is yours. Just do whatever the you want with it. So that's exactly what light coin did. And that's the first coin that we're gonna be talking about. A light coin, which exactly took did that. It took Bitcoin code and it branched out into its own thing. So we'll begin talking about like coins. And in 2011 Charlie Lee is a software developer that worked at Google and started gaining interest in Bitcoin around that time. 2011 now Charlie used many parts of its of Bitcoin's code to build the Light, Cohen Protocol and Crypto Currency. Remember, there is a protocol, and there is a crypto courtesy. There are two different things, and he built, like Quinn and his spare time, which then he released to the Bitcoin talk forums in October 2011. Charlie Charlie Lee said that he didn't mean for light coin to compete with Bitcoin, but rather have it used for smaller transactions, since its properties were slightly more quick than Bitcoin. And generally you could say that Bitcoin was more or less. I mean, a light coin was more or less four times faster than Bitcoin. We'll see in its technical properties how light coin is generally in many aspects four times lighter than Bitcoin, right, as its name implies. So in 2013 Charlie left Google toe work for coin base as a director, which was one of the largest crypto companies at the time and still is today right. Many of you probably know coin base, and later, after Charlie started working there, corn based always also added light going to its platform, allowing people allowing coin based users to buy sell like coin trade and everything that coin base offers. And ultimately, as you see right here, the motto toe light coin became to be the silver to Bitcoin's gold right, and it progressed as the gold. The digital gold narrative of Bitcoin progressed and was built and meaning this this moto this slogan would mean that it would aim to become more of the people's currency, which is used more for day to day transactions, right? The narrative was, and still is that if you use Bitcoin for larger transactions and to store value over a long period of time, then you would use like coin for smaller transactions like ah, buying coffee or paying for ah ah haircut or, ah, carwash, Right? So Bitcoin ah, light coin developed alongside Bitcoin and is still trying to become the silver to Bitcoin's gold. Let's talk a little bit about the differences between light coin and bit coin, and we'll talk about technical terms the block time on light coin. Remember that? We said on Bitcoin. It is around 10 minutes, perfect per per block. So in light coin, it's on average 2.5 minutes per block, right? It's four times more often the Bitcoin that allows to include more transactions in the same period of time. Right, because in the in the again, this is all on average. But in the same time that we have one Bitcoin block, you have four light coin blocks, right? So you can include more transactions and therefore reduce transaction fees and allow people to pay less and transaction fees. Now, the second thing that was changed is the mining algorithm, the consensus algorithm, which was changed from because original shot to 56 or S h A to 56. It was changed to an algorithm called script and script was introduced in order to try and kind of democratized the mining industry or the mining operations around Bitcoin. And the difference is that script as opposed to shot to 56 it allows people it allowed people to use hard where they already have at home, like computers in graphics cards to mine light coin, instead of using what Bitcoin users Bitcoin network miners were using, which was a six right or ass sex, which is short for application specific. Ah, integrated circuit. In simple words, it's a small computer that all it does is mine. Bitcoin right. It doesn't do anything else. It doesn't have an operating system like Windows or Mac OS on it or Lennox it just Well, it does have some kind of operating system because you need to operate it. But it's not a computer for personal use, right it the Onley purpose off this machine, that is to mind. Bitcoin. So the reason that script was introduced is to allow for more users to engage in the mining process with its still being profitable to them. Since then, it didn't really work out and a six manufacturers were starting to catch up because my light coin mining became so, um so so ah forgot the word. But it's ah, lucrative, right? It became lucrative. The likely mining became so lucrative that a six manufacturers to simply started manufacturing a six that are optimized for the script algorithm. So it's kind of a cat and mouse game, right? So, uh, today light coin mining is dominated by a six. It is still everything that we talked about. The the mechanism is still proof of work, right? You submit a proof of work proof of of computational work to the Blockchain, and that's how users can validate, can verify that you actually did the work and confirmed the transaction. The light coin maximum supply was raised four times from Bitcoin's original 21 million to 84 million to adjust for the other four times scaling changes that were done in the protocol. Right? No other significant reason simply for to adjust for the changes and the light. Quinn also benefited from being Avery early, very early mover, and today it is very large when talking about market cap and market cap is simply the value that light coin manages to capture in the global market, and that is achieved by mostly copying Bitcoins movements as of September 2019. Light coin all the likely in the world have ah, theoretical value of $4.6 billion if you, ah value them in U. S. Dollars, right? So, as I've said, light coin generally follows Bitcoin's price movements. Generally, they're considered related for people here who view the crypto currency market and not just Bitcoin, and we'll also discuss the similarities between light coin and Bitcoin, starting with the having ah and the block reward having that we experience in light coin. Exactly. Like we experience a