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How Bitcoin Works

Bitcoin For Beginners - Episode 2 - How Bitcoin Works

Our Bitcoin for Beginners tutorial makes learning about Bitcoin and the Blockchain easy to grasp. In this episode we explain in simple English just how Bitcoin works.

  • Learn what a Bitcoin Wallet is, and how it can be used to send or receive Bitcoin
  • Our Bitcoin Tutorial will guide you through a simple Bitcoin Transaction.
  • You will learn about the unlimited Bitcoin Addresses that your Bitcoin Wallet uses to protect your confidentiality on the Blockchain.
  • Learn how Computers on the Internet called Bitcoin Miners confirm Bitcoin Transactions before writing them into the large distributed Public Ledger called the Blockchain Public Ledger.

The History of Bitcoin and the Blockchain

In two thousand and eight, one of the first ever Bitcoin transactions was recorded. It was for the purchase of two pizzas, exchanged for ten thousand bitcoins. As I record this, less than ten years later, in December twenty seventeen, a single Bitcoin, on it’s own, costs over eleven thousand dollars.

You might ask how on earth is this possible? Well, it is possible. But if you want to learn more, and understand what Bitcoin truly represents, you must begin with Bitcoin’s history, and also learn how Money is actually created.  In this Episode, we explore the Great Financial Crisis, which led the anonymous character of Satoshi Nakamoto to write the Bitcoin paper, in which he proposed a new Digital Currency Bitcoin and the Blockchain.

Bitcoin Versus Traditional Money

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It may surprise you to know that traditional money is created through debt, in a practice called Fractional Reserve Banking. Using this system Banks are able to ‘loan out’ $900 for every $100 deposited by customers.  It was due to this practice that made the Great Financial Crisis of 2007 / 2008 so dangerous for so many Banks. Few people actually realise that ‘money’ is created in this way – through debt.  It was from this dire financial history that Bitcoin and Digital Currency was born.

  • Compare Bitcoin to traditional money systems, such as Cash, Credit Cards and Checks.
  • Learn the drawbacks and dangers of Bitcoin – not only its benefits.
  • Impartial and practical advice.

EP04: Bitcoin’s Strengths, Weaknesses and Competition

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Our  Bitcoin For Beginner’s course explores Bitcoin’s strengths, weaknesses and competition.  Bitcoin was the first digital currency  but it was not the last and today there is a lot of competition.

  • Learn how big the Bitcoin Market Cap (Market Size) actually is (March 2018).
  • Be prepared for Bitcoin’s massive price swings up or down.
  • Gain the knowledge that Bitcoin is constantly subject to price speculation and sudden selling (for profit) that can take the price downwards, just as quickly as it went up.
  • Learn the truth about Bitcoin from an unbiased source.

EP05: Types of Bitcoin Wallets

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Studies indicate that of the 17 million Bitcoins so far  mined (March 2018) up to 4 million have been lost permanently – many due to reasons that were entirely avoidable.  Storing your Bitcoin is not the only, or best way, to store your Bitcoin. You can even take Bitcoin offline completely, and store them on Paper in a Safe.

  • Our Bitcoin Tutorial will explain more about the different types of Bitcoin Wallets that you can use.
  • Learn about Bitcoin Wallet Applications for Computer or Smart-phone.
  • Take your Bitcoins offline, away from Internet access, and potential theft, by using either a Paper Wallet or a new Hardware Wallet, such as the Trezor or Ledger Nano S.

EP06: Security Fundamentals

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Many people have bought Bitcoin and many people have lost bitcoin. With Bitcoin, you are your own Bank!  It is crucial that you understand this – our Bitcoin Tutorial will show you how.

  • Learn about your security responsibilities if you intend to purchase and use Bitcoin.
  • Bitcoin makes you your own Bank – YOU are in charge of Security!
  • We look at some scams, internet hacking scandals, thefts and basic mistakes that has left people with lost Bitcoin. Do not become a statistic!
  • Bitcoin is made overly complicated on many Internet sites – we seek to make it as simple as possible.

EP07: Installing Electrum - A Typical Bitcoin Wallet

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There are many Bitcoin Wallets available. In our Bitcoin Tutorial we explore the Bitcoin.org website to find safe download links to Electrum, one of the most popular Bitcoin Wallets.

  • Learn the different types of Installation options that affect your Bitcoin Wallet’s Security.
  • Standard Wallets simply use a password to protect your Bitcoin, which is not safe if your computer is affected by Malware.
  • Two-factor authentication Bitcoin Wallet’s  are much more secure, as they require a PIN sent to an attached cellphone.
  • Explore multi-signature wallets for even more security.
  • You will learn how the Seed & Private Keys from a Paper Wallet or other digital wallet can be imported into your own Wallet.

EP08: Restoring a Lost Bitcoin Wallet - What you need to know

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From the total of 17 million Bitcoins mined so far, up to 4 million have been lost. Many of these Bitcoins were lost for avoidable reasons.  Bitcoin users are essentially their own Banks, yet many Bitcoin Users do not grasp this simple fact.  After installing your Bitcoin Wallet, your next step should be learning how to recover your Wallet, in case your Wallet gets lost, or is destroyed, or stolen.

  • Learn about the different backup and restore requirements of different Wallets.
  • Make sure you are prepared to recover any lost Bitcoin Wallet.
  • We highlight the importance of making multiple copies of your Wallet’s data files and exported Private Keys, and keeping these securely and separately from your devices.

EP09: Seeds, Recovery Keys, Private Keys and Bitcoin Addresses

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Our Electrum Wallet was generated using some random words called the Seed. But what exactly is this Seed (recovery phrase), and what does it do?

