Complete Cryptocurrency Course For Beginners (Full Course) | Security, Trading & Mining Explained

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– Nelson Mandela once said that, "Money won't create success,
the freedom to make it will." Welcome to The Complete
Cryptocurrency Course, and thank you for purchasing this course. We are gonna have a lot of fun together as we learn everything,
and I mean everything we need to know about cryptocurrencies. Now cryptocurrencies are not
just about digital currencies. There's so much more. Because the underlying technology
of many cryptocurrencies enable secure contracts
that will eliminate part of the enormous cost in the
long run of hiring accountants, lawyers, middlemen, et
cetera, so that more people can get access to capital as
more than 2,000,000,000 people don't even have bank accounts as the current financial
system hasn't really changed that much over
the past few decades, which is partially what led to
the financial crisis of 2008.

Okay, now I'm gonna be
teaching this course in a much more visual way so we can make complex topics easy and fun
to learn and edutaining too, meaning educational and entertaining. And it's important for me to
stress that you're not only a student in this course,
you're also the customer, and the customer is always right. So please let me know if you
want me to add new lectures covering new topics as my
goal is to not only make this the most comprehensive
cryptocurrency course on the market but also the most up-to-date
cryptocurrency course. And as you take this course,
if you want me to add more lectures covering more
topics, please let me know and I will work around the clock to add these lessons for you. Thanks again, and let's begin. So in terms of my
background, I have 25 years of finance and technology experience.

I've been investing in and on the boards of cryptocurrency company since 2013. I have a lot of experience
in finance and technology as I worked on Wall
Street at Goldman Sachs. I also worked in the hedge fund industry and also in the venture capital industry. Now when I worked in technology
consulting at Accenture before getting my MBA in finance, I actually worked on
technology consulting projects in the financial services sector and so I have a lot of
technical experience as well. And I've also started venture
capital and hedge fund and technology companies. And I only mention all this
because I'm gonna provide you with a number of frameworks for you to analyze cryptocurrencies
before you consider investing in them based on my real-life practical experience and
never based on theory. I don't believe in teaching theory. Now although I'm very
positive about investing in the cryptocurrency
market in the long run, I have to stress that there's
a lot of unethical people and scammers in the
cryptocurrency markets, and I care and I wanna help you so you can apply the concepts
that you learn in this course and do your own research before investing and so you can securely
protect your money.

Now I believe in being
contrarian when I invest, and I think Warren Buffet
actually said it best when he said you wanna "Be
greedy when others are fearful "and fearful when others are greedy." And the cryptocurrency
market is very controversial. And many countries are actually gonna ban the use of cryptocurrencies, okay? Many countries will ban
buying, selling, mining of certain cryptocurrencies
for various reasons and I'll explain why soon. As such, what I wanna do
is I wanna provide you with a menu of many types
of cryptocurrencies, many types of cryptocurrency wallets, many types of cryptocurrency
exchanges and much, much more. Why? In case the country that
you live in does not allow the use of certain
cryptocurrency companies.

Now governments are really confused when it comes to cryptocurrencies
because on the one hand, they wanna protect their citizens from getting scammed
with cryptocurrencies. They wanna protect you. But on the other hand,
these governments also know that in the long run, if
citizens use cryptocurrencies, then the government loses
a lot of power, okay? Now I'll explain what that means in much more detail in this course. Okay, let's discuss how
to take this course, and I believe it was
Confucius who said it best when he said, "I hear and I forget. "I see and I remember. "I do and I understand." As such, the best way to
learn is by doing exercises, and there's gonna be a lot
of exercise in this course that we will complete together.

There are seven parts in this course and many exercises that
you can do as we go on this thorough and fun journey together. And please note that, I
think, in order to understand the micro, meaning
individual cryptocurrencies, we need to first understand the macro. Okay, that's me and my
tippy-toes, the macro. Meaning we need to
understand the top-down view of the force before we
discuss the bottoms up analysis of the trees. Now in the next couple of
minutes, I will discuss the seven parts of this course. I will also show you the seven parts of your Excel dashboard exercise workbook, which is attached to this lecture and looks like this here, okay? And I will always, always tell
you when and how to complete all of the many exercises in this course and when to open up your
course Excel dashboard.

I also wanna mention that
there is a beginner track in this course, okay? There's also an advanced track. I included a beginner track, which has a logo b you'll see
quite often in the course; and an advanced track because
I wanna appeal to everybody in this course, okay,
based on your experience and interest in cryptocurrencies. And as a quick side note,
I was born in Canada, proud Canadian, I live
here on in the States and I showed this to my
eight-year-old son here and I failed as a Canadian father because this is a hockey puck obviously.

I said, Dylan, what is this? And he said, Dad, it's an
Amazon Alexa Echo so… (chuckles) It's a hockey puck. So B for beginner, because
when you play hockey, you use a black puck, okay? But when you practice
hockey, a lot of times, and I didn't know this till recently, people use an advanced puck, a white puck so it's hard to see on the ice. Okay, so beginner, advanced, I'm trying to keep it fun. Okay, all right. And there will be a lot of
props in the course as well. I had a blast putting this together. Okay, let's take a look at your complete cryptocurrency
course Excel file here. And this Excel file is
attached to this lecture and it will work with
Windows and Mac, okay? But I recommend having
Excel 2013 or later. And if you don't have
Excel, you might be able to go to Microsoft website and downloaded a free trial version,
your call, your call. And although I state that
it works on version 2013 and later, a lot of it will
work also on earlier versions. So if you want, open
up this Excel document, which is attached to
this first lecture here.

And there are no macros
in this Excel file, meaning there's no code
that's gonna run, okay? And when you open it, you'll
see this message here. And I want you to please
select Enable Editing. And if you don't have Excel, you can actually access the
contents of the Excel dashboard and the many exercises
in this course, right, the many exercises in this Excel file here by either doing one or two things. One, if you open the file and
you see a little PDF icon, right, on each tab you can click that; or you can go to this location here, okay? So I'm not gonna talk about
the PDF version of the course for the remainder of this course. I'll only talk about the Excel version. But if you wanna access anything
we do in this Excel file, if you wanna access it in PDF format only, you can go to this link here. Thanks. Okay, so as we go through this course, you will see in the coiner
of each button the letter b for beginner, okay, and A
for advanced track, okay? And this is meant as a
guide to help you decide how to take this course as you navigate through your Excel
dashboard exercise workbook.

Okay, and I also included
the letter A for advanced and b for beginner track at
the start of the lectures in the course in brackets. And as you'll see, A for
advance, A plus b for both tracks or b in brackets for beginner, okay? Great, so it's up to you how
you wanna take this course. You don't have to take the whole course, you don't have to do all of it. I want it to appeal to everybody, okay? And once you have your Excel file open, if you wanna change the
viewing size of the document, them please click this
button here for instructions.

Okay, and I think that if
you maximize the width, as I have done here with
my customized toolbar across your entire screen,
it's much more fun to use. Okay, let's go back to the
Course Navigator button by clicking on this course button here. And let's now talk about how to use the Excel dashboard and the seven parts of this entire course. Okay, so first of all, please make sure that your Course Navigator
button is selected. And you'll see that
whatever location you're on in this comprehensive spreadsheet, the button, meaning the
location, will turn green, okay, like this green Course Navigator button after I click it, okay? And there's no code here at all.

And I had a lot of fun
putting this together. And if you wanna learn how
to create this Excel file and customize it yourself, at
the very end of the course, I'll provide you with a bunch of lectures on how to create this file from scratch even if you have no Excel
experience at all, okay? And so I'll always tell you when to click on a certain button and when to open up your Excel dashboard. Okay, great. So please make sure you selected the Course Navigator button here, which will be green after you click it. And please make a
selection of how you want to take the course by clicking
on the beginner track, as you see on the screen there,
okay; or the advanced track; or the entire track, A plus b, okay? Your call.

And you can always change
this later on in the course. You'll notice that the
names of the lectures that you will be watching appear down here on your Course Navigator tab, depending on what track you selected, meaning beginner, advanced
or all lectures, A and b. And in the course curriculum, you will also see the
letters A for advanced track, b for beginners track or A plus b. And this basically means both tracks when I say A plus b.

And it's all based on
your experience level or your interest level, okay? Now on the Course Navigator tab, if we look in the middle here, we see a Course Progress Tracker, which will be updated
after you finish each tab in the Excel file based
on what track you're on. And this will make a
lot more sense very soon as we progress throughout this course. And there's a lot of exercises here, okay? On the right side you
will see your portfolio of what cryptocurrency companies you own or want to own on a watch list. And below that you will see
your profit and loss charts, meaning how much money you've made or lost in a real portfolio or
pretend (mumbles) portfolio. (chuckles) And the charts here will
update once we complete part seven of the course. Okay, so please click now
on the Settings button here. And after you selected
the Settings button, we're gonna customize the course based on what country you live in and what paper currency,
meaning real currency you use as I customized this
course for every single country in the world and
every single currency.

