Bitcoin and blockchain explained in simple terms so that anyone can understand it. -Bill Poulos, founder of Profits Run. https://www.youtube.com/watch?v=FTvaWBLZRZM

2. Hi, this is Bill Poulos from
Profits Run.

3. In this short video you will
quickly and
easily understand
how Bitcoin works.

4. I think you'll agree that this is
the simplest explanation of
Bitcoin you've ever seen.

5. The concept of Bitcoin can be
a little tricky at first so to help
you understand let me tell you
a short story.

6. Imagine two people on a
beautiful beach.
Let's call them Sammy and Suzie.

7. Sammy has one coconut. He wants to
give it to Suzie who has zero coconuts.

8. After Sammy gives the coconut to Suzie he now
has zero coconuts.
Suzie now has one, which she
stores in her lovely green satchel.

9. And we know this because we can physically
observe the transaction.
We could physically touch the coconut if we
were standing there on the beach.

10. There's only one coconut here, not
two, not three.
You can't pull coconuts out of thin air.

11. This type of in-
person
exchange is
something we
can all
understand.

12. Well let's back up
for a minute
and ask this
question: what
happens if
Sammy gives
Suzie one digital
coconut?

13. How does
she know
she'll be the
only owner
of it?

14. How did she know that Sammy didn't make ten
copies of it that he gave to other people?
This kind of
transaction is
more complicated.

15. One solution would be to bring in a third party
to keep track of the transaction on a ledger.
Let's call his person Andy the accountant.

16. He could write down on his ledger that Sammy
gave Suzie one digital coconut, which is stored
in her green satchel.
That way someone is keeping track.
This solution is flawed.

17. Andy could also just create more entries in his ledger, thus
creating more digital coconuts.
There's no trust in this scenario, so this solution doesn't
work.

18. But what if there were 10 accountants in charge
of keeping track of this transaction?
What if all 10 had copies of the same ledger?

19. Now we're getting somewhere. But, there's an
even better solution.

20. Now we're getting somewhere. But, there's an
even better solution.
Instead of just ten accountants standing on
the beautiful beach with Sammy and Suzie.
What if there were thousands
of them spread across
the globe?

21. It would be a huge network of people who all have a copy of
the same ledger. They would all keep track of every digital
coconut transaction at a simplified level?
That is exactly how Bitcoin works.

22. Let me explain.
The digital coconut in our
example is a Bitcoin.

23. Every Bitcoin is
unique. The satchel
that Suzie used to
store digital
coconut is called a
wallet.

24. Every wallet is unique. The accountants spread
across the world are called miners.

25. The common shared ledger (that all the miners
have copies of) is called the blockchain.

26. Because the sequential transactions stored in it
are called blocks, blockchain is actually more
than just a simple ledger.

27. As it is the technology that enables Bitcoin to be
transferred, it has a set of rules and regulations
that all the miners must follow.

28. Thus it is governed by the peer network
of miners.

29. Another way to think of blockchain is like this:
blockchain is to Bitcoin as the internet is to
email.

30. So why would a miner have any interest in participating in a
blockchain network?
What do they get out of it?

31. One of the ingenious ideas built into the blockchain
rules actually awards bitcoins to miners who use their
computers to solve complex mathematical equations.
One of the ingenious ideas built into the blockchain
rules actually awards bitcoins to miners who use their
computers to solve complex mathematical equations.

32. This is the only way that new bitcoins are created. The
process of solving these equations is
called mining.
Thus the reason for the term miners.

33. FOR THE BITCOIN
PROTOCOL THERE ARE A
FINITE NUMBER OF
BITCOINS THAT CAN EVER
BE MINED—ABOUT 21
MILLION.

34. THE RULES INCREASE THE
COMPLEXITY OF THE
MATHEMATICAL
PROBLEMS TO BE SOLVED
SO THAT IT BECOMES
INCREASINGLY DIFFICULT
TO MINE BITCOINS YEAR

35. IT'S ESTIMATED THAT ALL
21 MILLION BITCOINS WILL
BE MINED BY THE YEAR
2140.

36. AFTER ALL BITCOINS ARE
MINED THE MINERS WILL
STILL HAVE AN INCENTIVE
TO MAINTAIN THE
BLOCKCHAIN THROUGH
TRANSACTION FEES.

37. SO THERE YOU HAVE IT. JUST
REMEMBER THE STORY OF SAMMY
AND SUZIE AND THE DIGITAL
COCONUT AND YOU'LL ALWAYS
UNDERSTAND AT A HIGH LEVEL HOW
BITCOIN WORKS.

38. IF YOU ENJOY THIS
EXPLANATION PLEASE
POST A COMMENT BELOW
AND THANKS FOR
WATCHING.