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Before we get into our topic on how cryptocurrencies work. We need to talk about the importance of keeping the cryptocurrencies that you have in your exodus crypto wallet safe, and The best way to do that is by using a VPN. Your ISP and possibly other not so good actors can monitor and record your internet traffic. This means they know exactly what websites you visit, they can see that you have been buying cryptocurrencies and that you have cryptocurrency wallets installed on your device. With a VPN your internet traffic is encrypted and scrambled so that nobody can spy on anything you're doing. Another good reason to have a VPN is to get around geographical blocks, some websites and cryptocurrency exchanges like Binance, bybit and many others will not allow you to use their services to trade cryptocurrencies if you are on those sites from a US ip address and a VPN can easily solve this issue. There are many other Fantastic uses for a VPN that you’ve probably never heard of, But this video is about cryptocurrency and how cryptocurrencies work so let's get started!
What are cryptocurrencies? To answer that question we have to first understand how money works and where it originates. Currently, most of us in the United States and many other countries use US dollars to make our day-to-day purchases. These purchases are most often done electronically using a debit or credit card, however, the idea of the US dollar is the same be it an in person paper transaction or an online credit card transaction.
Let’s start with the federal reserve. Many people think that because the word federal is in the name, that the federal reserve is part of the US government. The Federal Reserve is NOT part of the US government; it is a privately owned entity that lends currency in the form of US dollars to the US government with interest attached. The Federal Reserve is in control of the money supply and let's just say they don't always have your best interests at heart. Speaking of interest, the interest that is charged on the currency that is lent to the US government is the main reason why we US citizens have to pay Federal taxes. Not all of the tax revenue that you pay to the IRS goes toward social programs and infrastructure. A very sizable portion of the federal taxes that come out of your paycheck each week goes towards paying interest also known as the national debt to this privately owned entity known as the Federal Reserve. So what we essentially have here is a central authority that is in control of our money supply. Let that sink in for a minute......... Moving onNow let's talk about cryptocurrencies most notably Bitcoin, But most cryptocurrencies operate similarly. Cryptocurrencies in their simplest form are nothing more than a digital ledger that all participants have a copy of. Let's say Hakim (me) requests a transaction to send 0.5 bitcoin to a bitcoin wallet address that I have designated for long-term storage and a wallet address can be thought of as an account number. The wallet that I am sending the BTC from is linked to 2 unique keys and this holds true for most cryptocurrency wallets. There is a Private key and a public key. The Private key is what gives you or anyone with access to your private key access to the available cryptocurrency on that particular wallet. A private key when it pertains to BTC is typically 64 characters containing both numbers and letters. Always keep your private keys stored someplace safe. The public key is very similar to a private key except that it is meant to verify that you signed/authorized a transaction with your private keys. This eliminates the security risk involved with sharing your private keys to verify that a transaction has been authorized by the sender. This transaction of 0.5 BTC is broadcasted to a peer 2 peer network consisting of computers known as nodes or miners. Now don't let the term "node" confuse you. A node is nothing more than a computer running special cryptocurrency transaction validation software that a HUGE number of network participants run all across the world, and yes anyone can run a node and take part in securing a cryptocurrency network. Next, the network of nodes validates the transaction and the user's balance also known as UTXO’s or unspent transactions. Now the senders transaction validation being done by this HUGE network of nodes will have all of the nodes competing against each other to get their new block added to the network. There is a reward for winning the competition to add your block of data which contains the new transaction to said cryptocurrencies blockchain. The reward is typically in the form of the same type of cryptocurrency. The competition takes place using the nodes processing power to solve a mathematical equation for SHA256 if we were to use BTC as the example. SHA256 stands for Secure Hash Algorithm 256-bit and it is a form of encryption, hence the name Cryptocurrency. This process is what is known as cryptocurrency mining. Once the new block containing your transaction has been added to the blockchain, typically the recipient or wallet will not release the sent cryptocurrency until a set number of confirmations have been achieved. Confirmations are blocks of data that have been added to the blockchain after the block that includes your transaction. The amount of confirmations can vary depending on the cryptocurrency that is being sent. Typically when it comes to BTC a wallet won’t make available the BTC until 6 confirmations have been achieved.
