What is BitCoin, CryptoCurrency, Blockchain • How to Buy BitCoin • What is BitCoin Value • How to Mine BitCoin
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Hey, folks CA Sonu Kumar here, and I welcome you all to another interesting post on cryptocurrencies. I'm sure many of you might have seen this chart on how bitcoin has performed in the past. A few months just after looking at this amazing moment, there are so many people who believe that my money will double in 25 days if I don't go behind this first learning. Once you understand the concepts, you can decide whether or not to invest.
What is CryptoCurrency?
So let's understand what the meaning of cryptocurrency is in the most simplified manner. As a result, cryptocurrency is divided into two parts. The first is cryptography, and the second is currency. let's try to understand what cryptography is. Okay, so it is the process of converting ordinary plain text into unintelligible text and vice versa. Unintelligible means that can't be understood, so it is the process of converting plain text into text that can't be easily understood. okay it is a method of storing and transmitting data in a particular form so that only those for whom it is intended can read and process it. okay see the moment when you read this that it is done in a particular way.
So that it can only be read and understood by the person to whom it is addressed. Remember the movie Razzi, in which Alia Bhatt used to make certain noises like this: okay from Pakistan, and then in India there is a person who is listening to this voice, and then he understands, "Oh, she's communicating this to me." Now, anyone else on earth, if he would have heard that noise, he would not have understood it. But the sender knows what he means to say and the receiver also knows what he or she needs to understand from it. That is actually cryptography.
Okay, now let's understand the combined term, what is cryptocurrency. Let's take an example: A, let's say any person A, and B, who is from the United States. Can A directly send dollars to B in the United States? No, the bank is a third party involved who will convert the rupees into dollars and then verify who is the sender and who is the receiver. We'll match certain things, we'll charge some money, and then transfer the funds to B.
Okay, so this transaction was possible only with the help of an intermediary, which was the bank here. Now let's try to understand if there was something like a digital form of currency that knew no barriers. Okay, something like that is a currency, it's nothing but a digital form of cash, right. So what could have happened that Mr. A could have directly sent funds to B without any third party, and that is an example of cryptocurrency. So what are the advantages of Number one, no intermediary is required. Number two, there is no geographical barrier; number three, because there is no intermediary, fees are also very low; who will charge?
We are going to cover that in the subsequent part of the video, but charges are going to be very low, and number four, it's very fast on an average. Of course, different cryptocurrencies have different timings, but popular coins have timings ranging from four seconds to ten minutes.Okay, these are the advantages. what are the disadvantages? Then The number one disadvantage is that if a wrong transfer is made okay, then this person A cannot ask for the money back. Why? I'll tell you why. Let us say the account to whom the money was to be transferred was account number 645, and by mistake,
If the person said 654, he does not know who is 654; that person does not know who is 654; no one knows who is 654; so once money is gone, it can't you can't get it back. If it was a wrong transfer, this could have happened. If a bank was there in between, because the bank knows who is 654 right, that is a disadvantage number one and number two, because the sender and the identity of the receiver are not unveiled, unfortunately. it is used for a lot of illegal activities through the internet, which is many times a part of the internet that is known as the dark web, but if you want to know more about what technology is used behind all these things, we are going to cover that in the next part of the video.
Are Cryptocurrencies Legal in India?
Well now let's understand whether cryptocurrency is really legal or illegal. There are two different things: one cryptocurrency being legal and one cryptocurrency being allowed as a legal tender in India. Let's tackle both the problems. number one is it the legal answer is yes, then why on the 6th of April 2018, when the RBI imposed a banking ban on Indian banks to have a relationship with crypto companies, but the same banking ban was lifted in 2018 by a supreme court decision, because of which the Indian banks were allowed to have business relationships and banking services with an exchange. So what's the conclusion? Trading in cryptocurrencies, as on date, is absolutely legal. Then what is the problem.
The problem is that cryptocurrency is still an illegal tender of money. That means what tomorrow if I want to go to a shop and buy a refrigerator, I go to the shop I tell the shopkeeper, okay give me this refrigerator and I'll say that okay I'll give you a bit some XYZ amount of bitcoins in return, or XYZ or some other cryptocurrency in return, is that allowed?" No, it's not a legal tender. I will have to pay in INR I'll have to pay Indian rupees. But then you will say but it's illegal. No wait, you can compare it with something like this. Even if I go to the same shop and I tell them okay, pack that fridge for me and I say I don't have rupees right now, do one thing. I'll give you 10 reliance industry stocks in return. Is that allowed? No, because even stocks are not a legal tender. I hope you have understood the difference between cryptocurrency being legal and cryptocurrency not being allowed as a legal tender in India.
What is Blockchain?
Now let's try and understand what is a blockchain is in simple words. A blockchain is nothing but comprised of two words, and one is "block" and the other one is "chain". Right now, what's a block block is nothing but a database which stores a lot of information. What kind of information? Now let's take the original example that A was sending some cryptocurrency to B. Okay, now what will that block store? That block will store information like who is the sender, who is the receiver, when was the money sent, and so much more information will be stored in that block right now. Now that this block is full, another block enters the picture, but when this block begins, it will point to the previous transaction. There are concepts such as hash rate and hashing.
we are not going to go into details of that let's try and understand the essence of what is a blockchain is. will point forward we are continuing basically from here. right again this block will start filling up with a lot of information correct once this block is filled. let's say now the third block starts but the third block will also again point out to the last transaction of the second block now all these blocks will be linked will be uh you know tied together with the help of a chain and that is why this is called as a blockchain. now the big question if I were to delete the data from one of the blocks is that possible no why because a third block was pointing out to the end of the second block. If that second block goes away, it will beclearly understood that something is missing so this cannot happen and that is why it is said that blockchain is immutable.
