I was thinking of making making a video in a powerpoint presentation style while narrating with the below script and I was wondering what you think about it and whether or not I should do it? Mind you I have zero experience with making videos..
Bitcoin for dummies
-goal of the video
-basic explanation of terms
-basic explanation of how it works, security
-advantages, appealing features
Goal of the video
So there are already these countless articles out there, explaining in detail what exactly Bitcoin is and how exactly it works in the technical sense, but I still get the sense that people don't really understand it. That's why I decided to make this short Bitcoin for dummies video, where I'll explain in very simple layman terms roughly what it is and how it works and perhaps why you should research it further.
And having said that, lets get right to it. Now before I get into anything else I just want to clarify what Bitcoin is. And the best way to sort of describe it is by comparing it to money in a video game. Just like say gold in World of Warcraft Bitcoin is a fictional, basically made up money on the computer. It's using it's own software for generating, maintaining, securing and transferring of Bitcoins and even though you can already transfer them physically they do not exist outside of a computer chip in a physical form.
Next I want to look at the terms that are most often used to describing Bitcoin: a decentralized digital p2p crypto-currency
Let's start with decentralized. Unlike WoW gold which you can earn while playing the game Bitcoins are not being created and regulated by a main server or a central authority. With our example WoW the central authority is Blizzard, the producer of the game, who owns the servers, which you as a player connect to when you play the game. And it is these servers that decide how much of gold there is at any point in time and how players can earn it. With Bitcoin on the other all the rules are already embedded into the client you install on your computer. These rules were preset when Bitcoin was developed and cannot change anymore. If someone connects to the network they have to use a client that obeys these rules or they'll get ignored by the rest. So the only way to ever change the rules is to have the entire network switch to your client with your new rules.
I don't want to delve into the economical or political implications of this type of a design, I just want you to be able to understand how it works.
The next term is digital, which we already covered and as we said it means it exists solely on computers just like WoW gold.
Next we have peer to peer which is what p2p stands for. This term describes how the Bitcoin network communicates. A peer is someone in the network who is running the Bitcoin client. This client acts both as a client and as a server, which means that unlike in a centrally run network like the WoW game, where the clients all connect to a central server, in the peer to peer network clients form a network by connecting to each other.
And then theres crypto which is short for cryptography which describes how Bitcoin is secured. Basically it's a way of hiding and securing data, which among other things is used with securing online banking, protecting government secret digital data, securing secure communication lines ect.
How it works:
Now that we have a basic understanding of it's main features and what Bitcoin actually is let's look at how it all ties together and why it works.
As we said Bitcoins are fictional, made up digital "coins" so you are probably asking yourself why couldn't someone just make up how many Bitcoins they have and cheat everyone else, especially if there is no central authority keeping track and keeping everyone honest. Well the reason they can't cheat lies in the next important part of it. In our WoW example it's the server which keeps track of every player's gold in it's own private database. Because Bitcoin is decentralized the database is public and a copy of it is downloaded on every single client. This in of itself does not keep everyone honest or secure but if you want to add a new entry to the database that says you received some coins, there are rules you have to follow or else when you send the new entry to the rest of the people for them to update their version of the database they'll reject it as invalid. These rules are really easy to check if they were followed and extremely hard or practically impossible to cheat. So in essence everyone is keeping everyone else honest.
In order to comply with one of those rules you have to sacrifice your processor speed for solving a difficult mathematical problem, so there is a reward system in place for those who contribute. Anyone who wants to add a new entry to the database has to first solve that problem. It's a meaningless problem, but with our current technology can't be cheated and is very easy to verify.
The solving of this problem is what the Bitcoin community dubbed as "mining". It's something you don't have to take part in order to able to use Bitcoin for transactions only and it's actually regulated through it's rules so that the more people "mine", the harder it is to solve the problem, where right now it's not even worth the electricity unless you have a good graphics card.
This problem solving is also random which means it's impossible to know how fast someone will find a solution. The faster your computer, the less time it will take but it's still random which means someone with a way slower computer can get lucky and beat you to it. Who ever finds this solution first, can then make a new valid entry to the database and as a reward receive some Bitcoins. When a solution is found and new entry made, that entry also called a block, is then sent to everyone in the network to verify and add to their version of the database. This process is also how all the Bitcoins that will ever exists are going to get created and distributed.
Basically all these virtual fictional coins are within that database. The database is constantly updated by people who participate in the "mining" process. Every time a new entry or a block is added someone received some brand new Bitcoins. These blocks also contain all the transactions between people which happened since the last block was created.
Every coin in that database is attached to a pair of a public and private key. The person who owns a Bitcoin must have both the public key to which the Bitcoin is attached and the private key. It is these pairs of keys in a separate file on your computer called wallet.dat that determine the ownership. If you lose this pair of keys you lose your Bitcoin.
This hopefully roughly explains how Bitcoin works. Now let's look at why someone would value these "coins" and use them as money online:
- they are extremely secure and are becoming increasingly so with the growing network of Bitcoin users.
- you can store your wallet.dat file anywhere you'd like: USB stick, DVD, CD, online email account, ect ect
- they are like cash which means no chargebacks are possible, once you send them, you can't get them back unless someone sends them back voluntarily
- the supply of Bitcoins is limited to just under 21mio, so thievery through the invisible hand of monetary inflation is not possible
- unless someone gets a hold of your wallet.dat file, no one can stop you from using them
- even if all transactions are public in the distributed database there is no way for anyone to know by just looking through the database who those "coins" belong to
- with proper precautions it is possible to remain pseudo-anonymous while using Bitcoins
- the Bitcoin network is practically impossible to shutdown by anyone
- no need for middlemen gobbling up expensive fees and requiring being trusted with your personal info
- client software is open source, meaning the code is freely available to everyone and anyone can see and double check, what it does
What do you think?
Oh, and feel free to give me an incentive