stop watching youtube videos. 90% of them are pure bullshit published by people who have little to no understanding of bitcoin and how it works. it will only waste your time and mislead you. the only videos worth watching on youtube in my opinion belong to Andreas Antonopoulos
(1.) Everybody on Youtube says that Bitcoin is Internet 'magic' currency and that anybody can get and send money just using the mobile phone.
My problem is this, If I want to send some money (Say 3800 USD) to someone to buy something and I want to pay using bitcoin, FIRST I have to BUY Bitcoins (in this case 1 Bitcoin) by giving REAL MONEY to a bitcoin exchange. Is this correct?
So, it's not 'MAGIC' currency out of nowhere is it??
bitcoin is different and being different doesn't make it "magic money". it only seems like magic money to the 90 year old grandmas who think the only "real" money is when you cut down trees and write a number on the piece of paper you make out of them.
you don't have to buy it, like any other currency in the world you either exchange your one currency to another or you earn that currency like when you get paid every month for your job!
(2.) So, I pay 3800 USD to a bitcoin exchange and buy 1 Bitcoin. This 1 Bitcoin is my virtual Internet currency which is in my bitcoin wallet in the Internet. So, NOW I can use that 1 Bitcoin to pay the other person USD 3800 equivalent using my mobile phone. Is this correct?
So, the only advantage is that there is no middle man (bank) involved. I don't have to pay service charges, be monitored or barred from bank or government authority. Is this true?
after you "obtain" bitcoin (through buying or earning like earning fiat) you can then spend it any way you like.
when you obtain 1 bitcoin you will own 1 bitcoin the USD value may go up or down because bitcoin is still young and volatile.
there is no middle man
there is only network fees and no other additional charges
there is no centralized authority to prevent you from using your own money
but they can monitor your transactions since bitcoin is not anonymous.
(3.) Now, I step up my BitCoin game and create a Bitcoin mining rig. I run the mining software and I Make 1 bitcoin at the end of 1 year. The exchange rate for bitcoins now has gone up to 4000 USD per 1 Bitcoin. Now, if I want to ENCASH this bitcoin and get 4000 USD cash, can I do it?
If I get cash of 4000 USD from a bitcoin exchange then where does the bitcoin exchange get the 4000 USD to pay me. Because bitcoin exchanges cannot 'make' money, that is real-money out of nothing can it?
Or is it the case where I CANNOT encash it. I can only keep it in my virtual bitcoin wallet and pay it to someone who accepts bitcoins to buy stuff?
it is the same as how exchanging your fiat would work when you want to go abroad. you go on some exchange site, give your fiat and receive other currency in return. it can be a place where they buy it from you and then sell it to someone else who comes along the next day or it can be a live market where people meet and buy/sell from/to each other. bitcoin exchanges are the later, you sell to someone else who is present on that platform and has placed his "bid" there.
(4.) Who runs the bitcoin exchanges?? Who creates the software, the web-sites and monitors and managers it?
Because if Bitcoin is real peer-to-peer money and exchange, then surely there cannot be 3rd parties like bitcoin exchanges can it?
usually it is some company somewhere that have invested some time and money into developing the platform. you can search for bitcoin exchanges then visit their websites and read their "about" page. like coinbase.com
it can and there are third party exchanges and it has nothing to do with bitcoin being peer to peer. it is as the name suggests a third party service!
(5.) Can I pay by hard-cash in a bitcoin exchange or ATM. If so who counts the cash?? It has to be real-people right?
ATM is just a machine that digitally verifies the cash you feed it and then spits out bitcoin in return