What is Bitcoin?
now let's try and understand what is bitcoin well bitcoin is nothing but a type of cryptocurrency. bitcoin was founded in 2008 and it was launched in 2009 by Mr. Satoshi Nakamoto. like I am sure no one knows who Binod is. Similarly, no one knows who Mr. Satoshi Nakamoto is. Well, what is the advantage of bitcoin I'll tell you, I can just compare it. And similarly, the promoter of this bitcoin is similar to Mr. Satoshi Nakamoto. Now I can imagine that if something happens to the promoter of the company, then what will happen to the share prices of that company? They want to go down drastically. Similarly, if something happens to Mr. Satoshi, then what but we don't know whether he's alive or not. So that danger is far away right now.Oh well, it can't be held physically in your hand, why is it a digital currency.
How does a Bitcoin Transaction work?
Well, I hope you have understood what bitcoin is very well. Now, one or two more fun facts about bitcoin. What do you think how is the supply of the Indian rupee? Is it limited or unlimited? The correct answer is that it's unlimited whenever the government wants it can print more and more Indian rupees. What about bitcoins? Is the supply limited or unlimited? The supply is limited. Okay, so there are approximately 18.6 million bitcoins in circulation right now, so let us move on to how a bitcoin transaction actually occurs.
So let us say our old example where A transfers bitcoins to B. That's where a new transaction will be entered. Now what happens? This transaction will have to be verified by someone. like you remember the bank example? If A sends money to B, then there'll be a bank in between. That bank will verify this transaction. But in bitcoins and crypto, do we have any intermediaries? Who will verify this transaction if there are no intermediaries?can imagine there are thousands of people all over the world who are there who are wanting to verify this transaction. These people are called as miners. Okay, so what happens is that whenever A person sends bitcoin to B, no one will say that in plain English; it will be written in some cryptic language.
Okay, imagine this as a mathematical problem that someone can see. Thousands of people from all over the world will try to solve it. Not with pen and paper. Not with a regular laptop. All of these are very, very powerful computers that will require super computers with very high computing power. Computers will be required to actually solve these mathematical problems. once they solve this problem, what will happen is that they will have to come to get something in return as a reward that is where we say that they are mining the Bitcoin okay so in simple words someone is verifying the transaction or free of cost, okay some reward will have to be given to that person at that reward is in the nature of giving him more bitcoins but these bitcoins are mined no one will transfer bitcoin to them as such right.
Should one Invest?
Now the big question is whether to invest or wait. To begin, you must understand how volatile bitcoin has been in the past and also in the present. For example, in December 2017 it reached a high of around 19,000 per bitcoin, then it went down and down and down, entering a bear market, and it rallied a long way, currently trading at around 42,000 per bitcoin.As I record the video, the bitcoin is trading around 36,000 for one bitcoin, so I hope you've realised by now that it's a very volatile cryptocurrency. The big question is, are you spelling it correctly? Are you saying it correctly? At 36,000 for one bitcoin, how on earth will I be able to invest even for one bitcoin?
You do, however, need to purchase one Bitcoin.Can you buy it in fractions? Yes, so for example, can you buy 0.1 share of reliance industries no you can't but can you buy 0.1 Bitcoin answer is yes so buying in fractions is allowed okay wait but then the big question is that whether I should buy Bitcoin, Ethereum, or any other cryptocurrency for that matter out of all this which should I choose? I think that, like I say in stock market, don't go for small caps, go for large caps, which are comparatively known which have a proven track record.
Similarly, if I'm talking about cryptocurrencies, For example, bitcoin is a cryptocurrency which has the largest market cap and alone, bitcoin has more than 65 percent of the total market capitalization of all cryptocurrencies put together. But then if you ask me my personal opinion, i would want to invest a small amount of money, which I always call a "party fund." That will depend on everyone's risk appetite. So for me, it can be 5000 rupees. For you, it can be 10,000. For someone else, it could be 500 rupees. So that depends on how much risk you are ready to take. That can be a small amount with which you may start your journey in investing in cryptocurrencies.
What is CoinDCX
If you live in India and want to invest in cryptocurrencies, you should check out their app, coin dcx go, which is India's largest and safest cryptocurrency exchange. If you still want to learn more about cryptocurrencies, they have a free learning platform, dcx learn.If you are a beginner in cryptocurrencies, and if you want to try, then you can surely check out their app, which is the coin dcx Go App, which makes investing easy, quick, and seamless using Indian rupees. To download the coin dcx Go App, follow the link in the pinned comment, and if you're a pro, then you can surely check out coin dcx, which is helpful for investing in more complicated products like margin, trading, futures, contracts, lending, staking, etc.
Key features of CoinDCX
Well, a few key features of the coin dcx app are instant order settlement, high liquidity, and low risk. Why? Because you can start investing with just ten rupees and depositing with just one hundred rupees.Its KYC is fast and safe because it is AI-enabled. It has multiple layers of security to ensure fund safety, and it is also backed by Bitgo's custodian.
Now the grand finale question is: where do you store these cryptocurrencies? Option number one is to store it with the exchange, where you can also earn interest on it. Option number two is to store it in hardware wallets, which resemble a pen drives but are password protected. 's an amazing fun fact that there is a US programmer who has actually forgotten his password to his hardware wallet and he has only two attempts left to access his 300 million dollar bitcoin fortune. I hope you have understood and enjoyed this small session on cryptocurrencies. If you have liked it don't forget to share it with your friends. If you want to learn more from me, do let me know in the comment section. Till then, take care. Jai Hind and bye bye.