Now some things that i may not have mentioned. All cryptocurrency transactions unless it is a privacy coin are stored permanently and publicly on the blockchain. These transactions are not attached to a name or any personal information but are attached to a wallet address which is a set of characters that consist of letters, numbers and represent what you can think of as an account number. There is no risk to having your Wallet address displayed publicly because it is only for receiving. You can find transaction information with either the transaction ID or the wallet address using what is called a blockchain explorer for the cryptocurrency in question and there are no fees or anything like that associated with using a blockchain explorer. The transaction ID will be available within the transactions listing inside the cryptocurrency wallet that you are using. Quite often and this is the case for most wallets you can simply click the transaction ID and be taken to a page that gives you all the details about the transaction. I have mentioned crypto wallets quite often in the video so far. So I'm guessing you might be wondering where you can get a crypto wallet or what's a good crypto wallet to use. In my opinion exodus wallet is one of the best and easiest crypto wallets to use. The link will be down below in the description for the exodus wallet. However there are many different and worthwhile free crypto wallets that you can use. As well as some excellent hardware wallets that you have to pay for. But many consider hardware crypto wallets like ledger and trezor to be the gold standard of crypto storage.
Alright so Just in case it has not become pretty clear after my explanation of what cryptocurrencies are, allow me to point out some of the amazing benefits of transacting with cryptocurrencies. There is NO centralized authority that you have to ask permission from to send and or receive currency. Let's say you wanted to buy some clothing to resale in your business and the vendor happens to be in Australia. Well you would need permission from either Your bank to wire the money, a credit card company, or some type of remittance service. You can also be certain that this transaction will involve some hefty fees, delays, ID verifications, and possibly a DNA sample will be required. With cryptocurrency, there is no asking for permission because it is decentralized, the fees are very low, we're talking about pennies for HUGE transfers of value, and there will be no ID verification needed. It’s simple: you ask for your vendor's wallet address, you send the crypto to that wallet address from your crypto wallet and a few minutes or seconds later the transaction is complete. This also works for sending cryptos to ANYONE at anytime from ANY place in the world, all you need is an internet connection. Maybe you are worried about the price fluctuations of cryptocurrencies and need stability like sending US dollars aka federal reserve notes, it literally says federal reserve notes on the money. You can choose to do a transaction using what are called stable coins. Stable coins are cryptocurrencies that are 1 dollars in price and stay at 1 dollar in price with maybe VERY VERY small fluctuations that would be in the less than a penny range. Examples of a stable coin would be TUSD aka true usd, USDT aka usd tether, DAI aka maker dai, USDC and many others. There is no shortage of stable coin options to transact in. I personally cant understand why people are still using paypal and other such services when using a stable coin is much more reliable, the fees are lower, and it works anywhere, anytime, and any amount. NO ID verification needed, no arbitrary account freezes, or delays. Cryptos are FANTASTIC! You can even use the Gemini app to get started now. The link for that is in the description, use the link and you can get $10 worth of Bitcoin for free.
Your funds in your cryptocurrency wallet can never be seized like they can be with a bank account. As long as you have access to your private keys. You and you alone have access to your funds. Bitcoin is quite often referred to as digital gold. Your gold can’t be seized in the middle of the night without somebody physically coming to your house to take it from you and nobody knows that you own gold right? Nobody has to know that you own crypto. You can have several million dollars worth of crypto be it in the form of a stable coin or any other type of cryptocurrency. Yes the easiest way to get your hands on cryptocurrency is to buy it from an exchange or platform such as Gemini and a link is down below to sign up for Gemini and get $10 dollars worth of BTC for free! However you can also purchase cryptocurrencies such as bitcoin, Litecoin, Ethereum and whatever by transacting peer to peer. Simply do a search on craigslist or your favorite classified website and meet someone locally to purchase some crypto with cash and send said crypto into your crypto wallet that does NOT require any ID verification to use. Many real crypto wallets can simply be downloaded as an app to your PC, smartphone or you can purchase a hardware wallet such as ledger or Trezor to remain off the radar of those that might be trying to understand how much value you have stored away.
Once you understand the basics of how cryptos work and realize that they are pretty easy to transact with. You will likely be wanting to partake in some trading, and make some serious profits in doing so. Profits that you will never realize by trading in stocks unless you are doing insane leverage trading. I should also add that you can leverage trade with cryptos as well. So yeah there is that golden nugget. Every time another person decides to start transacting in cryptocurrency, less and less power is given to central authorities that like to make us work for them for free via taxation. Which can critically be thought of as a form of slavory. But one would have to be critically thinking to see it that way. I love cryptocurrencies. That's it for this video. Be sure to subscribe, like and comment down below. Let me know if I explained how cryptocurrencies work good enough for most people to understand and what I could have done to make the video better. As always, thanks for watching and i'm out! Peace.