And I had a lot of fun
putting this together, okay? Now please select your country here. And if you want, you can pause me. And I've customized user
experience here for you based on what country you live in, okay? Again, every country is represented in the entire world
here in every currency. And after you select your country, select your currency here. And you will see that your
country name and your currency are now listed up here,
and your flag is shown now in the Settings button. Next up, Please enter only your nickname or your first name, okay? Why, because I wanna customize
the user experience for you through various messages
like this one, okay? And I will never ask you to
enter in any bank account or personal information
or private key information or anything like that in this file, okay? Now after you select your
country, if you scroll down here, you'll see some helpful
links in this gray box based on what country you've selected. Okay, and we'll talk about these links later on in the course, meaning the links in this gray box here. Okay, cool.

Let's click on the Course
Navigator button now again. And please make sure that
you've selected your track here. Okay, let's move on and talk about the seven parts of this course. In part one, which is the part that you are currently watching, it's called Foundations
because it introduces you to all of the basics for understanding the fascinating world of cryptocurrencies. And in this Foundations
part, we'll discuss an introduction to
cryptocurrency security concepts and an introduction to
cryptocurrency wallets, right, where we will create a paper-based cryptocurrency wallet together. We will also discuss an
introduction to blockchain, which is a mind-blowing technology. It's very, very powerful and I think it's the most important technology that's been invented in years.

And I'll explain all
this stuff from scratch. We will also discuss an introduction to mining cryptocurrencies, okay? And I use a lot of visuals in this course just keep it fun, okay? And I'll teach you how
to mine from scratch even if you have no experience creating computers at all or mining,
or taking apart a computer. I'm gonna teach you everything
from scratch, right, based on your background
and interest level, right? We're gonna use, I bought a
couple of mining computers that we'll use to mine Bitcoin.

And I also am going to create
a computer from scratch and I'm gonna teach you
how to select the parts from scratch even if you
have no experience doing this so that we can mine many
different cryptocurrencies with what we created, okay? This is kind of neat. This is actually a mining
tool they used in 1849. This will be a lot fun,
this will be a lot of fun. Okay, probably wash my
hands, it's a little dirty. Okay, and we're also gonna
discuss an introduction to 10 different cryptocurrencies here, and this is still in part one. And then what we'll do is we'll discuss a very, very detailed
49-step investment framework that I created for you so that
you can thoroughly research potential cryptocurrency investments. Don't worry, you don't have
to use all 49-steps, okay? And the framework has
beginner and advanced investment research features, okay, which you can see here.

And don't worry, I'll explain all of this as we go through the course. And you can even use this framework here as a way of comparing the
different cryptocurrencies discussed in the course, okay? And I tried to make this Excel dashboard a one-stop shop for you
so this is the only place you need to go for cryptocurrencies. And you'll see there's
just a ton of links as well to other great resources.

And I know that the
49-steps is a heck of a lot but there's so many
scammers in the market, especially in cryptocurrencies
and I just wanna help you. I wanna help you avoid losing money if I can humbly do so, okay? And now there's a football
team here in San Francisco, and I don't know too much about football, I'm more of a hockey guy, okay, Canadian, but there's a football team here called San Francisco 49ers. And the San Francisco
49ers were named that because in 1849 here in
the San Francisco Bay Area there was a gold rush and a lot of people think that because of
this gold rush in 1849, people are very much risk
takers here in the Bay Area.

And so this is an actual
mining tool from that era and what I've done is I've created a 49-step research process, right? I know it's a little bit out there, but I try to make it
real and I try to make it really fun as well as we go through this very, very long and fun and comprehensive journey together, okay? And so anyway, you'll understand this in much more detail very, very soon, but I had a blast putting it together. I don't know how people
throw footballs, it's hard. Okay, so my 49-step
research process framework is very thorough and based on my knowledge of 25 years of investing
and making mistakes too as a hedge fund investor,
a venture capitalists, having worked at Goldman,
having started a hedge fund and a venture capital company and having started tech companies as well. And the framework is thorough and I wanna help protect your money before you consider
buying, selling, mining or investing any money in
cryptocurrencies, okay? And you don't have to use all 49 steps, I just wanna expose you to a
menu of many different options.

And so I think of myself kind
of as, I'm a waiter, okay, and you're the customer, okay? And hopefully, I'm a good
waiter with good food and not a bad waiter with bad food, one of those combinations. But I wanna expose you to the entire menu of
cryptocurrencies, okay? And you can choose what you want to learn based on this course, and I just want you to be ready, ready to
invest, or not invest or ready to analyze
cryptocurrency companies so you're much more informed. Okay, let me put down my little prop here. All right, moving on, Chris. Okay, now I spent a really,
really, really long time researching how to teach this course and how to think about potentially investing cryptocurrencies because the problem with cryptocurrencies is that there's no
regulated research sources.

And there's not much
government protection for you. And I'll give you an example. Okay, so before you invest in an IPO or initial public offering,
meaning when a company goes in the stock market,
governments usually make companies create these really big
reports called prospectuses. And this is the prospectus
for Facebook from 2012 and we're gonna talk about
this in more detail soon. And this is from Goldman Sachs
when I worked there in 1999 when it went public. I didn't get any shares
though unfortunately. Okay, all right. And what happens is in these
investment prospectuses, every single risk is listed. Every single risk you can imagine, okay? And there's nothing like this that exists in the cryptocurrency market.

And I've created something
like this for you as part of this 49-step
process just to help you preserve your capital, okay? Now after we complete
part one of the course, meaning the high level
cryptocurrency foundations part of course, then in
part two we'll discuss many cryptocurrencies in
a lot of detail, okay, including what each of
these cryptocurrencies are, the pros and cons of each
of these cryptocurrencies, as well as a quiz on each one of these and how to analyze each one of these by creating a 49-set research report on all of these cryptocurrencies, okay? And I'll teach you also how to buy and sell cryptocurrencies.

And if applicable, I'll teach you exactly how to mine these
cryptocurrencies from scratch regardless of what your
technology background is. And one of the most fun
parts of this course I had was building a computer from scratch. And again, I'll teach you how to do that. And it's a mining computer,
we call it a mining rig. I had a blast doing it, okay? And so we're gonna use different machines in different configurations to mine different cryptocurrencies, right? So this is an old Antminer
here for mining Bitcoin. I have another more
modern one that we'll use. And then also, I'm back, we're gonna create a computer from scratch and this is a graphics card. And graphics cards are
the most important part of a mining computer you make. This is a lot of fun. And video games are really upset. Actually this is true. Video games are upset
at miners because miners have been buying these things
to mine cryptocurrencies and driving the price up
of many graphics cards, or at least not enabling
the price to fall overtime.

Sorry, I can geek out
forever, I love this stuff. And in part two we're
gonna cover Bitcoin first as this was the first
notable cryptocurrency. And then we'll talk about Ethereum and other cryptocurrencies as
many cryptocurrencies exist only because Bitcoin has
certain limitations, okay? It's fascinating. Kind of like how Yahoo was one of the first notable, whatever, successful search engines,
and then Google came out and fixed some of Yahoo's issues, okay? Okay, it's controversial, moving on. Okay, this button here
is for future updates. And if you want me to
add more cryptocurrencies to this course, then please
click this button here and answer a one-question survey, okay? I'm not gonna ask you for
any personal information. It's a one-question survey
on what cryptos to add as you're the customer
and I want this course to be helpful for you, okay. Again, I'll tell you
exactly when to open up and use your Excel exercise file. And per this image, when
you select a certain button, that button will turn green
so you know where you are.

Okay, moving on to part
three of the course where we will talk about
the many different types of wallets in much more
detail from scratch. We'll discuss what each wallet is, the pros and cons of each wallet type and how to set up and use each wallet. And if you want me to add
more wallets to this course, just click here, similar
to what I talked about with cryptocurrencies in part two and you can just say,
Chris, I want this wallet to be added to the course as well.

Okay, in part four of the course, we'll talk about cryptocurrency exchanges in a lot of detail, including
what each exchange is, the pros and cons of the different changes and how to use each exchange. And if you want me to add more exchanges, you can click here as well. Okay. Moving on to part five of the course, we will discuss ICOs, which stands for initial coin offerings, which is similar to a stock market initial public offering, except
it's for cryptocurrencies. It's when cryptocurrencies
are first made available for public sale, okay? And in part 5.2 here, I even
added a framework for you, okay, to analyze ICOs
before you invest in them. And you can also use this
framework in button 5.2 or part 5.2 here to
analyze cryptocurrencies we haven't talked about in the course. Okay, I wanna arm you with a lot of tools. Then in part six, we'll
talk about many, many, many cryptocurrency
resources to help you become a better cryptocurrency
investor and researcher in the long run and how to stay up to date on important cryptocurrency news and how to not be biased by people that will try to scam you.

Okay, and you can always
click here on this green text and then select this gray arrow and you can look at any resource you want that we discussed in the course. And the resources are
sorted alphabetically by category type here, okay? And every single one of
these resources we talk about at some point in the course, okay? And I wanted this to be a dashboard one stop shop for you,
kind of like a portal to everything you need
cryptocurrency-wise, okay? For those of you not using Excel, you can use the PDF at this link, okay? And I'm not gonna mention the PDF version of this course anymore. I'm only gonna talk
about the Excel version. But every single thing
we talk about in Excel is available in PDF format
if you want at this link.