Bitcoin around every four years. And the block reward is being haft in light coin from whatever it was to half of what it was around every four years and currently the last having event was simply just last August , not too long ago. Depends on when you're watching this, but, um, it then dropped to 12.5 light coin, and it was 25 light coin before per block. Now, remember, like coin blocks are on average four times as frequent as Bitcoin blocks. So in the around 10 minutes that it takes to create 12.5 Bitcoin, you have, um, four times the block reward for light coin because you can squeeze four light queen blocks in around 10 minutes. So you get currently 50 Bitcoin perp. Excuse me. 50 light coin generated per one Bitcoin block per 12.5 Bitcoin generated. So these mechanics are always changing because the having events are not synchronized in anyway, right? It all depends on the individual Blockchain, the way they progress in the way time progresses. So that's generally I wanted to keep the amounts here. So also blocks and light coin are very, very small. I've talked about how the last having event occurred just last August and the since blocks are very small compared to Bitcoin, and that is because not as many transactions compete on entering the next block. Right. There isn't a demand for block space in late coin as much as there is in Bitcoin, since many people want to transact on Bitcoin mawr than they do want to transact on light corn as a result, transaction friend, transaction fees remain very, very small because you don't have AH ton of competition when you want to pay fees. Because, as we've said in Bitcoin, the more you pay, the sooner you'll get included in the next block. So competition is fierce in Bitcoin and light coin, not as much. And finally, to compare, we have this pretty table that shows us the differences between Bitcoin and like coin in a nice wait so average on average transaction cost again. This change is very frequently, and it can have spikes for either up or down, but on average in recent times, Bitcoin transaction costs right, not transaction value not how much people transact in just how much does it cost and transaction fees. So I'm Bitcoin. It's around $1.5 like coins, it's around four cents. So a significant drop in and cost when you transact. Unlike coin block time, that is a more technical term that we've discussed, and users don't really see it as much. But in Bitcoin, it's 10 minutes. And, like when it's 2.5 minutes, basically, it means that for users, if you're a Bitcoin user and you want your transaction confirmed and you pay as much fiA's possible, it will probably get confirmed in the next block, um in, which could be 10 minutes from now. But in light coin, if you pay a lot and transaction fees because you want to be included in the block much faster, you can be included in the next 2.5 minutes. So it's you could say when the all the other um ah, every everything else is right then, like coin could be four times faster than Bitcoin. Now for a block reward we have in Bitcoin 12.5 Bitcoin, which for a $10,000 Bitcoin. It's $125,000 being generated around every 10 minutes. And the light coin, you have something like $900 being generated Every Bitcoin, every light coin block. But remember, in the time that it takes to create one Bitcoin block, we can have four light quick blocks, so you kinda have to multiply it again. Depends on which calculation you're trying to do. This is just a general info maximum supply on Bitcoin we have 21 million. That's the amount of total Bitcoin that will ever, ever be created. And unlike when we have 84 million, right, simply four times the supply of Bitcoin and the percentage of supply already issued in both light coin and bit coin, we have and Bitcoin almost 86% of the supply issued and in light coin, 75%. So 3/4 of all light coin that will ever exist already exists. But in Bitcoin we have much more than that that are already existing right already circulating. So we've done talking about like coin. Um and I guess it's time to move on to Ethereum, right? Ethereum. It's kind of a change in perspective because it's very much different from Bitcoin. It's very big. People talk about Ethereum more than they do about light corn right now, simply because there are more movements going on and Mawr developments, and it's a different mindset going into Ethereum. So let's begin, Um, when talking about Ethereum, you have to to start discussing its the earliest and actual founder, which is Vitelic Metallic blue. Terran is a Russian Canadian programmer. He became interested in Bitcoin in 2011 after his dad introduced him to the technology, and he co founded Bitcoin magazine in 2012. In late 2013 he published the Ethereum White paper. After envisioning a system that would allow more flexibility with programmable money, we said that Bitcoin is programmable money. But for Batalik, that wasn't enough. And a lot of other people to the program. Ability of Bitcoin wasn't enough. They wanted mawr. They wanted, um, to have applications. Running on top off our money sounds a bit crazy, but let's continue to see what it means. So Ethereum was meant to be a platform that is built on a distributed ledger, pained, maintained using Blockchain technology very similar to Big Corn, right? The same thing I said, could be applied to Bitcoin. But Ethereum Ethereum program ability would be much higher, and it would allow anyone to write and deploy code that deals with money in a decentralized manner. This is very important, and it's also called smart contracts, which are an idea that originated more than 20 years ago. But it's only now seeing widespread use, starting with the launch and the success of Ethereum. So smart contracts are, as I have said, basically, um, programs. Small programs are any any size of programs that can be executed in a decentralized way in a distributed way in which you can program certain actions that you want to have with value with money, with transacting this value so we'll get into what