Session 1 Transcript

This is a transcript of our first academy session.

 

Hey everyone and welcome to Cointelligence academy.

As you may already know this course will take you through the most fundamental topics required to understand

today's cryptocurrency industry and market.

And we'll bring you to a basic level of understanding from what you can go on your own journeys to learn

invest and do whatever you want to do in this new and exciting world.

My name is Raz.

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 thank our sponsor this session of the Academy is sponsored by PumaPay which

is the first comprehensive crypto payment solution for businesses combining the flexibility of payment

cards with the advantages of block chain technology.

We are excited to be partnering with a company that genuinely wants to increase adoption of crypto currencies

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 where 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 in a little bit of what we're going

to learn.

We will see what Bitcoin is in the first two sessions.

We will actually see how a block chain works what what what a block chain even is and why everyone is

talking about it.

We will learn about other crypto currencies 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 a conclusion as to if you want to invest some in something or

not.

And this is very important to note that we are not going to tell you what to invest in.

We are not financial advisors 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 am not here to

tell you.

Hey buy this asset because it will appreciate.

I can't say that.

All I can say is I can teach you is how to do that process yourself and come to a decision an investment

decision on your own terms and what are you going to need for this course while you're already watching

me.

So you probably have some sort of computer to watch just on.

Maybe it's a P.C. 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 e-mail how to navigate yourself around the web stuff like that.

I do want questions.

I do want to hear questions from you guys.

So everything that you ask 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 that

I don't immediately know the answer to.

I will research it until I have answers for myself and not for that person necessarily.

And finally the final thing and the most important thing about this course we need to come here with

the right mindset.

Many people hear about bitcoin here about people that made a lot of money in bitcoin and they want to

come in and go into this world for a quick and easy money making.

And there is no quick and easy money making it and in many places in the world these days especially

in crypto it's it's very easy to lose money in crypto getting.

Contrary to popular belief making money in crypto is not that easy unless you are a scammer.

And that's what we're trying to to do away with here.

We're trying to eliminate scammers from this industry.

That's what coin telegenic does and that's why we want to bring 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 funds 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 responsibility.

If you've done everything right.

If luck played 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 saw as a 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 this course is built using sessions of around one hour and 20 minutes for each session and 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 we'll go into what I've said the crypto market 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.

OK.

A little bit about intelligence.

So we were founded in 2017 and we are focused on getting on making analysis of the crypto market using

data using insights and getting information that you can't find anywhere else and creating that these

insights in these products.

So we offer two things in general.

We have our Web site intelligence dot com where we can go and learn about crypto learn what wallets

are recommended for each each person you're going to learn that in the academy of course as well you

can 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.

We have our asset list.

We have our ICAO ratings.

Basically we offer a very wide range of 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 fulfill these needs whether it's research whether it's due diligence whether it's auditing

that's our offering.

So you probably know us mostly from our websites and our online activity.

We are known for exposing scams.

We are known for searching for who does the bad things here in this industry and letting all everyone

letting the community know who these people are and to stay away from them because we believe community

is one of the biggest engines of that drive forward the technology and the industry a little bit about

myself.

Well I'm the head of research at Quinta elegance.

I got into crypto in late 2016.

I did hear about bitcoin much before that but I really started a bit really got hooked as I write here

in late 2016 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 a lot of bitcoin is based on economic theory not

only computer science right.

And I was a lecturer in an Israeli Israeli local college in 2018 and as the market died down 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 that I'm sure will be I promise we'll be starting the session in a minute I promise

we'll 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 advisor 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 going to tell you what to invest in.

The only thing we're going to teach you how to do is is give you tools to do these things.

We're going to 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 would like it if you could go on there and give us your quick feedback.

It helps us bring you better content.

So please do.

That's what I've said right now.

Feedback So we finally finished our introduction and let's begin we begin with a quote by famous economist

Adam Smith which says all money is a matter of 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 Adam Smith wrote a very famous book in economics called The Wealth of

Nations and published it in 1776.

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 1776.

Right.

It's the same year as the American independence.

And this is a time where the world is changing right.

Capitalism.

The philosophy of capitalism just was just starting out with Adam Smith and he is considered one of

the fathers of capitalism and a friend.

