Bitcoin For Non-Technical People #7 – What Is A Bitcoin Account Or Wallet?

This is a Tai Zen again in this video I want to continue our series here on Bitcoin for non-technical people.

So, in the first video, I talked about the difference between the 1% that’s on Wall Street that controls all the money that can print money at will without ever having to work for it or give people value for it. And how they control the power over the 99% of people like you and me are Main Street because they’re the ones who are holding and printing the money and we’re not allowed to do that.

In the second video, I talked about how the blockchain works, which is the public ledger that was used to be private inside the banks. What Satoshi- the inventor of Bitcoin did was that he what he did was he took that leverage made it public and that ledger is called a blockchain.

The blockchain is updated every 10 minutes and every time I have a new block of data that is added to the blockchain. That blockchain contains all the transactions that have ever been made in the Bitcoin world since 2009 when the Bitcoin system was released to the world by Satoshi.

In this video, I want to talk about Bitcoin wallet or Bitcoin account. The way that you normally store your money in the regular banks that benefit only 1% of the people on Wall Street. What happens if you have to bring your ID, your social security number, your government identifications, driver’s license, all kinds of IDs and requirements, you have to be a certain age, all kinds of nonsense to set up an account.

Satoshi, he felt that was not fair. It’s not fair that only the people that have a job and only the people that are educated and only people of a certain race or only part of the people of a certain ethnicity are allowed to open up an account in the industrialized and developed countries.

What happens is Satoshi saw that in the poor countries in the third-world countries like in parts of Asia and parts of Africa and parts of Latin America, there are people out there that do not have banking service. People out there that do not have the ability to send money to another human being on Earth.

Satoshi felt that “Hey, you know, that’s not fair. That’s not fair.” We have over 7 billion people on the planet and only like over a slightly over a billion people have the benefit of banking service, of being able to wire money to another person, being able to store their money in a safe place and things like that.

What Satoshi did was he decided to create this new money system. He had this brilliant idea that “Hey, you know what? Everybody, every human being on earth should be allowed to open up a bank account regardless of their age, their ethnic city, their democratic country whether a socialist or communist. It doesn’t matter who you are. What country you’re in, what language you speak, what race you are, you should be allowed to have banking service as a human on this planet”

What Satoshi did was created this Bitcoin account system to where as long as you have a computer or some kind of smartphone or any kind of device that can store a wallet that is your bank account. Now what Satoshi did was made banking available to the entire world, to the other 6 billion or people on this planet that do not have access to banking. And this has very big and revolutionary effects in the world.

The reason is because I have a friend that’s in a communist country such as Vietnam where I’m originally from or in Cuba or in other countries where they have oppressive governments or whatever and I can send the money and I really don’t care if the government says no or not because my money is going to get to the person that I want to send it to and I don’t have to worry about the government or anybody interfering it.

If I have a family member that’s back in Vietnam or have a college friend that studying in Cuba. It does not matter their communist governments do not allow me to send the money with Bitcoin as long as they go to Bitcoin.org and download one of the Bitcoin account software, right?

This Bitcoin account software the original one was called Bitcoin-QT and you can find that at Bitcoin.org on their wallet page or their account page the show you how to download it with instructions and everything. And I’ll make a future video to explain how to do that later.

But for now, just know that you can download the software to your computer. And now you have a bank account on your computer or on your smartphone or your iPad or whatever it is that you’re using for your computing device.

Now, once you get that software on your computer or your smartphone. In the Bitcoin world, it’s referred to as a wallet. And I think this is one of the biggest downsides of Bitcoin is that they’re trying to get a lot more people to adapt to it. And it’s growing by day more and more people are adopting it by day. The problem is some of the terms of these engineers, computer scientists came up with kinda don’t make sense at least to a knucklehead like me.

Why are you calling something a wallet when you can’t even touch it? It’s software.

So I would prefer to call a Bitcoin account or a Bitcoin account software that you put on your computer and install it. Once you install it, there is a unique thing about this Bitcoin software when you download it and install it on your computer, it creates what’s called a private key.

It is extremely important that you protect that private key.

Because you are the only one that has that private key in the world. Nobody else has a copy of it. If you lose that private key and that private key it’s a big old long string of numbers and letters, it doesn’t even make sense. There is no way that you can look at it and memorize it, you have to write it down or a copy and paste it somewhere and make sure it’s there.

What happens is when you download it on your computer this a file called wallet.dat. That file is the private key. Whenever you back up your private key to like a memory stick or to an external hard drive or anything like that, that’s what the computer back up is that wallet.dat file

In that file, contain your private key if you don’t have that private key, you cannot send money out, you can receive it but you’ll never be able to send it and spend it. Make sure you protect it.

Now, there are different types of wallets and these different types of wallets in the way that you store these wallets or the Bitcoin account is for security reasons. Because you are the only one are responsible for those Bitcoin…that you hold in your account. So there’s a paper wallet, there’s cold storage, there’s warm hot storage.

Anytime that your computer that contains your Bitcoin account, if it has access to the internet, there is a chance that someone could hack into your computer, break into it and steal that wallet.dat file from you or copy it from you. And then use it to send money from your account to their account and that’s how they steal your money.

What happens if people recommend that the designers and the developers a Bitcoin recommend that you create what’s called a paper wallet.