Okay, if you have questions,
please send them in. Lastly in part 7.1, we'll put
everything we have learned in this course together. Okay, the whole course comes
to a crescendo in part 7.1 and we will discuss how
to construct and track a diversified, long-term cryptocurrency investment portfolio, okay? And we're doing this last because we really need
to thoroughly understand the cryptocurrencies first, right, as there's many risks and many people that will try to scam you. And one thing I ask is please don't add or remove any rows or columns
to this 7.1 tab here, okay? And this tab, the 7.1 tab
here, right, the button, it's so thorough. So it might take a
couple of seconds to load the first time you load
it as there's links to a lot of market data,
which I will show you how to input soon, okay? And there's also links here
to all 49 research steps for the many cryptocurrencies
that we talk about in this course, okay? And it's not just the stuff
that I'm gonna complete and give to you, but also your research will be tied in here as well, okay? And there's also a place
in this tab for you to enter in how much
you own of each crypto, your target price, risk management, portfolio diversification,
technical analysis and much more.

Or if you just want, you can create a pretend portfolio here as well. I'll explain how to do it
in a lot of detail soon. Okay, we will even learn
as an optional exercise toward the very, very
end of this long course, we'll even learn how to add stocks, bonds, real estate and commodities,
right, to part 7.1 here, okay, as an optional advanced
exercise later in the course. And after we complete part 7.1 here, there's an optional section in the course where I will teach you how to make this entire Excel spreadsheet from scratch in case you wanna customize this document to fit your investment needs. And you don't have to have any
experience in Excel at all. I make it really simplistic to figure out. There's no code. These buttons you see here,
those aren't real buttons. Those are just images and I right clicked and
inserted a hyperlink, okay? I kept it fun and simplistic for me.

Okay, so before moving on, I want you to please
click this button here called Secure This File, okay? And this is optional, but you can choose to enter a password to protect this file if you want to, okay? And again, you'll see
that there's no place in this entire spreadsheet to enter bank account information
or private information or anything like that, okay? And there's no place
to enter your last name or anything personal about you except for your nickname
or your first name. I had a lot of fun making this course and I really hope you enjoy it. Thanks again and let's begin. There are many problems with
what I'm holding here, okay? And I'm not just picking on the US dollar. I'm picking on all
paper-based currencies, okay? It's really important to
understand the problems with traditional currency like this in order to really
understand cryptocurrencies from an investment perspective.

Let me put this down. Okay, now in your lifetime you've seen incredible progress. The Internet has made it so easy for us to communicate and get
access to information. You know, a child in the
middle of any continent today has more access and faster
access to information using a smartphone than Bill
Clinton did in the 1990s. Billions of smartphones today each have more processing power than every computer in
the world used in 1969 to put the first person on the moon. People today are living longer, healthier and happier lives than ever before. You know, we as a society
have progressed so much because of incredible
technology innovations. There is, however, one
aspect of our economy that has not seen significant improvements due to technology, okay? And I'll explain what that is. Here is a dollar bill, okay? This dollar bill here looks
like the one we use today, but it's not.

This here was a dollar
bill printed in 1957, okay? It looks identical to the
ones we use today, okay? And here's another one. This one here looks like one we use today. It's not. This is one from 1935. My eyes, not that great. The older I get the better I was, yeah. This one here is from 1935. Isn't that crazy? It's identical, and it looks
the same as this uncut sheet of US dollars here, okay? And here's another one that
doesn't look that different. This one here, I've got two more here, one from the 1800s, right, and one from the early 1900s. The whole process hasn't
really changed in years. I mean, can you believe
that the archaic form of currencies here has not really seen significant innovation in our lifetime.

Okay, and the whole dollar process today is pretty much the same
as it was, you know, over 100 years ago. Okay, and by the way I purchased all of this cool stuff on eBay and I use them in my courses
then I sell them back, right? So it's kind of like I rented them. I had a lot of fun with this. Okay, so you would think
that these currencies I just showed you, okay,
are worth a lot of money because they're collector's items, right? They're not. You know why? Because you and I have no control over how much of this paper currency is printed by governments. Do you want more proof? Okay, this one's crazy. All right. This coin I'm holding in my
hand is from the year 30, right? From the Roman Empire, okay? And you would think that this thing is worth a fortune, okay? But it's not, it's not, because so many of these
things were created, right? It's amazing, it's amazing.

It's pretty cool though. It hasn't really changed, the
whole process hasn't changed, money in years because
governments have monopoly on money and why would a monopoly
try to innovate, okay? And so the value of a currency is a result of the available supply of it, and that is crucial to talk about when it comes to cryptocurrencies. Okay, I'll give you an
example of something that's more valuable than
money printed on paper, okay? All right, in my hand I'm holding a piece of paper, actually
it's 10 pieces of paper that are folded in half
and stapled together and it cost me $0.60, I
think it was the early 80s when I was a kid, and I really
am dating myself here, okay? I bought this when I
was about 10 years old growing up in Canada.

Again, I am dating myself here, okay? This comic was epic as Wolverine fought a bear in Canada. Why am I talking about bears
in Canada and Wolverine, right? Wolverine's a bad ass, love this guy. Okay, because Marvel printed a limited number of these comics and I knew they would
not print more, okay? So I saved it, right? And it's worth more than the paper value of holding currencies. It's more than this paper
because the government keeps printing these things. Marvel doesn't print these things, okay? This is it, this is the only print they had of these things back then so it's worth a decent amount of money. Now if it was a 9.8 out of
10, it'd be worth a fortune. It's not, okay, it's not. Okay, so governments don't give you the same value proposition
that Marvel Comics or DC does as governments can literally print a hundred billion times
more than you want them to of your paper currency, okay? And it's not fair because
you worked so hard for that currency.

You worked so hard for it and
they're printing more of it, printing more of it, right? So they're devaluing your net
worth, your life's work, okay? And the problem is we don't have control over the supply and value
of money and it's not fair. And it's actually what
we learned in 2008, okay? Now why has nobody done
anything about this, okay? The answer is because governments,
again, have monopolies with their currency and
there is no incentive for monopolies to innovate, right? And the big banks are
making too much money with the current unfair system. And it's ridiculous as you and I, we listen to central bankers
and the Federal Reserve chair people tell us what our
hard earned money is worth. I remember when I worked at Goldman Sachs on the trading floor in New
York back in the late 90s.

I remember we analyzed every
prophetic word that former US Federal Reserve Chairman
Alan Greenspan would say as this person would basically determine the value of our net worth. And sometimes you need a
Big Bang event or a storm to clear the skies.
(paper rustling) That's thunder paper
(chuckles). And this is exactly what
happened in 2008, okay, which is why cryptocurrencies exist today, or at least one of the reasons, okay? In 2008, we were literally within 24 hours of bank machines not working, okay? And it was chaos, and it was so unusual that people actually refer to that event as a black swan event, a
very rare occurrence, okay? And historians are
already referring to 2008 as the Great Recession.

And your children and your
grandchildren will ask you what was it like living or working during the Great Recession in
2008 and after that period? And it was so scary. And interest rates are
still artificially low today in many countries because of the disaster that took place in 2008. I remember that year my
mom called me and asked me if she should take her money out of her Bank of America account. People had no faith in currencies then as the sale of gold as
a safe haven, right, and the sale of safes,
right, went through the roof.

These things were sold out everywhere. People were terrified. People had no faith in our government or any government for that matter in 2008. It was scary, okay? And so today, many people see
Bitcoin as the new gold, okay? And the great thing about
Bitcoin, for example, and most cryptocurrencies,
is there's a limited amount of supply that you can
actually make of this stuff, unlike that thunder paper there, okay? All right, cool. So let mem show you another example, this one's pretty interesting. In my hand I'm holding a
$10,000,000,000,000 bill, okay? This used to be worth something, and this is from the Reserve
Bank of Zimbabwe, okay? And what happened was in 2008, things were really scary
and governments didn't know what to do and they thought the only way they could get out of the
Great Recession of 2008 was by printing lots
and lots and lots more of this money, okay? It was chaotic.

It was chaotic to the
extent that countries like Zimbabwe here
printed so much more money in 2008 that the daily inflation rate was literally about 100%, right? Almost 100%. It's actually 98% per day at one point. Frightening, frightening, right? And it's not fair because you
worked hard for that currency. So in many countries,
governments printed more and more and more and more money to create economic stimulus events,
stimulus events, right? And the younger generations
called these stimulus events steal from us events, right,
because the younger generation really got shafted, it's really sad. You know, unemployment
for people that are young under the age of 25 in a lot of countries is 40% right now, right, because
of what happened in 2008. It's not fair, it's terrible. And older people that
worked their entire lives to save money were
forced to go back to work or not retire, making it harder
for others that are younger to find employment, okay? And it really was the perfect storm, okay? This chaotic 2008 time
in history, you know, led to the creation partially of this new digital currency
reality that we have today because governments print too much supply of these currencies, okay? Cryptocurrencies for the
most part, a lot of them, have a limited amount of supply and exist partially because of that
chaotic event in 2008.