smart contracts are. But the basic premise is here is to make a network on which you can transact in value and have it be much more programmable than Bitcoin. So for this platform to run for everything in this platform to operate users who want these applications to run, they need to pay for the minor to run them. And so the miners are not only being paid for providing the security of the network the proofs of work. They're also being paid to run these applications, using their computers using their mining's ah hardware. So users pay for these application for running these applications using the networks native currency, which is called ether right, which is quite a difference from Bitcoin if you think about it, because on Bitcoin we have the Bitcoin network and we have the Bitcoin asset. But on Ethereum, the difference is much more much easier to spot because you have ethereum, which is the network, and you have ether, which is the currency, which is a very smart move to even even to put even more emphasis on the separation off the network and the currency. So either, and networks native currency is also being produced in a block reward fashion, just like Bitcoin and like going so every new block. The miner who minds that block gets new gets new either that are being minted. So this payment to run smart contracts and sent transactions on the network is called the gas fee, right? So as it says here, and it's called gas, just like in a car in order for the car to drive, you gotta put gas in it. Also, same thing on Ethereum. In order for an Ethereum smart contract or a decentralized application. In order for it to run, you gotta pay gas and this gas is paid in either. Which is the networks native currency a norm repeating myself here. But it's very important in order to understand. So Vitelic and a few others who worked on the project they saw the need Teoh Tomb or to have a more flexible Bitcoin quote unquote right to have more flexibility with programmable money. And they also saw that Bitcoin is not delivering this type of program ability because and this is not a minus for Bitcoin, it's because the strongest point of Bitcoin is the fact that it is so hard it is so difficult to change. So what Bitcoin excels in which is being a solid protocol that will never, ever move and is being secured by the toughest rules of mathematics, either wanted to be to still to still have these traits. I'm Ethereum wanted to still have these traits but have more flexibility with program ability for being programmable money So the development on Ethereum began in early 2014 and they raised funds through an icy Oh, which stands for initial coin offering, meaning that they ask people to pay them with big coin in order to receive the networks native currency ether right when the network launches. So when creating Ethereum, its creators said, we're creating this network. But in order for it for us to create it, we need money. You got to create anything with money. That's how the world works. So give us Bitcoin, pay us in Bitcoin and we will pay you back in ether, right? We will give you either for your Bitcoin. In that way, when the network launches, you can use this ether to transact on the network to you to create smart contracts, to do whatever you want. Right? And that was the initial coin offering for Ethereum, which was one of the first initial coin offerings or I c ose happened Ah, in around 2014 and essentially, yeah, the find rates air itself took place in July, August 2014. So essentially those who contributed to the sale essentially they bought ether at around 30 cents per one ether and you have The number is here, so they raise this amount of Bitcoin and this amount of of corresponding dollars, accounting for Bitcoin dollars at the time. And essentially, if you do the math, it amounts to around 30 cents for either, and for a price right now of around $190. I don't know when you were watching This crypto is very volatile, but, ah, it's a It's a very, very, very impressive return on investment to R. A. Y. Right, Um, I don't know how how foreseeable it was back then, but everything is much more easy in hindsight. So let's talk a little bit about Ethereum is uses and use cases. So ethereal wants to be what it calls a world computer, which means that people could run applications on top of it instead of on their own computers. No, this is Ah, this raises the question. Why would someone want to pay pay either that is worth actual money? Actual dollars? What what was someone want to pay extra to run applications if they already have a computer , right. If I'm going on facebook dot com and I'm not paying to use Facebook or YouTube or any other popular app popular free up. Why should I have to pay to use, um, applications on Ethereum? It's a less. It's a worst user experience that I already have online, right? That's our That's our initial reaction to that, um, and the other. And the other argument against Ethereum is, even if I do want to use cloud computing, um, cloud computing platforms such as AWS right, Amazon AWS or Microsoft Azure. Why should I use Ethereum instead of these established cloud networks, cloud platforms that have millions of users and how very competitive pricing and are easy to use? Why should I use Ethereum? And Ethereum has a few key things that these other platforms will never ever have, as long as they remain what they are today and will begin by talking with about censorship , resistance, censorship, resistance and censorship. The effect that a network is censorship resistant. Ah, it's being thrown around a lot, but let's explain it. And that means that no sovereign power such as like a nation state, no sovereign power can tell a theory, um, that it can't run certain code or censor parts of the network. Right, Because Ethereum is not the Ethereum company or the theory. Um ah. Foundation. There is an Ethereum foundation, but it's not in charge of what happens on Ethereum on the network. Right, Because ethereum, is it distributed ledger in