The French Revolution was to come few like a decade after he came in and a few years after he published

his book.

And so this is a time of very big very big changes in the world.

Right.

Nation states.

The move from from more of a 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 they're there.

They would go out of their way to acquire this money because money is worth only 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 these 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 stop and and think about how money is only a belief in a certain contract that we have.

So I do want to talk a little bit about the history of money before we move forward.

And since we started out as a as a as a an intelligent species we exchanged valuables first.

It wasn't that that intricate and interesting and advanced as we have today.

Like credit cards.

It's it's a very technological advancement.

In the beginning you know it was rocks.

It was sea shells.

It was livestock.

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 is 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 accept 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 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 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 where the where the disadvantages of these moneys are.

Right.

You can't pay for coffee and gold even if you you came up to your local Starbucks and gave them a gold.

I don't know an ounce of gold.

It's it's it's very valuable but they wouldn't know what to do.

Right.

They they they are they know how to deal with a certain money which is which is not gold.

So eventually we moved on to coins.

Right.

Which monarchs and and rulers standardized the money they made the money.

Just 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 wait units.

So that was a big technological advancement and a bit of nice trivia about us humans.

The earliest writing that archaeologists were able to find is from around 30 200 B.C. 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 boring right.

A spreadsheet is the is the earliest thing we could find.

But it also goes to show how rooted it is in our culture and in our 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 a pretty big leap I know but we started to see the gold standard in which money that are just issued

by governments and specifically the US dollar.

We had the gold standard which pegged the U.S. dollar to actual gold that the Federal Reserve is holding

in their vaults.

And if you walked up to the Federal Reserve vault with with this this bank note that says Here 20 dollars

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 because he was afraid the government was afraid

that people would just redeem all the gold and the money wouldn't have any gold reserves.

And this was what was called a gold run right where people just run to grab as many gold as they can

because they start to lose faith.

They start to lose the social contract that we talked about so in 1933 the US starts to depart from

the gold standard.

The departure won't be finalized until the 1970s but this marked the the biggest point of of the 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 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'll do that either now or tomorrow 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 that is credit cards and in 1998 big leaps.

I know but in 1998 PayPal is founded and essentially we get the first digital representation of money.

PayPal puts U.S. dollars on the Internet and enables people to transact in U.S. dollars in a digital

way in an in over the Internet.

Right.

So PayPal 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.

Mail mostly political and geographically barriers.

And finally in 2008 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.

Well 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 a list of people who subscribed to a newsletter that is in a community of cryptographers

right cryptography cryptography is a field in mathematics that deals with the encryption of data using

mathematics and a few hobbyist cryptography is we're on this mailing list which on it was the bitcoin

made paper was published now.

Again we'll get to who and what the White Paper is in just a second but what else do you remember happening

around that time around 2008.

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 who paid the price were the people the people mostly in the US but many

people around the world.

There was a global recession.

Many people will focus on the US lost their houses.

People came as far as taking their own lives.

And it 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 an all time low.

So we will talk about who really is behind bitcoin.

So the person who wrote this paper this white paper 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 just the places that he appeared 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 like digit cache by Professor David charm which also tried to take cash digital back

in the 1980s.

There was Nick sables bit gold which again started and tried to to create a system of digital gold right

back in the late 1990s.

But Bitcoin was the first time that 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 border

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 in and

knew what he was talking about is signals that presumably this person is part of the cipher punk movement.

And that is a 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 math to encrypt data.

So that's what we know about this person.

And again we I refer to him as a mail person but I don't even I don't know if it's a male or 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 indirect talks with bitcoin developers

after Bitcoin started to actually gain traction 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 Bitcoin's largest mystery.

So people know of Satoshi they they some people worshipped Satoshi.

You might find that weird but it's it's happening.

There are T-shirts about this guy and everything.

And it's Bitcoin Bitcoin's 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 bitcoins anonymous creator

will never be will never be.

No one will expose him.

Right will never be exposed will always have this sort of secrecy about him.

Others find it terrifying.

Others find it wrong.

Right.

Others think it's a coward move.

It's it's.