Okay, so that chaotic catalyst in 2008 led to a big change for us. And it's about time. And if that awful time in
history did not take place, then there is a good chance
that many cryptocurrencies would not exist today, okay? And it's not fair that the money we hold can be devalued, right? And it's out of our control. And to make matters worse,
a massive amount of people cannot get access to money
today in many countries. And they're referred to as the unbanked. It's really tragic. You know, for example, only 20% of people that live in Africa have bank accounts. But thank god, 2/3 of the
people that live in Africa have access to cell phones, okay? it's gonna be easy to get
access to cryptocurrencies using cell phones in
the long run, thank god. And cryptocurrencies are
different from traditional money also because they are
regulated by mathematics. And I'll explain this in more detail when we discuss individual
cryptocurrencies in a lot of detail in
part two of the course. Okay, here are some staggering statistics from a global charity called Oxfam. 42 people, yes, just 42 people control the same amount of wealth as the poorest 50% of people worldwide.

Crazy. And the world's richest 1% have 82% of the world's wealth, okay? And just last year, you know, billionaires increased their collective net worth by $762,000,000,000. That's enough to end extreme global poverty seven times over. Don't get me wrong
please, I am a capitalist but this wealth inequality is too extreme especially since so many
people are unbanked. It's not fair. And capital elitism should come to an end as everyone gets access
to cryptocurrencies in the long run, okay? And after the 2008 crisis, governments bailed out these massive banks that were deemed too big to fail. And then a couple of years after, those bankers that
created the 2008 crisis, a couple of years after that and after they were bailed
out by the governments, they got record bonuses. Not fair. And so many of the founders
of cryptocurrency companies that I had met with, you know, are younger and rebellious
and they embrace this 1960s-style Berkeley type of power to the people movement approach.

They despise what took place in 2008, and they are standing up to
big brother, so to speak, in order to make the
global currency process more fair for all of
us, which I will explain in much more detail in the next lesson. ♪ Power to the people ♪ ♪ Power to the people ♪ Cryptocurrencies will
help address the problems that we discussed in the previous lecture in the very, very long run. So in this course, although I will talk about short term cryptocurrency
investment frameworks, I will actually spend much more time on helping you decide which are the best long term cryptocurrency investments.

And I don't want you to invest
any money in cryptocurrencies until you have a thorough understanding of why the crypto market
exists and how it works, and understanding supply as well, okay? So please don't ever rely
on anyone's opinions, including my own, okay, on what to invest in, okay? Many people that try
to tell you what to buy cryptocurrency wise are
talking their book, okay? And that means that
they're pumping and dumping or they might own a cryptocurrency and they're trying to get you to buy a certain cryptocurrency. I will never tell you which
cryptocurrencies the buy, okay? So what happens is financial
geniuses, so to speak, that you see interviewed on television, they might speak gooder
than us, better, I know, but it doesn't mean that they know what they're talking about, and they're certainly biased, okay? And a great example of these
brilliant geniuses are, you know, people that basically
caused this company called Long-Term Capital
Management to fail, okay? This book here is called
When Genius Failed. And the smartest people in the world started this finance company and they didn't know what
the heck they were doing.

Anyway, so I want you to always use, I want you to always use your own approach to
investing and not listen to anybody else, okay? Okay, so the cryptocurrency
market is kind of like the wild wild west. It's exciting, it's growing quickly, and fortunes will be made. But we have to be very
careful of scammers, okay, and the many risks with this
new exciting frontier, okay? So there are so many problems with our financial system that cryptocurrencies will help to solve in the long run, right,
including the following. Cheaper access to money. Instead of the ridiculous interest rates that many banks and
credit cards charge us, we'll get access to capital
at a cheaper rate, okay? Also, cryptocurrencies
are much more secure versus traditional technology-based
credit card transactions where credit card and
store-based credit card security breaches occur far too often. I mean, we go out to dinner
and we give a stranger our credit card, and the stranger
goes back into the kitchen to prepare our bill.

They could easily just take a picture of that card and scam us. I can't believe this
system still exists today. It's crazy, right? Okay, so what happens
also, and this is out there and I probably shouldn't go
there but I'm going to, okay? Just to show my kids how to be careful with credit cards and IDs, we went out to dinner and we
went to a couple of places. And people asked me for my ID, okay? And I actually, I showed them this, okay? What movies is that from? Some of you will know,
some of you won't, right? And the funny thing is that people, and it's from a very funny movie, but people looked at the ID and they laugh and then they don't ask my real ID.

Or what also happened was
I would show people this ID of this guy that looks
identical to me, not, but I'd show them this ID and
then people would look at it, even at the hospital for me recently, they look at it and they
go, okay, it's good. Crazy, crazy. Don't use this at the airport. Okay, all right. Anyway, it's kind of funny. My eight year old son has a
little brother and I'm seven. Actually I'm not, I'm seven and a half. Okay sorry, dad humor, no more. It's ridiculous though. And in this course, we'll discuss security in a lot of detail,
starting with an exercise in this lesson here where we will create what is called a private key, okay? And don't worry as this will
all make much more sense soon as we build upon what
we learn in this course until you have this awesome aha moment.

Now understand why consumers
need access to cryptocurrencies as supply for the most part is limited and most cryptocurrencies
will be much more secure than traditional currencies, okay? And traditional currencies
or paper-based currencies are called fiat money or
fiat currencies, okay? so fiat currency means paper
currency that we use today. It's the old system. So what about retail stores? Why would they want to
accept cryptocurrencies as an additional form of payment? Well, the reason is
that when retail stores let us pay for something
using a credit card, the credit card companies
like Visa, American Express and Mastercard charge those
stores one to 3% or more of that transaction, okay? So if you buy something
for a hundred bucks, Visa, Mastercard, American
Express will take between one and $3 on average from that store if we use a credit card, okay? Not to mention the unfair
20% late fees they charge us, the credit card companies.

Ridiculous! It's ridiculous. And it's very hard for stores to compete with juggernauts like Amazon. And so a lot of times these stores only make one to 3% profit
on all items they sell so they can't compete with Amazon and a lot of them will go bankrupt, okay? And I mention that for a reason. Since many cryptocurrencies will have fees at close to 0% versus
credit card companies that fees up one to 3% or more, then more stores or more retailers will want to accept
cryptocurrencies in the long run. It's inevitable, okay? And there's so many other problems with the financial system today that cryptocurrencies should
be able to fix in the long run, like why do we have to
rely upon credit agencies to tell others how credit worthy we are from a trust perspective when we can't trust them
to rate us as consumers as they are constantly being hacked and revealing our personal
credit histories to the world? I also humbly think that cryptocurrencies are the most disruptive technology to have ever been created.

And I have to mention
that early in this course as I promise you that
whatever country you live in, some of the cryptocurrency
companies that you consider using will come under scrutiny by
many government officials around the world not
because they're only trying to protect us, rather
because cryptocurrencies threaten the most powerful weapon that most governments have. And that weapon is the
ability for those countries to print more money, by raising or decreasing interest rates. So one of the reasons that
the Roman empire ended was that their currency was devaluing and then came what was
called the dark ages, a period of time we don't know much about. Now governments view cryptocurrencies as the largest threat
to national security. I should say many
governments view that, okay? and I know that's a
really extreme statement, and I'll explain that
more in a second here.

Now at my previous venture capital firm, I hired the former CTO
of the CIA as an adviser, and together we looked at
the map of the movements of Bitcoin, and we saw
that China was buying a lot of Bitcoins. And he said to me at that time that if he was still at the CIA, then the CIA might be watching
this very closely, okay? And so if you're curious
about Bitcoin movements in real time, okay, please check out this website here, okay? And as with all web sites and resources I mention in this course, you
can go to this menu right here and get access to these links, okay? So this one here is
called, okay? And you can track Bitcoin
sales and what other countries, what countries are buying Bitcoins using this website here, okay? And this fiatleak website
has a pretty cool name.

Fiat, as we know, means paper
currency and leak, yeah. Okay, so not only do
governments feel very threatened by cryptocurrencies but
so do the most powerful business people in the world
in many industries, okay? And whenever a business
person says something that's really extreme, I want
you to think for yourself, are they biased? Why are they saying that? Why would they say that
in an interview, right? and I'm not saying it's
because they're unethical, it's just because they're biased. I'll give you an example, okay? There's a fantastic CEO named Jamie Dimon, and he's the CEO of J.P. Morgan. And he says that Bitcoin is
a terrible store value, okay, and I respectfully disagree
with Mr. Dimon, okay? Banks make a fortune every year off of government's ability
to change interest rates and the value of their
currency by issuing bonds. When companies feel threatened, they make ridiculous statements, okay? Like Jamie Dimon did from J.P. Morgan. There are so many examples
of smart company leaders making ridiculous statements,
like Jamie Dimon did, because they feel threatened
by positive changes that can help us but could also threaten their business model empires, okay? And so in business, we
always need to understand why people are biased,
which often influences them to make statements that don't seem to make much sense to us, okay? There's many examples and
they're fun to look at.