a decentralized network. No one has control over it. Right? If if you do believe it is decentralized than it means that no one has control over it. And no one can, um, take down anything. Censor anything, right? If ah, the U. S government disagrees with Mark Zuckerberg's actions on the Facebook platform, it invites the it invites Ah Zuckerberg to testifying in front of Congress. Right? It happened. But you can't invite anyone or or order anyone to take down anything that is on Ethereum. You can try, but you won't have any luck. No one has control over its out there, right? Why are torrents if some of you who know what torrents are peer to peer torrents? Um, and Pirated torrents, right? When people pirate movies, pirate video gains and they share it using torrents, why is it so hard to take down? Why is it blooming as an online ah network? It's because no one can actually take that down. No one can can can. No one is has the ability or the power or the funding to take this entire thing down. Ethereum is similar again. That's a few believe it is decentralized. And that was what censorship resistant means. The ability to be resistant to any sort of censorship. Because if if someone wants to censor you, they have no one to talk to. The second trade is a mutability, and the fact that Ethereum is immutable means that once something has happened on the network, it will stay like that forever, and it cannot be changed. And we know that we it's probably, um ah reminds you of Bitcoin because in Bitcoin, when something is on the block chain, when a transaction has taken place, it's there. It's final. It cannot be changed. You cannot, um, send a support ticket to the managing team and ask them, Hey, I sent this transaction by mistake. Can you reverse it, please? Nothing. You can't do any of that because the mutability means once something happened, it is final. It cannot be changed. I know it's it's frightening. It's scary, but it's essential to having these platforms operate in the best way that they can. This is the only way that they cannot operate in that matter. And the decentralized nature of Ethereum also guarantees that because no Central party has the authority to confirm or deny users from transacting on the network, and that ties in very much to the censorship resistant part. And I'll repeat that sentence because it was it was a hard one. Because no central party has the authority to confirm or deny users from transacting or than on the network, and no one has control over the network, then there is no risk that this party could ever take over the network and start to dictate what can or can't be done. On the other hand, right? Take this with a great assault because many people over the years have criticized Ethereum and are still today criticizing Ethereum, saying that it is not really decentralized, and most of the mining power is in the hands of very few people, and development is also handled by a very small group of people and metallic the guy who created the theory, um, in the first place he is the most known among them. Now these voices against Ethereum. They believe that Ethereum on Lee says it is decentralized, but in reality, very few developers are actually working on it. And outside suggestions from developers who aren't part of the core team are ignored or pushed to the sidelines. So there is a big discussion going around. If Ethereum is actually decentralized or not because and there is no one sided answer because there is no actual standard to what decentralized is, there is no actual number or key. Ah, indicator that can tell you if Ethereum is either yes, decentralized or no, not decentralized. And it's sort of an opinion thing. And that's the one of the discussions going on now. Very interesting, and you can get into it further if you want to. Now, moving on with a theory ums, uses and if use cases. Despite what we just said, Ethereum is generally much more developer friendly than Bitcoin is. It has a ton of documentation available for people who want to learn how to develop applications on top of it, and there are many courses, both online and in person and in general and has the biggest developer community of any public Blockchain network. Basically, everyone can write and deploy their smart contracts on the network. Right. Developers can also deployed APS or decentralized APS make you see here, um, which are either a smart contract or an application that uses smart contracts. Or maybe it uses some sort of front, and that is hosted on some website, but a backhand that uses some smart contracts on ethereum. The consolations are infinite, but generally smart contracts are code that is built on top of ethereum and adapts decentralized APS. And from here on out, I'm just gonna call them DEPTHS. DAP, sir, APS applications that you can use using the Internet, um, that make use of ethereum. Also, Ethereum wants to make to take the program ability of money and the program ability of value, which is different. The money money has value, but value is not just money. Ah, Ethereum wants to take this this program ability to a level that Bitcoin doesn't, which is to enable many uses for people's funds for people's money for people's property, which are not available today because of the cumbersome infrastructure of the traditional financial system. For example, if I'm a person that lives. Ah, that I'm from, ah, country, um, which is far, far away. And I've moved far, far away In order to work and send money back to my family organizations such as Western Union, they take up to 20% of what amount I want to send out. Now. I don't know if my numbers are as accurate. Um, that's possible. But that's one use case just off the top of my head, an example that you can use to program your value to program your money to be sent over the Internet for much, much cheaper now. Theory, um, also uses a new programming language, which is developed, which was developed still being developed specifically four. Ethereum, which is called solidity and in syntax