It means that that he could have put 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 Bitcoin 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 evil thing could have been inserted in the first place.

So we will see exactly how.

But again some people find it very very great very appealing for 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 or 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 if you ask me I don't believe he is alive anymore and I'm sad because a great person.

But.

To me I'm in the part of people to which it's appealing to the fact that he is not that he is anonymous.

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 white paper.

And if you go to the link here which is simply Bitcoin dot org slash bitcoin that PD f or even simpler

just search Bitcoin white paper in your favorite 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

describes a problem and a system that proposes a solution.

Right.

So the White Paper was released to the world as a proposed solution to the problem of transacting over

the Internet.

That's the simplest way you can describe the bitcoin white paper so it is 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 going to I'm going to list a few a few properties of Bitcoin a few key properties.

So the first thing is bitcoin is 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 in 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.

This may seem kind of a given right.

Many many systems that we use are like that many systems that we use.

Basically it's 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.

Well it's not actually the case.

The case in the WhatsApp message telegram Facebook.

Any of these things when you send a message that we're taking the example of an instant message and

messenger stuff.

Me such as WhatsApp when you send an instant message.

It first arrives at when you send a WhatsApp message for example.

At first it first arrives to the WhatsApp servers and only afterwards if the phone of of your the person

you were interacting with.

If their phone is available if the WhatsApp client is available only then it arrives at their client.

So there is a party in the middle which is WhatsApp when you send a Facebook message.

It doesn't arrive physically.

The data doesn't arrive at your friend's 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 peer to peer.

And if you look at it and money systems add value transaction systems that ease 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.

They got payment processors and you have credit card companies and you have banks and all of these things

just make it more cumbersome of a chain right of a value chain of 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 only also controls the system.

No central entity can 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 its terms of service

they're going to remove my photo.

But if I do anything on bitcoin which people don't like or my friends don't like or even a 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 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 US government.

I speak out harshly against the US government.

For the record I don't.

I am not a political activist but let's say I or someone else does.

The US government can come and silence me right.

If they want to.

There they're a powerful buddy.

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 and its most basic the most basic way it is built is decentralized.

There is no Internet company right.

There is no place that if if it's if it's gone then the Internet is gone forever which is called a single

point of failure right.

So that is the meaning of decentralization so the other thing that bitcoin is is is pseudonymous now

by her hard word.

I know what pseudonymous 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 a very different identity a completely different identity from what you have in the

real world and that is pseudonymous just the separation of identities between the real world and the

bitcoin network.

So your bitcoin network identifier which will see how it looks is very is disconnected entirely from

your real world identity and Bitcoin is also self-sustaining which means it doesn't need anything external

in order to keep operating forever.

It's a system that can sustain itself.

The only thing required for the system to continue working is just to keep going to keep people in the

system 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 less 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 fun security in bitcoins.

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 tried to crack the encryption that Bitcoin uses.

You won't succeed in and 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 computer science venture out there.

So moving on from that we start to ask.

OK so what is bitcoin exactly.

And the first thing that bitcoin is and this is very important and I'm going to repeat that throughout

the entire course even when talking about different assets completely Bitcoin is before it is a currency

before it is a value transfer.

Bitcoin first and foremost as a protocol based network and 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 hardcoded 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 or app because a client can be operated on any computer even

not on computers but 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 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 affect other users of the network badly

they are punished.

They are dis incentivize dis incentivized means that basically 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 rules 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 way by breaking into houses.

But in bitcoin you can't do that because you will only be punished and you will be punished harder then

then you will

what the ratio of what you will gain against what you'll be punished with is worse than what you'll

just gain 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't change the rules ban that requires consensus and a majority of the network.

Which means a majority.

That's half the people in the network plus one.

Right.

Just one.

Over half of the network.

And we will see how how people will change the bitcoin protocol if they want to.

And the protocol has been changed a little bit throughout Bitcoin's more than 10 year history.

But we'll see how it's done.

Whenever we want to do it so Bitcoin

secondly after it's a protocol based network only then it is a value transaction system which means

it's a system on which people can send and receive value from other people.

And technically participants in the network are called a node and on the network nodes 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 U.S. 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 Bitcoin transfer

is called the transaction.