Another example is the
former CEO of Microsoft, Steve Balmer, who said there's no chance that the iPhone is going to get any significant market share. – [Interviewer] Steve,
let me ask you about the iPhone and the Zune, if I may. The Zune was getting some traction and Steve Jobs goes to Macworld and he pulls out this iPhone. What was your first
reaction when you saw that? – $500, fully subsidized with a plan? I said that is the most
expensive phone in the world and it doesn't appeal
to business customers because it doesn't have a keyboard, which makes it not a
very good email machine. – Okay, or the president of money transfer and telegram company
Western Union once said that the telephone has too many shortcomings to be seriously considered
as a means of communication. – I've got something for you. A letter!
(thunder rumbling) – A letter for me? That's impossible. Who the hell are you? – Western Union. – And can you believe that
antiquated Western Union still charges more than 10%
for us to send money overseas? It's crazy.

And it's so important for
us to do our own research on cryptocurrency investments,
which we will cover in this course in detail, as
there are many people out there that will try to influence
which cryptocurrencies to buy because, you know, they're biased, because they own that
cryptocurrency, right? Or they will tell you not to buy them because they feel threatened
by the future success of cryptocurrencies like bank CEOs do or many government officials do, okay? Just be careful with YouTube as well when it comes to people that are talking about cryptocurrencies, okay? Just please be careful.

And it's important for me to stress that many short-term traders
in the cryptocurrency sector lose a lot of money. They lose a lot of money
because they made money on a single trade and
they became what's called fooled by randomness, okay? Great book, Fooled by Randomness: The Hidden Role of Chance
in the Markets and in Life. And this won't be you by
the time you're finished with this course, okay? My job in this course is to provide you with many investment framework tools so that you can do your own due diligence and decide for yourself what
to invest or not invest in.

And many of the investment
framework principles that I will teach you in this course can be applied to other investments as well in your life, okay, other investments you might make that or not cryptocurrency related. And I think it's really
important for us to understand how the value of money changes if we're gonna invest in
cryptocurrencies, okay? Because this will give
us a better understanding of why governments feel
threatened by cryptocurrencies. And you really have to understand that because the geopolitical
issues with some countries when it comes to
cryptocurrencies will have an impact on you, okay, especially if
cryptocurrencies are outlawed or if cryptocurrency
companies are outlawed in certain countries, okay? And we'll talk about this
in a lot of detail as well.

So with cryptocurrencies,
I'm gonna show you literally better ways to protect your money than by opening a Swiss bank account. Before we discuss securing
and protecting your money, which is another big problem
with traditional securities, let's talk about how
governments change the value of their currency. How does it work? It's fascinating, okay? And how do they change interest rates? And how do they change
the supply of paper money that's out there? And as always, I'm gonna use
many, many real world examples to make the learning process more better, as my youngest son says. Okay, so we know that the
biggest problem for us holding traditional money
is that we have no control over the supply of that
money in the future, okay? And so here's how governments
change interest rates, and this is fascinating.

And here's how governments
control the supply their money, and it's important that we understand this before discussing
cryptocurrency supply metrics in our investment framework. The more we understand how traditional fiat paper-based currencies work today, the more we can profit
or avoid losing money from investing in cryptocurrencies
in the future, okay? Okay, so let's discuss
how governments increase and decrease the supply of money by using real life examples
from the US government, the Canadian government,
the Egyptian government and the Russian government, okay? And governments spend a lot
of money on building bridges and other stuff. Where do they get that money from? It's not just from taxes, because taxes are not enough, right? They can't get enough money from taxes to spend on stuff, okay? So let me give you some examples, this will be a lot of fun, okay? Let me just go grab this. Okay, this here is a World War II United States war savings bond.

It was issued in January of 1945. Now in January of 1945, the
US government had no idea how long World War II would
last so they had to raise money to pay for World War II supplies. And they did so by selling debt, meaning selling bonds
like this exact one here. And what the US government did was they said, hey, if
you buy this bond today, I will charge you $18.75 for it, okay? And then in 10 years, I will
buy this bond back from you at a price of $25, okay? It's pretty cool.

All right, and let's say the government wanted to raise $100,000,000 by issuing 4,000,000 of these war
savings bonds at $25 each. People, what they would do is people would give, in total, $100,000,000, I'll get some props here, this is fake money, okay? Okay, this is fake money. So people would give
$100,000,000 of this fake money to buy 4,000,000 of these
war bonds at $25 each. Okay, let's do some role playing here. Let's pretend I'm the government of the United States, okay,
and I'm gonna sell you $100,000,000 worth of this
war savings bond, okay? Let's go through this. So you, you meaning investors, you will give me this $100,000,000, and I the government will give you this war savings bond, okay? And on the bond that you now
bought, this is yours, okay, it says that it's a contract, okay? A contract is written, okay? And it says how much you own
and how much this will be worth when I, the government,
buy this back from you in the future after World
War II is done, okay? So think of it like
it's a contract because as we will learn in this course when it comes to cryptocurrencies, and it's not just about
investing in the next generation of currencies, it's so much more because cryptocurrencies and blockchain,
which I'll explain too, is about creating more
secure contracts, okay? And we'll discuss that soon when we talk about blockchain, okay? And the beautiful thing about blockchain is that in the long run, when
smart contracts are created on blockchain, transaction fees
will come down a lot, right? And we'll need to hire
fewer lawyers, thank god.

Just kidding, sort of. And fewer accountants, et cetera. Okay, so I'm gonna build
on this logic very slowly so that we have this aha
moment later in the course so that we become better long term cryptocurrency investors. And so in order to understand
the bigger picture, we're gonna be better investors because if we get the macro wrong, right, if we don't understand the high
level cryptocurrency stuff, then the micro, meaning
individual cryptocurrencies, that that whole approach is irrelevant. You got to get the macro right. Okay, back to bonds, okay? Let me build on this. So you own this contractual
war savings bond. Okay here, this is yours, I'm
gonna give this to you, okay? There we go, all right. And you gave me $100,000,000. Thank you, okay, fake money. Okay, now let me build upon this. What happens when you
go to the grocery store and you see that the price of an avocado or another vegetable
goes up a lot in price? Why does that happen? It happens because for some reason, the supply of avocados or
other vegetables is lower.

And the same thing happens
with the supply of money, okay? Since there is now $100,000,000 less of US dollars in circulation, then the price of US
dollars goes up a lot. This is out of circulation, okay? Just like the price of
avocados goes up a lot when supply decreases. When the price of dollars goes up a lot, then everybody charges each
other more for dollars, meaning interest rates go up, okay? All right, now 10 years later, okay, in 1955, World War II is over and you sell this bond back
to me, the US government, okay, and instead of me
giving you back $18.75, I give you back $25 or
$100,000,000 all in. Here, okay? Now all of a sudden there's more money supply out there and we know what happens when there's more of something out there, right? Supply increases and therefore the price goes down, okay, a lot. And this is really important to understand when it comes to investing
cryptocurrencies. So countries spend a lot of
money marketing, you know, these bonds that they issue, kind of like how McDonald's spends a lot of money on commercials. And let me give you an example.

This one's near my heart. Okay, so… I love eBay. Probably the only person
who still uses it. Okay, so in the spring of 1945, the Canadian government
spent a lot of money marketing, let's see if you can see this, marketing this war bonds,
they were marketing war bonds. They were advertising war bonds
per this poster here, right? And I'm actually keeping this one, I'm not gonna sell it back on eBay because my grandfather did a lot in World War II, I miss him. Anyway, close to my heart. Sorry, off topic. Okay, so I mentioned
marketing or advertising bonds because cryptocurrency companies market the heck out of their ICOs, meaning their initial
cryptocurrency offerings or initial coin offerings.

And there's a lot of unfair
cryptocurrency market scams out there, which we will cover soon, okay? So in the likelihood the you get scammed while doing your research
on ICOs or cryptocurrencies is much lower, okay? So let's talk about another example. I'm gonna make this very international. Okay, in 1917, okay, and I can't read this except for the 1917, but in 1917, the Russian
government issued this bond to help pay for what? Yes, World War I, okay? So almost all governments
issued bonds to pay for stuff.

And this impacts the
value of your money, okay? Let me give you another example, okay? I'll go through as fast, okay. This one here, this is cool. Let's see this. So this example I'm gonna give you is extraordinarily international,
it's fascinating, okay? All right, this here is from 1898. It's real, isn't that amazing? Okay, the Egyptian government
wanted to build a dam on the Nile river. And of course we know this
is very expensive to do, so the Egyptian government
issued this bond in order to pay for it, okay? And this is so international,
it's fascinating.

This was written in French
and issued in London. And the Egyptian government sold this bond at a discount to 500 sterling, okay? Meaning below 500 sterling, just like what the US government did with the war bond, okay, or what Russia did with
that World War I bond, okay? So the Egyptian government
bought this back years later at a price of 500 sterling, okay? So they can manipulate their
currency by doing these things. Imagine if they lose control and governments cannot
manipulate their currency? Now you probably understand
why a lot of countries are starting to outlaw
cryptocurrencies, okay? We have to understand the macro side. I'll give you another example,
this one's pretty cool. All right, this here was
issued in New York City, right, to pay for railroads, okay? And this one here was issued by the city of Los Angeles
many, many years ago, 1911 actually, to pay for roads, which is why there's
no traffic jams in LA. I'm just kidding, okay. All right, and governments
aren't the only ones to raise money with bonds, okay? Companies also do this, okay, to pay for really expensive
stuff all over the world.

