Cash Course: Cryptocurrency

[Music] in 2009 a mysterious figure named Satoshi Nakamoto harnessed the power of the internet and created the world's first cryptocurrency crypto for short known as Bitcoin today ethereum and Dogecoin are just a few examples of the more than 20,000 cryptocurrencies available you could even create your own cryptocurrency if you wanted to how about autoc coin sure but before you create trade or try to use crypto let's download some information on this episode of throughout history people have used currency to exchange goods and services like precious metals and paper money also called Fiat money crypto is designed as a medium of exchange just like any other currency but a unique feature of most cryptocurrencies is they're decentralized this means that no country or government has oversight or control why does that matter well in the past governments have often spent more money than they have then they would simply print more money or use cheaper Metals this printing devalues the existing money and causes inflation creating various economic problems some cryptocurrencies were created to deal with this by limiting the total amount that can be created this in turn limits its value from being manipulated by a central Authority for example new Bitcoin is being created all the time but a limit has been set at 21 million Bitcoins once that number is reached no more Bitcoin can be created or mined so can crypto be used the same way as this or this some people are willing to accept crypto instead of Fiat money in exchange for goods and services but unlike traditional currency cryptocurrency is a completely digital form of money transactions are recorded on on a digital Ledger I.E An accounts activity which also happens when you send and receive money with a bank the difference is that crypto does this using a blockchain Block Chain what's that in a nutshell a blockchain is a public Ledger where every transaction is recorded when you send Bitcoin to a friend people called miners create the blocks to record and then confirm the transaction on the blockchain each step in the process is encrypted which is super complicated secret code making it a very safe and secure way to transfer money so how would I access my crypto well your crypto is actually represented by a set of keys one public and one private your public key is your crypto's ID and the private key is your crypto's password these Keys which are a series of numbers and letters should be stored in a wallet and for that you've got some options these include offline Wallets on paper hosted online wallets which are similar to having a bank account or cold storage which is a small device that can be connected to your computer so if I lose my keys then I can just call customer support right unfortunately unlike traditional online banking if you lose the keys I.E your money it's almost impossible to recover and most likely lost forever it's estimated that almost 31% of all the Bitcoin ever created has been lost due to to missing Keys that's tens of billions if not hundreds of billions of dollars lost but wait If It's All Digital then how does it have any value just like any currency Bitcoin and other cryptos derive their value from what people are willing to pay for them essentially set by free market forces including supply and demand for instance when Bitcoin was introduced in 2009 one Bitcoin was worth less than a penny today its value has soared to1 of thousands of dollars per Bitcoin this growth is in part due to its limited Supply which prevents its value from being diluted unlike Fiat money now that you know a bit about cryptocurrency you can put it into action one be knowledgeable make sure you understand what you're getting into before investing be careful just like any investment there's no shortage of scams when it comes to cryptocurrencies if it's too good to be true it probably is two check your budget and don't invest what you can't afford to lose cryptocurrency is generally very speculative making it quite volatile you should accept that you may lose everything three consider storing your crypto on a cold storage offline wallet there have been incidents where people have lost all their money because they stored it on a hosted or online wallet never share your keys and remember the advice not your keys not your coins cryptocurrency is a new generation of all digital money backed by the power of the internet enabling peer-to-peer connection without central control or interference some places already accept crypto as legal money in addition to their local currency maybe someday yours will too autoc coin to the moon or maybe not watch more at Prager kids.com and parents don't forget to subscribe