What it is? It is that you take your private key that’s in that wallet.dat file and you copy and actually you physically write it out or print it out onto a piece of paper and store, that piece of paper with that private key or that wallet.dat file on it.

What happens is when you do that, that is called cold storage because that piece of paper doesn’t have a chance to touch the internet.

If if you store your Bitcoins on your account on your computer and it has access to the internet, then that’s what’s called warm or hot storage.

If it’s warm is like it’s on your computer but it’s not exactly connected to the internet yet and then once it’s connected it is hot storage.

So anytime is connected, there are people out there that are a bunch of crooks. That go out there and all they do is a try to hack into people’s computer to look for that wallet.dat file because they know it contains the private key in there and once they copy and paste it and then send it to themselves. They’re capable of stealing your Bitcoin without even touching your computer like physically touching it.

Now, how strong is this private key that is stored inside that wallet.dat file? This private key is extremely strong because they recently confiscated like 144,000 Bitcoins from the owner of an illegal website called Silk Road.

And what they were doing on their website were selling narcotics and a bunch of other illegal contraband stuff on there and the owner of it finally got busted. And when they busted him, the FBI and everybody in the US busted him, they arrested him and they took his computer and everything. However, he only had a small number of Bitcoins on his computer that was warm or hot storage.

Because of that, the FBI Cryptographers were able to go in there dig into that wallet.dat file and extract the private key and be able to go in there and transfer is Bitcoins out of this computer into the FBI’s account and takes that money.

However, they confiscated also 144,000 Bitcoins from the same owner but they were not able to find the private key that goes along with it.

Because of that, they can never touch that money and a lot of people say eventually they’re going to crack it and find it. They would have to spend hundreds and hundreds of millions of dollars and hundreds of years before they finally crack that code to get into that wallet.

That is how tight… Remember when Satoshi Nakamoto when he invented this. Remember that, he knew that the 1% that control Wall Street and control the world do not like it.

If they find out that there’s money here. They’re gonna come take it so when they came and try to take it, they couldn’t do it because Satoshi made sure that the cryptography that securing everybody’s transactions and their money is as tight as humanly possible.

Right there in the future video, I’ll talk about different ways that Satoshi secure a system and try to make it non-technical as possible so you can understand it.

But it’s tight, so basically, let me just give you an idea here. How powerful the security is?

Those 144,000 Bitcoins that were confiscated by the FBI. Right now, the value of $837 per Bitcoin. If we take that $837 per Bitcoin in the market right now and multiply it by 144,000 that would be $120,000,000. You can bet that the FBI is trying to crack the hell out of that figure out how to get that private key so they can open up the owner of Silk Roads account so they can confiscate that money.

Here’s 5th wallet type or 5th thing that you need to know. I suspect I’m not the owner of Silk Road. I don’t know him, don’t know anything about him. But I think this is what he did. Because this is an option that you have as a Bitcoin owner or a Bitcoin user is that you can create what’s called a brain wallet.

And what a brain wallet is if you take a phrase there’s software out there that remember that long code, that long Bitcoin account number that you see on the screen right now. That long code there is my account number and it was automatically randomly generated by my Bitcoin account when I’ve installed the software on my computer.

However, if you want to create a specific… Let’s say that you took a phrase, a famous quote, a famous phrase that you like. Let’s say that you wanted a quote Abraham Lincoln and you said “Four scores and seven years ago”, what happens is the brain wallet software will take your quote and converted into a Bitcoin address. It does all kinds of fancy-schmancy cryptography and computation and it’s able to take that quote and converted it into a unique address that only you know.

Because of that, that will become your private key. The quote “Four scores and seven years ago” will become your private key and it’s only unique to you because you only know it, no one else knows that that’s your private key. So because of that, they call it a brain wallet. Now the information is stored in your head.

What I suspect is that the owner of the Silk Road. He has a private key in his head. He’s the only one that knows what the password is to open up that private key to open up his Bitcoin account to be able to send the money anywhere.

What’s going to happen is? They are going to do whatever they want with him, put him in prison do whatever. But the day that he gets released, he’s going to be able to go and I suspect that he’s going to be able to go and use his private key that’s in his head and his brain wallet and be able to access those Bitcoins that was confiscated from him. That is the beauty of what the blockchain and what Bitcoin can do.

Hopefully, in this video, I was able to help you understand “What is a Bitcoin account?”, “What is a Bitcoin wallet?”

What it means to have a paper wallet means that your private key is on a piece of paper and it cannot touch the internet. Cold storage means that you stored it can be on a piece of paper and you can carve the private key on a piece of wood, on a piece of metal and the stone and stash it and hide it away it.

It doesn’t matter as long as he’s not touching the internet is considered cold-storage, warm or hot storage means that your computer that has your Bitcoin account has access to the internet where people can access and hack into it. A brain wallet is nothing more than the Bitcoin account that is the private key is inside your head whether it’s a string of numbers and letters or is an actual phrase or a quote or a model anything like that.

Hopefully, that helps you understand more about “How Bitcoin accounts are set up” and “How wallets are created” and “what they mean”.

Thanks for watching this video. If you have some friends or family that want to know more about Bitcoins. I invite you to share this video with them and if you like this video hit the like button comments whatever and if you want to get more videos like this.

I invite to go to prisonerfreedom.com/newsletter subscribe to my newsletter and I’ll send you more videos like this when I make them. Thanks for watching this video and I’ll see you in the next one

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