To bring you the best content on our sites and applications, Meredith partners with third party advertisers to serve digital ads, including personalized digital ads. Those advertisers use tracking technologies to collect information about your activity on our sites and applications and across the Internet and your other apps and devices. Join over 94,000 students, learn all you need to know about Bitcoin. Bitcoin 30 minute Email a Day, 7 Days in a Row.
This sounds like a simple question but it tends to get some complicated answers. In this video we’ll make sure to cover all the bases but also to keep it simple. Money, ultimately, is simply the tool that we use to exchange value. There’s good reason for this: gold works really well as money. And this worked for thousands of years, no matter what social institutions exist around you, no matter who the king or government is at that particular time. Ener Paper Money Then came along a new invention: paper money.
When you think about it, for someone who uses gold their whole life, paper money is a hard sell. Well, paper money actually started out as just a representation of gold. In other words, people never trusted paper money, they trusted the government to hold the gold for them. Paper money has some advantages and disadvantages.
This makes money much easier to count, manage and move. In fact, the vast majority of money these days are actually just numbers in computers, believe it or not. The age of digital money Wait a minute, so if money today is digital, how does that even work? I mean, if I have a file that represents a dollar, what’s to stop me from copying it a million times and having a million dollars? Everyone has an account and this ledger keeps a tally for each account. We all trust the bank and the bank trusts their computer, and so the solution is centralized on this ledger in this computer.
This may sound confusing, or at best like science fiction. How does something work if it’s decentralized? You actually already know the answer to this, you’re using a decentralized solution right now to watch this video: the internet. Think about it: nobody owns the internet. Bitcoin is just a distributed ledger system At this point many videos would start getting technical and complicated, but we want to keep it simple. The big deal with Bitcoin is that this ledger is public and shared.
Not only, it’s also maintained by the public. Usually people get concerned when they hear about this ledger being public. Like most privacy issues, it’s complicated. We will touch on this in a later video. OK, maybe it’s not anonymous or something, but isn’t this a security problem?