For example, the Walt Disney Corporation had to raise a lot of money to build Euro Disney in 1983, okay? And this contract, or bond I should say, was issued on May 2nd 1983, and you can see at the top here that there's a serial number
so you can track this contract. So what, Chris? Well, cryptocurrencies also have serial numbers for
tracking them, okay? And this is part of what's
called the blockchain which we'll discuss soon
in this lecture here, okay? Now that we understand why
governments and companies raise a lot of money, let's discuss who makes a fortune helping governments and companies raise these massive amounts of money. Now who do you think,
who do you think profits from governments and
companies issuing bonds? Who makes money off of this? Who? Yes, the banks, the investment banks like J.P. Morgan, which
makes billions of dollars every year creating and
underwriting these bonds, okay, as well as stocks.

Now we understand why
banks and governments feel threatened by cryptocurrencies. You see, we got to
understand the macro side of cryptos as well, okay,
before we do the bottoms up, individual cryptocurrency
analysis research. So many countries pay for
stuff by issuing bonds. Now if countries lost just
a little bit of their power to issue bonds, okay, if they lost the power to issue bonds, if they lost the power to
change the supply of money, that's how they issue bonds, they would have less control
over their own budgets and potentially much less control over their national security. And we know governments
do whatever they can to make sure that they
never lose power, okay? So if the government loses
just a little bit of control over how they can change the
value of their currency supply, if they lose that control a little bit because you and I as consumers
buy more cryptocurrencies and less fiat paper money, then it makes sense why many governments do not like cryptocurrencies, right? So especially given the
fact that governments like to have more control, right? And the governments around the world, I'm not gonna mention who they are, but the governments around the world that like to have more
control in the long run are probably gonna be more critical and impose more sanctions, I should say, or more rules and more regulation
on cryptocurrencies, okay? Now it makes sense that some governments might view cryptocurrencies as the largest long term threat to national security and we need to understand
the geopolitical impact when we do research on
cryptocurrencies, okay? So let's talk about a
hypothetical example.

Let's say that you and I, we exchange 5% of our net worth, right,
from the fiat currency that we currently have, okay? In your country, my country, whatever. Let's say we took 5% of the money we have in your local currency. And we get rid of it
and we exchange for 5% of our net worth in cryptocurrencies, like Bitcoin or whatever. Then the demand for
currencies in your country, and hence the price of the
currency in your country, goes down, okay? If this took place, governments would lose a lot of control, right? They can't print money
to build stuff, okay? And if you and I
hypothetically exchange 20% in the very, very long run from the currency in a country we live in to cryptocurrencies, then
some governments and countries would literally go bankrupt.

Yes, it's true. Why? Because many countries
pay for the interest on their current debt
by issuing more debt, meaning by issuing bonds, okay? Bonds are a form of debt. Now if all of this occurs, right, if you and I demand more
for cryptocurrencies and less for our fiat currency
in the country we live in, if all of this occurs, then
governments will not be paying the big global banks like J.P.
Morgan as much money in fees the create or underwrite these
bonds or stocks, et cetera. And J.P. Morgan's stock
price would go down because they would make less money, okay? The way that stocks are
put on the stock market is a similar process to bonds as well. So here's a stock certificate from IBM. So when IBM issues more shares, a big investment bank, like
J.P. Morgan, et cetera, makes money from putting
this stock on the market. I'm not just picking
on J.P. Morgan please. I think Jamie Dimon is a great CEO. It's just all banks in general, okay? It's just that Jamie Dimon
made some very critical, and I respected it, but he made some very critical comments on
cryptocurrencies, okay? And you'll see, J.P.
Morgan will embrace them in the long run, you'll see.

So now we completely
understand why bank CEOs and government officials say negative things about cryptocurrencies. It's fascinating, eh? Everybody has a bias in business and we need to understand
the bias of people advertising or selling
cryptocurrencies as well, especially as we drill
down and start discussing cryptocurrency mining,
ICOs and much, much more. You and I will be much better long term crypto investors
because we understand the forest from the trees
and the overall biases of different people involved
with cryptocurrencies. Okay, so after our top down
cryptocurrency analysis, we're gonna focus on the bottoms up cryptocurrency research, okay? Individual trees. And if we understand the macro, then the micro is easier to comprehend. Okay, now if you and I
converted a certain portion of our money into cryptocurrencies, then yes, we might make money from the appreciation of this
currency in the long run. And we might realize other benefits too. But you know what, those
benefits come with a price, okay? One of the biggest problem is security, the price of security, okay? Let me explain what that means.

So banks and credit card
companies charge you and I crazy and unfair fees, but
these fees partially pay for security on our money. Meaning if somebody fraudulently
uses your credit card, you can usually call
the credit card company and get that money back. And if a bank that you have
money in goes bankrupt, then you can get that money back if your government in your
country ensures that money, okay? So for example in the United States the government insures up to $250,000 in each bank account you have
in different banks, okay? And by the way, and I wanted to make this an extremely, extremely
resourceful course for you, so you can always go to
your spreadsheet here, okay, and find out how much
of your money is insured by your government, okay? So you go to the Settings tab here, click the Settings button and
then scroll down to row 46. If I could find it, I included it there for your country. Okay, moving on. So by using cryptocurrencies, we give up some security
protections, okay? Which is a concept I will
introduce in this lecture here when we discuss cryptocurrency
private key generation in an exercise.

Thanks. Please open your Complete
Cryptocurrency Course Excel dashboard and
click on the first button if you're not already there, okay, which is called Course Navigator, okay? Then what I want you to do please, is I want you to scroll
down to this row here, and I want you to complete
the first quiz in the course. And when you select the correct answer, you will see a message below each of the multiple choice answers, and that message will tell you if you got that question right. And when you've completed the quiz, then please go to row
number six here, okay, on the right side you see here, I want you to click on this check box and your course progress
will be updated here, okay? And after you select the check box here, then if you scroll to the top, you will see that your
progress has been updated.

And if you have any questions about this, please let me know. And this is the last time I'll mention the PDF part of course but if you're only doing the
PDF version of the course, as a reminder, you can
access all PDF files, including the quiz here, at this location. Thanks. Cryptocurrency taxes are different in every single country, okay? In this optional side note lecture here, and you can skip this, but in
this optional lecture here, I'm gonna discuss taxes
in a lot of detail. And here's a seven-minute
interview I gave recently on television on the topic
of cryptocurrency taxes. And there's so much confusion
out there about this topic that it is causing some people to literally declare bankruptcy, right? Even people that have made a lot of money in cryptocurrencies. You'll see why in a second, okay? And some people will be arrested
as well because of this, you'll see, if you don't declare taxes. It's an absolute mess, and governments aren't
likely to be lenient when it comes to these tax issues, okay? And we know a lot of governments feel threatened by cryptocurrencies, okay? And so after I show you this
seven minute interview here, then I will explain crypto
taxes in more detail and how you can avoid a
brutal tax bill, okay? And you can also go to our
Settings tab here in the course in the Excel spreadsheet, and then here in the gray shaded box you can learn more about
taxes in your country, okay? And so unfortunately,
a few people understand how to account for cryptocurrency gains on their tax returns.

So after this interview here, then if you want I'll talk
more in this current lecture about cryptocurrency taxes
in other countries as well. – [Presenter] Press:Here is available as a podcast on iTunes. – Welcome back to Press:Here. There's a guy on Reddit, we
don't know his real name, but we know he's an office assistant, who posted a message about Bitcoin. Turns out the guy bought
Bitcoin at a low price, sold it at the peak, made
$125,000 and then spent the money. The title of the post, I
just discovered I owe the IRS $50,000 I don't have
because I traded in cryptos. Am I out of luck? Except he didn't use the word luck but it was a word that
was very close to that.

He says he only makes
$47,000 a year at his job, so we're talking about
the whole year's salary. I'm telling you this on
April 15 for a reason. People who got caught
up in the Bitcoin frenzy may not know about capital gains taxes. On Tuesday, the actual tax day this year, a lot of them are gonna have to pay it. The young man wrote, "Is
all my savings gone now? "I feel like I might have
accidentally ruined my life "because I didn't know about the taxes." Chris Haroun knows about the taxes. He also knows about the Bitcoin. Chris is a professor of business
at Hult Business School. He also teaches classes online at Udemy. In fact, he's the most
watched business professor on the entire online platform. Chris has an MBA from Columbia, says he can teach you everything you need in an MBA in eight hours! You could have saved a
lot of money, Martin.