  • The random words and letter placement in the seed is used by the encryption algorithms, to create encryption patterns and Keys that are unique to your Wallet.
  • Learn how  the Seed (Recovery phrase) creates your Private Keys, Public Keys and Bitcoin Addresses.
  • Understand the need for unlimited Bitcoin Addresses to protect your anonymity.
  • We show you how the Private Key and Public Keys are paired to prove transaction ownership, but still protect your confidentiality.

EP10: Sending and Receiving Bitcoin from Electrum - a Typical Wallet

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Electrum is one of the best known and best loved Bitcoin Wallets.  However, there are many other alternatives, including Bitcoin Core. All Bitcoin Wallets work in basically the same way.

  • Start small, with a dollar’s worth of Bitcoin, when sending and receiving Bitcoin for the first time.
  • Learn all about how to Send Bitcoin the correct way, using Low Fees.
  • You will understand the Fee Process and how to calculate the average fee, before you send.
  • You will learn the difference between unconfirmed and confirmed transactions, and how fees affect these.

EP11: Cold Storage Wallets and Hardware Wallets

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When Bitcoin is kept on a device connected to the internet, there is the potential for loss of Bitcoin through computer viruses, malware or hacking. Cold Storage Bitcoin Wallets and newer Hardware Wallets get around this problem by disconnecting your Bitcoin Wallet from the internet completely.

  • You will learn about how to make a Paper Wallet, or a DIY Cold Storage Wallet on a USB Thumb Drive or writable DVD.
  • We will look at the benefits of Hardware Wallets such as the Trezor or Ledger Nano S Bitcoin Wallet.

EP12: The Blockchain Public Ledger Explained

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The Blockchain Public Ledger is a single data file that contains every Bitcoin Transaction ever made.  It is not in any one place, but instead it is spread across millions of Computers, including all Mining Computers, in what is called a distributed network.

  • We will explain the Blockchain Publc ledger in plain and simple terms that anyone can understand.
  • Let us remove the complexity and mystique that surrounds the Blockchain so that you will understand what it is, and how it works.
  • At the end of this episode you will understand what the blockchain is and how your Bitcoin Wallet uses different Bitcoin Addresses for each transaction, to protect your confidentiality.
  • Learn to explore the blockchain using blockexplorer.com and look up your own transactions on the blockchain.

EP13: How to Buy Bitcoin From an Exchange

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In this Bitcoin for Beginners episode, you will learn the best practices for Buying Bitcoin from an Online Bitcoin Exchange.

  • Learn to avoid beginner mistakes when buying bitcoin.
  • How to find reputable Bitcoin Exchanges.
  • Learn the importance of doing your own due diligence before you sign up with an exchange.
  • Why you should never leave Bitcoin in your exchange account.
  • Transferring Bitcoin to your own Bitcoin Wallet.

EP14: Mining Bitcoin For Beginners

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This Mining Bitcoin For Beginners episode will give Bitcoin Beginners a good understanding of the main concepts, issues and potential rewards of Mining Bitcoin and alternative Cryptocurrencies.

  • You will learn what potential rewards can be expected from Bitcoin Mining today.
  • Know what Bitcoin Rewards you can expect when Mining using basic Gaming PC setups, with a good Graphics Processor Unit (GPU).
  • We will introduce you to ASIC Mining Computers used by Professional Miners.
  • Gain a good understanding of the Electricity costs you will have to pay.
  • Learn about the tools available to calculate Power Costs, which will help you decide whether Mining will be profitable for you.

EP15: Investing in Bitcoin

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In this Bitcoin for Beginners episode, we will take a look at Investment Options for Bitcoin and other Crypto-currencies. Today there are several digital currency investment options available on Stock Exchanges around the globe.  To invest in these options, we recommend that you speak with a Financial Adviser.

  • We look at the highs and lows of a typical Investment opportunity on the Australian Stock Market.
  • Bitcoin has many digital currency competitors, and we explore the potential impact of these competitors.
  • What are other options for investing in Digital Currency derivatives, such as Hardware Wallet Manufacturers, such as Trezor or Ledger?

*LearnByCartoon.com are not a financial advice service. This video is for education purposes only. Please speak to a financial adviser. Never invest more that you are able or willing to lose, as digital currencies are a high risk investment. Bitcoin prices can go down as well as up.

Bitcoin For Beginners

Our Bitcoin Tutorial guides the Bitcoin Beginner through the complicated world of Bitcoin and the Blockchain. Our animated episodes make the complex simple to understand!  Digital currencies, such as Bitcoin, allow people to carry out transactions without the need for traditional intermediaries like Banks or credit card companies.  We are all used to keeping our credit cards and banknotes in physical wallets, and bitcoin actually replicates the use of Wallets. However Bitcoin Wallets are not made of leather or nylon, they are digital apps that you keep on your computer or smartphone. 

All Bitcoin transactions are recorded in a single file, called the Blockchain Public Ledger.  The Blockchain is distributed between millions of computers, and contains all confirmed Bitcoin transactions.  The block chain is kept updated by Computers on the Internet called ‘Miners’  who confirm new Bitcoin transactions, and write these newly confirmed transactions to the Blockchain Public Ledger.  Bitcoin transactions generally use randomised Bitcoin Addresses, which protects the true identity of the Sender and Recipient’s Bitcoin Wallets.

Learning online should never be boring. With our Cartooned Instructors it never is!  Learn about Bitcoin and Blockchain quickly and easily with our unique cartooned Bitcoin For Beginners Guide.  Our Animated Episodes maintain learner focus. We make your learning experience more engaging and improve recall by using Cartooned Instructors.

Bitcoin Tutorial Author Ken McHardie
LearnByCartoon.com ELearning that maintains learner focus
 

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