Right.

When someone sends over some bitcoin 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 database of who has how many write a spreadsheet

if you will.

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 it with value keeps ledgers and these transactions are recorded in the bitcoin

Ledger in the form of a block chain.

So the block chain and its most basic level is a ledger is a database of who owns how many and how and

how these bitcoins changed hands.

Where did they come from.

Where did they go.

And the entire history and I know you don't know what a block chain is but that's what we're here to

do.

We're here to explain what it is but the first thing that you have to know is that a block chain is

basically a ledger.

That's where we record Bitcoin transactions.

So let's start by looking at the network itself and seeing how it operates.

So this is a very very crude and

primary example of how the network looks like right.

In a very small microcosm.

So these are Bitcoin software and these are nodes right each and every one of these is a node.

And the lines between them signify their Internet connections.

Now it's very very easy to see that hey this this node is simply connected to this node but this peer

to peer is is not it's not a given in most of the Internet.

The connection between these nodes doesn't look like that.

It goes through a ton of servers and a ton of services in between but on Bitcoin it's specific.

It's peer to peer exclusively.

So in the network we have nodes.

And these are the devices that are running the software and are connected to other devices running the

software.

Right.

It can be a phone it can be a computer it can be all sorts of things.

Now when these devices want to send new transactions they simply broadcast the transaction to the network.

Right.

This network this node wants to send over a transaction to this node so it simply broadcasts that information.

It says Hey I'm transferring this amount to this node.

All right.

But it's not the only thing that is happening after this node has announced to the network that it is

transferring an amount to this node.

It is also announcing it to this node but every other node that receives the information of the transaction

is passing this information to any other node.

And this information that the the information about the transaction made from here to here is being

passed not only to here but also to here into here into here and to any other node in the Bitcoin network.

Right.

Until the entire network is synchronized until everyone in the network knows about this particular transaction

at this node wants to create with this node

Bitcoin nodes they record all of transactions in blocks.

Right.

A block is a group of transactions.

Now whenever a block is is completed it's it's called a group of transactions and it signifies the amount

of transactions that took place in the amount of time that this this block was filled with transactions.

And let's see how it looks like more or less so time goes on and people on the bitcoin networks and

transactions between each other.

So this person sent some bitcoin to that person and a few seconds later this person sent this amount

of bitcoin to that person and only then this this person.

These are all persons.

It doesn't matter who they are.

Right.

Their identities don't matter.

The only thing that matters is that they've sent Bitcoin over the Bitcoin network.

And at some point this group of transactions is being grouped together.

Right.

Another transaction.

All right.

And at some point this transactions group is being grouped together right.

And is called a block so a block is simply a group of transactions that took place over a short period

of time.

What period of time on average 10 minutes so for each block that is being composed the only way that

it can be attached to the existing record of transactions on the Bitcoin network is by attaching it

to the existing chain to the existing block chain to the existing chain of blocks that is being you

know added on and on and on from the beginning of Bitcoin.

So in the beginning there was only block number one and then came the the Bitcoin network grouped the

transactions that came after a block number one and changed the this block to block number one and called

it block number two.

And then they did the exact same thing with block number three.

We grouped a few transactions they put it together in a block and then they changed it to the first

two blocks and so on and so forth.

And right now every new block that is being produced is being changed to the one before it now.

The changing process is done using some math functions crypto cryptography functions all that very technical.

But on the surface level these nodes change it to the ones to the blocks that came before it chronologically.

Right.

And eventually what all of these nodes have is a file that combines all of the transactions that were

ever ever made on the entire bitcoin network and this file is called the block chain.

As you've probably guessed.

So this is the famous block chain.

Now how do we make sure all of us have the same block chain.

Because you can run Bitcoin in London you can run Bitcoin in Hawaii you can run Bitcoin in Tokyo but

we all also always need to verify that everyone has the most up to date information.

So we know that this block chain this file is being shared by the nodes throughout the entire network.

And the correct block chain right because since so many people are being are participating in a network

there can only be one correct blocking if you want to to create a network which operates in a good way.

So the correct block chain is considered the one which the majority of the network participants have

at any moment.

Right.