– Damn it!
(laughs) – University of Chicago. – In Bitcoin!
(overlapping dialogue) – All right, so what's the deal? If I buy Bitcoin and sell
it at a higher price, do I automatically owe taxes? – Yes, absolutely. And I think the most
important thing to recommend is that if you've made money in Bitcoin or any cryptocurrency, to
immediately put the money aside so you can cover your taxes. Don't buy another cryptocurrency with the entire proceed. – That was gonna be my second question. Well, wait a minute, what if I make money in one cyber coin, crypto coin
and I immediately invest it in another crypto coin, that one falls, now I have no more money,
do I still owe taxes on the original transaction? – If it's done in two separate tax years.

I'll give you an example. If you buy Bitcoin in 2017
and make 100 bucks off it, you sell Bitcoin in December
2017 and you buy Ethereum, and Ethereum crashes in January 2018, you're still on the hook for that $100 in profit for Bitcoin. – One of the things
that's confusing to me, like if you use Bitcoin to buy something at Home Depot or somewhere,
is that a tax transaction? – That's a great question. Well, the IRS classifies
Bitcoin and cryptocurrencies as property and not currency.

So when you use Bitcoin to buy something, think of it like it's a stock. You sell the stock or the
Bitcoin, that's a sell; and you buy something else. And if you bought and sold with a profit, you pay taxes on that. – Wait, go over that again. So I have $1,000 worth of Bitcoin. – Sure, yes.
– I bought it at 100, it's now 1,000, I take that Bitcoin, I don't cash it, but I take the Bitcoin, pay you for something, am I
still taxed on that profit? – You are, absolutely.

– Even though you sold me an object? – Yes, absolutely. – There's no reason to
use Bitcoin whatsoever ever, ever, ever, ever
because that's dumb. – I don't recommend doing it, unless, unless you can actually
put the taxes aside and save that amount. – And I don't think a lot
of people are aware of that, like they, yeah. – No, no. And the issue is that the
IRS came up with a tax rules on cryptocurrency in 2014,
then one year later in 2015, only 802 people mentioned
this on their tax returns. – Right, and my
understanding is that the IRS has basically taken a
crypto wallet to court to basically say, hey, you need to give us all of the information about the people who have been trading. I mean, that's one. How many others is this gonna be? I mean, how many people are out there that might be caught in this net? – There will be a lot.

So for example, Coinbase,
which is taken to court by the IRS, Coinbase actually released more than 10,000 names
to the IRS of people that made a lot of money in Bitcoins that are cryptocurrencies
between 2013 and 2015. And the issue is if you
didn't claim that tax, not only do you pay a
fine, you might go to jail. And the IRS mentioned this
last month on their website. – I already hate Bitcoin. I mean, you can't spend it
without getting a tax on it. – Right. – And now, like the
whole secret part is over because you have to
report it on your taxes. – But what happens if I invent marty bucks and I trade them for stock coin. We just make these things
up completely, right? (overlapping dialogue) We're trading them directly. I mean, does that get caught? I mean, we just something out of nothing. Stocks says my marty buck is
worth actually 10 real bucks. That's a problem, right? The moment just the two of us do that. – Yeah, the IRS comes after all of the big exchanges.

And big exchanges will start offering 1099-K forms to anybody that makes– – The big exchanges?
– Yes. – Yeah, because there are those online, I mean there are a lot of exchange. I checked with Coinbase
and they're like yes, we will give you a 1099
the same way Fidelity sends you something at the
end of the year, right? But only in certain circumstances. Otherwise, you got to
self report this stuff. – You do, you do. Because what happens is
the second you realize a capital gain, be it short
term or long term profits, you have to declare it
on your tax returns. And for anybody that is not,
I highly advise speaking with a tax attorney or an
accountant and back filing one. – I do a lot of taxes. I think tax attorneys are still
trying to learn about this. Like I mean, the level of complexity, you got blockchains and
like all kinds, I mean, you think the tax codes
are complicated enough, now you throw this into the mix. – Yeah, it is complex. The best way to think about
it is a cryptocurrency is classified as property. It's not a currency.

Think of it like it's stock. Like if you used Apple to buy something, one share of Apple. If you made money on that share of Apple, you're liable to pay taxes. – But in reality, how is
the IRS gonna enforce this? It's like you're supposed
to report like a sale, like if you didn't pay your sales tax when you bought something
in Florida or something. – Right, right.
– There's no paper. Is there any kind of
train for the IRS to– – There is, there is if you transfer a major exchange. – I wanna point out to the IRS, it's L-I-E (laughter drowns out dialog) All right, so as we just got
a couple of seconds left, I do wanna make it clear, if I have a Bitcoin wallet,
and I have definitely made a profit but I haven't sold that Bitcoin, I don't owe anybody anything? – You're correct, that's right. You don't owe anything
if you haven't sold.

Think of it like a stock, like Apple. If you don't sell your share
of apple, you don't pay taxes. – I didn't like Bitcoin coming in, I like it even less now. Chris Haroun is on Udemy, he can teach you how to
be an MBA in eight hours. Thanks for being with us. – It's great, thanks a
lot, I appreciate it. – Press:Here will be
back in just a minute. – So unfortunately, few people understand how to account for cryptocurrency gains on their tax returns, okay? And again, I'll talk about
other countries in a minute. But here in the US, where
taxes are really high when compared to other
countries on cryptocurrencies, there's so much confusion, as
you saw in that TV interview.

I actually had problems in
that interview, being honest, explaining it, okay? I was a little bit nervous there too. So the only official guidance
on how the United States tax agency, called the IRS,
views cryptocurrency taxes was published several years ago, which is light years ago, when
it comes to cryptocurrencies. And as with all exhibits in this course, you can go to part six and
read up on certain items like this link here, okay? So although the IRS tax
rules on cryptocurrencies seem somewhat cryptic, it's important that cryptocurrency investors like us speak with our accountants and/or our tax attorneys if possible, okay? And not only pay taxes on the past year's cryptocurrency profits but
in all previous years as well if applicable, okay? Regardless of how small the
profits might have been, okay? And I know that sounds extreme to do that, but I really feel that
governments feel threatened to the extent that they
will come after people that don't pay enough taxes by investing in a currency that kind of makes the issuance of this
stuff less relevant, okay? Anyway. So if you paid in cryptocurrencies, if you are paying in
cryptocurrencies for your salary, then the IRS calculates
the value of your salary for tax reasons based
on the fair market value in us dollars or your currency
of that cryptocurrency value when you received it, okay? Okay, and the same thing
applies, if applicable, if you wanna mine cryptocurrencies, same thing applies to you.

So later on when we talk about
how to mine cryptocurrencies using machines like this
one and others, okay, when we talk about that, you're gonna have to pay taxes based on how much money you made the second you mined it, okay? This one's out of date, I have a more recent version, okay? Oh, it's heavy. Okay, great. Okay, so if your compensation
in cryptocurrency is not documented on a tax
form like a W2 or a 1099, for example, that you received, then please speak with your accountant and/or tax attorney on how to report this when you file taxes, okay? And please note that, at
least in the United States, if you were paid less than
$600 in cryptocurrencies, then the company that compensates you is not required to send you what's called a 1099 tax form, but
you still need to claim this stuff on your taxes, okay? And if this is not of interest to you, just skip the rest this lesson.

But I get questions all
the time on tax stuff so that's why I'm including it. But how will the IRS
know if you don't declare your cryptocurrency taxes, okay? And the IRS again is the
Internal Revenue Service in the United States. And I'm talking about the US because they're pretty
strict about it here, and most other countries
are not as strict. But I wanna discuss it with you because there's big implications
if you don't file taxes. Okay, so there's actually a
precedent which was in 2009 when the IRS started collecting
over $100,000,00000 in taxes from UBS, okay, that's in Switzerland, UBS account holders in Switzerland.

And in fact, the IRS is so
serious about this issue that it recently demanded that wallet and exchange company, Coinbase, which we'll talk about in 3.3 here, the IRS demanded that
Coinbase give the IRS, US government tax agency,
they demanded that Coinbase give the IRS transaction data on more than 10,000 Coinbase customers. And this is actually a signal that the IRS will find a way to get customer data from many cryptocurrency wallet and exchange companies, okay? So the best plan of action is to file and back file taxes, okay? So I've talked a lot about taxes but let me now provide
you with five strategies to ensure that you are properly
paying cryptocurrency taxes or minimizing the amount of taxes that you will pay on cryptos, okay? Number one, this is my favorite one, be a long term investor, okay, as taxes are usually much lower if you own stuff, investments meaning, for more than a year, okay? And what happens is the tax
code in the United States and many countries really
rewards you for being patient.

If you make money on something
that you transact in, in less than a year, okay, you
sell it, you make a profit, usually you pay a higher tax on that than stuff you hold
for longer than a year. Every country is different, okay? And short term day trading
is not a sustainable long term investment strategy. You know, quite often you're
fooled by randomness, okay? I really believe in being
longer term focused. And Warren Buffett famously said the longer the view, the
wiser the intention, okay? And when Warren Buffet
invests in a company, and I know he's not a big fan
of cryptos, I get it, okay? But when Warren Buffet
invests in a company, he assumes that the market will be closed for 10 years, okay? Meaning he can't sell
for at least 10 years. And just thinking longer term when it comes to investing
and doing due diligence on cryptocurrency, is a
prudent way in most situations because capital gains taxes on investments held for more than a year are
much lower in many countries than the capital gains tax on investments held for less than a year, okay? And cryptocurrency investors should always do your
own thorough research so that you won't be
tempted to sell on weakness.