right the way it looks like and being written down. It's quite similar to the JavaScript language for those of you who work kind of familiar with programming and programming languages. So let's jump a little bit for a farther into what smart contracts are in how they work. So smart contracts are generally what their name plus, whenever certain pre made conditions are met, the contract automatically does what it is programmed to do right. This ensures that the contract will indeed take place without the need to have a certain party that guarantees it will take place like a lawyer. Think about a traditional contract that you enter in with some other person. Let's say you want to Ah, mow your lawn and you're you're leaving, right? You're flying off for vacation. So you want toe leave someone in charge of your lawn. But you don't want to give the money in advance and you're flying out for a month so they can't ah, wait around with ah, with your payment. They want received the payment as soon as they finish mowing the lawn. So you fly out. But beforehand you draft up a smart contract with the person that wants to mow your lawn, right? You say Okay, I'm gonna deposit Ah, $100 in this smart contract. But it would only be available to you it, but only be sent over to you once the lawn is mowed rate. I don't know how how correct I'm pronouncing it. But once you finished mowing the lawn, um, you're going to receive the payment automatically from the contract I'm gonna be on my vacation. I'm gonna not gonna worry about it. You're going to start stop mowing the lawn and finish your day's work. But the money will automatically be transferred over to you, Right? This is one very simple. Ah, an example. A reuse case of a smart contract. Two parties need to have something happen. And the smart contract facilities that now originally traditionally this was done by professionals, right? Lawyers who made sure these things work. Um, but these simple, um, these simple uses such as the one I have described their possible without lawyers, as we've seen right, You don't it's it's a It's a very simple ah, use for a smart contract. Now it can get much, much. Ah, more intricate than that. And I have given an example here, But, um, example I've given Ah, I think signifies it better. This was a very, very basic, ah example. But smart contracts in decentralized networks such as Ethereum in general are more tailored towards the actions that they they they are doing financial mostly on a theory. Um, and, um, it's less comical than than the example I've described. And so they are usable, and they do have use cases, and many people do use them now. The biggest promise of smart contracts on decentralized network. The effect that they minimize trust, right? They minimize trust, and they minimize risk for all parties involved. Because you're taking the lawyer, the professional out of the picture, you don't have to trust them. You don't only have to trust the code. And generally I think code is is a bit more dependable than people. Once. Of course, you know there are no bugs in it, But, um, there's the example I've given It minimizes trust and risk because when the person that is mowing the lawn needs to trust the other person, if there wasn't a smart contract to give them the money when they return from the vacation right now, they only have to trust the code. And if the person who most Dylan knows the code, it can look at the code and see for themselves that it's fine, right, it's it's gonna work, um, so you'd only have to trust the platform, trust the code, you don't have to trust the people, and that's how you minimize trust and consequently also minimize risk now a little bit further down the decentralized APS rabbit hole. So well, it's it's It's a generally correct say it is sentenced to say smart contracts evolved into depths. But smart contracts are not depths, and depths are not. Smart contracts basically adapts our applications Who make use of smart contracts? Smart contracts are simply pieces of code who deploy certain actions using certain assets on ethereum. Um, when cream it could conditions are met right when pre made conditions are met so and to to , to define it a decentralized application. ADAP is an application that uses one or more decentralized services at its back end, and a smart contract can be a decentralized service. We won't get into the software development perspective, but the meaning is that it runs on distributed networks such as Ethereum and thus is able to be decentralized example. Like I've given Facebook or YouTube could be considered APs, but they are not decentralized. The Iran on YouTube's or Facebook's servers using the back ends of these companies developed. Now I'm gonna give you a few seconds to think about an app which is decentralized. Well, the best application that I I can. Ah, given example of which is decentralized is email write. Email is an application that we use. We go on the Internet, We use our phones, our computers, and we send out on reply to email. We forward it, we archive it. We do a lot of things with it. This is an application. This is something that you used. But is there? An email company is their email dot com. All the probably is, but there is no single entity that is in charge of email, right, and that makes email decentralized. The Internet is also decentralized, right? There is no person, no country, no company in charge of the Internet. So that's an example of decentralized app, which we are familiar with using no, in contrast to, ah, central applications like I have said, like Facebook and YouTube adapts air developed by teams and are able to run using the network rather than a dedicated server run by a centralized entity. So in late 2017 and this is an example of an actual DAP on Ethereum, the in late 2017 the DAP crypto kitties became so popular so quickly that it completely blocked up the Ethereum Network because so many people were using it and Ethereum couldn't handle all of the transactions at once. It's a Depp,