Because if everyone has a different type a different representation of the blocks then you can't arrive

at what we call consensus.

We can't arrive on agreement of agreeing about the state of the network.

So what the majority of the network has again in the majority is one over half of the network it's considered

the correct block chain.

So if I go off line as a node go to sleep turn my computer off the next morning all through the night

the Bitcoin network continued to work.

I don't think I've mentioned that yet but Bitcoin works all the time in weekends and holidays.

It doesn't take a day off it doesn't take a minute off bitcoin.

Always always is operating and so if my node was offline if any node was offline the transactions that

I missed will be sent to me will be synchronized with me after I go back online because the network

just kept rolling all the time.

Never takes a break so that's how the network is self-sustaining.

But you have to ask the question.

Right.

Well to transact in bitcoin first you need to have bitcoin right.

If you have zero bitcoin you can't.

You can't send any.

And so how do these nodes how did these participants get their bitcoin in the first place.

And the answer to that is mining.

Mining is the process of creating bitcoin when no bitcoin was where no bitcoin was before or in other

words minting new bitcoin.

In next session we will take an in-depth look at how mining is created helping people create Bitcoin

from thin air.

So we finally arrived at the recap so I want to quickly go over what we've learned today and it's been

long but it's been important.

So the bitcoin White Paper is released in 2008 by a person or a group.

Still no one knows who's called Satoshi Nakamoto.

And to this day no one knows or the people who do know don't don't.

If anyone knows even on this planet basically no one knows who Satoshi is.

And this is one of the big mysteries of Bitcoin.

Actually the only mystery of Bitcoin and Bitcoin is a protocol based network meaning it has participants

who play by the rules and transact bitcoin between themselves right.

It's open.

Anyone can join.

The only thing that you need in order to join is a Bitcoin client and an internet connection.

Don't need anything else.

And the security of Bitcoin is a product of its use of cryptography cryptography is a field in mathematics

which involves the encryption of data using math right.

The the security of bitcoin is derived exactly from the use of this cryptography.

These methods in cryptography.

So when someone sent someone else bitcoin there is no party in the middle that has the authority to

reject this transaction.

All right.

Bitcoin is being sent directly from me to another person.

No one else in the middle.

No Facebook server in the middle.

No government spying in the middle.

It's only a peer to peer network.

Right.

That's how we send bitcoin.

That's how Bitcoin is sent and the only way you can send them.

So this actually resembles cash because when you give someone a paper note you no one else knows of

the transaction except you and the other person.

The notes aren't equipped with G.P.S. trackers are not equipped.

You don't have to fill in any any any document and submitted to the government before giving or receiving

cash right.

So Bitcoin is very much.

It operates very much like cash and in fact let me take you back to this to this.

To this slide right here and it says that Bitcoin is a peer to peer electronic cash system.

That's the official name of Bitcoin.

That's what was published on the bitcoin white paper.

That's the name of the system.

Right.

So let's go back to our recap and

we see we saw how a block chain looks like right in order to create a two to broadcast transactions

to the network.

These transactions are then grouped together and a group of transactions is called a block and each

new block is changed to the one that came before it.

And after we have this very long chain we have the block chain which details the history of the entire

entire the entire history of Bitcoin transactions since Bitcoin was created.

And it's represented in a file.

This file is then shared between all users of the network.

So at any point in time the entire network is synchronized and everyone knows about everything that

ever happened in the history of the network.

All right.

That's been the recap.

And that has been the session.

I'm so glad you guys joined us.

It's been long it's been heavy.

I know.

But we have to decide bitcoin before we move forward.

To me it's very interesting.

I'm very I very much hope that interested you too.

And in the next session we're going to be talking about like I said mining what mining is how to create

bitcoins out of thin air.

And we'll see what the bitcoin supply looks like.

How many bitcoin will ever be.

How many bitcoin exist right now.

And we'll talk a little bit about wallets as well how Bitcoin is stored.

And finally I want to thank you guys so much for joining us.

I want to thank Puma pay for sponsoring this session and that's it.

I'll see you in our next session about bitcoin mining in supply.

Bitcoin mining and supply.

So thank you very much and I'll see you in our next session.

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