You know, it's really funny because people let their emotions take over when stocks or investments
or cryptos are going down. They sell at the worst time, you know? They're tourists, they're renters, they're not long term investors. And Warren Buffet had this great quote, he said that the New York Stock Exchange is the only store in the world where consumers sell stuff
when it goes on sale. Isn't that fascinating? And he's said also that
investors should be greedy when others are fearful, and
fearful when others are greedy.

Okay? So if you're a longer term investor, you'll pay less in taxes too, okay? All right, moving on. Number two, I want you
to please immediately put money aside in fiat,
meaning paper currency, okay? Put it aside whenever
you sell a cryptocurrency and you make a profit, okay? Don't buy another cryptocurrency, okay? And in terms of how much money in dollars or your current issue you put aside when you realize a profit, it
really depends on two things. Number one, how long you
own that cryptocurrency for; and number two, your tax bracket. So in terms of how long you
own the cryptocurrency for, if you owned it for more than one year, then you usually pay less tax, you pay long term capital gains taxes, which are either 0%, 15% or 20% depending on what tax bracket you're in in the United States.

And a lot of other
countries are similar, okay? Now if you own the cryptocurrency
for less than one year, then your taxes are
likely much higher, okay, and potentially close to 40%, depending on your tax bracket, okay? And just for details on
taxes in your country, please see this gray box here in the Settings tab of the course. And the worst thing, the worst thing a cryptocurrency investor should do is to convert from one
cryptocurrency to another if the investor has made a huge profit on the initial cryptocurrency. For example, and I had trouble explaining this on television, for example, if an investor
bought cryptocurrency A worth $1 on January 1st in year one and then they converted
the same cryptocurrency A when it reached a value of
$101 into cryptocurrency B, then that investor is gonna be taxed on the $100 gain, right, because the IRS used cryptocurrency
conversion from one to another as a taxable event, right? They see it as a sale or
purchase of something else, okay? Now if we assume that the
same investor's investment in cryptocurrency B
went from value of $101 when cryptocurrency B
was purchased in year one to a value of $1 when the
cryptocurrency investor sold cryptocurrency B in year two, then watch out man, the
tax implications are awful.

So in that example I just talked about, the investor would have to pay taxes on the $100 in realized
profits in year one, even though the investor
lost all $100 of that on cryptocurrency B in year two. Now you might be thinking wait a second, if I lose money, can I
get a tax benefit later? Well, it depends on the country you're in. But if an investor lost money on the sum of all transactions in a given
year in cryptocurrencies, then that investor can claim a tax loss of a maximum of $3,000 per year
and carry it forward, okay? Now if the amount loss in a
given year is more than $3,000, then you can recognize additional losses in future years, okay, as
long as the value of the loss is not higher than $3,000 in each year. Okay, it's complicated, I know. Okay, and similar to how taxes
must be paid on dividends on publicly traded companies, if you receive additional cryptocurrencies through what is called a fork, I'll explain it in a second, but if you receive
additional cryptocurrencies through a fork, then you must pay taxes on the amount you received as if it was converted to
dollars or whatever currency you live in, real paper
currencies when you received it.

So I'll give you an example. Now fork is something, it's
a concept I'll be discussing in more detail later,
but sometimes you'll own a cryptocurrency and you'll receive other cryptocurrency shares
in a different cryptocurrency that was created. Let me explain, okay? So if you own, let's
use IBM as an example. If you own IBM, which stands for industry's
biggest mistake, just kidding, but if you own IBM shares
and you get a dividend, okay, you pay taxes on that dividend okay? So if you owned cryptocurrency X and cryptocurrency X issued a dividend, you'd pay taxes on that dividend. But what happens is quite often, the programmers, okay,
behind the cryptocurrency, they have a disagreement
with other programmers and so they decide to
switch, there's like a fork in the road and go down a different path and create a new cryptocurrency. For example, if you owned Bitcoin, you might have received
something called Bitcoin Cash which was when there was, I guess, an ideological difference or
disagreement I should say, whatever, in the programmers of Bitcoin that created a fork in the road, a new currency called Bitcoin Cash.

Don't me ask me questions about this because we're gonna go in a
lot more detail soon on this, and I mean that in a loving way. Now if all you've done is you
purchased cryptocurrencies with paper currency, okay, like US dollar, then you don't owe any
taxes unless you sell those cryptocurrencies
and realize a profit. Welcome to part 1.1 of the course. In terms of the what,
why and how of part 1.1, I'll kick it off with what. What are we going to learn? Well, we're gonna start
off with an introduction to security and wallets.

And then we'll talk about security topics like private keys, and then
we'll have public keys. And then I'll tell you
what SHA1 is all about and then SHA256. And I like using exhibits
because it's a lot more fun to explain it this way,
and I think that we retain the knowledge better if we
can visualize stuff, okay? So I will also introduce you
to the concept of cold storage and hot storage to ensure
that your money is secure. Moving on to why. Why are we spending a lot of
time early on in the course talking about security topics? Because cryptography is the
cornerstone of cryptocurrencies.

And in this new crypto digital reality, there are not really any
banks or credit card companies that will protect your money if your cryptocurrency
accounts get hacked, okay? So I'm gonna spend a lot
of time on security topics early on in the course. It's very important so I can help to protect your capital, okay? Lastly, how. How are we going to learn about these security concepts together? Well, after we discuss
public and private keys and what SHA256 is and what hashing is, then we're gonna do an
exercise where we will encrypt and then decrypt text based
on less secure protocols like SHA1, and then based
on more secure protocols like SHA256, which is the
cornerstone of security when it comes to encrypting and hashing I should say, Bitcoin, okay? This will make a lot
more sense to you soon. And different cryptocurrencies have different algorithms, okay? So SHA256 is important, and
I'll tell you all about it. It's interesting too. And then what we'll do
is we'll make our first paper-based QR wallet together,
which will be a lot of fun.

And that will help us to really understand the concepts of public and private keys. And I'll tell you exactly
when we will access all of the aforementioned
lectures and exercises which are in this button 1.1 here on your Excel dashboard, thanks. We know that banks and
credit card companies charges high fees, but they do help us protect the security of our money, again through their high fees. Now if we're going to invest
in and use cryptocurrencies, we need to not only thoroughly understand cryptocurrency security concepts, but we have to also be
willing to spend some money on purchasing devices that
will act as digital wallets because only you can protect
your cryptocurrencies and not the banks and not the
credit card companies, okay? So we should think about
the amount of money that we're going to save in bank and credit card
fees in the long run. And we should use part of those savings to buy and use what are called
cold and hot storage wallets, meaning online and
offline security products for your cryptocurrencies.

And so we're gonna cover
wallets in much more detail later on in the course in part three. But as we build upon the security and other crucial cryptocurrency topics one layer at a time, we're gonna complete a couple of concepts through exercises, okay,
which help us understand the marrying of security
and wallets, okay? Especially since half of
the word cryptocurrency is crypto, which can mean
secret or hidden, okay? So I'm gonna go into a lot of detail and summarize more than 40
years worth of fascinating cryptography events, including the NSA fighting cryptocurrency experts, going back to the 1970s in this lesson and through the exercises in the next lesson, okay? This will make much
more sense to you soon. Why? Because we have to thoroughly understand how security has and will continue to change in our lifetime as I promise you that if we don't stay up to date on security changes over time,
then our money and privacy can and will be compromised.

You know, no big institutions
are safe anymore from hacking. We know that. The media covers this in a lot of detail. And before learning about wallets and how to use them and
deciding which ones to use, I wanna introduce you to the concept of public and private keys in this lecture through an exercise we
will do together, okay? I hope you enjoy this. And on nuclear submarines, often there's two keys,
two keys are needed to, god forbid, launch missiles. One key can go to the
captain of the submarine, and the other one usually goes to potus or a top government official. Similarly, when it comes
to cryptocurrencies, two keys are needed to transfer
and receive money, okay? And these keys are called
public and private keys, okay? And if you just wanna jump into
the exercise in this lesson, then you can fast forward me right now to this part in the lecture, okay? I understand that some of
you might already understand these concepts, but it's
fun for me to talk about and some of you might
not know much about this. Okay, so the concept of
private and public keys was created in may of 1976 as a brilliant security
breakthrough was discovered by a brilliant man who still lectures here at Stanford named Martin Hellman.

He's a rock star, he's amazing, okay? And he created public and
private key cryptography, okay? He did this so that if
enemies get their hands on one key, okay, they can't
decrypt the information because they don't have
access to the other key, which is private and not public, okay? And the NSA actually
approached Martin Hellman and told him to be quiet about this for national security reasons. And Hellman thought
about this and he thought it's an ethical issue so he
did not keep quiet about this. And he says in this video here, which is an incredible speech, which you can access by
clicking this button, but he says that he felt
that he had an angel on one shoulder and a devil
on the other shoulder. And he said the same thing took place with those that created
the first nuclear bomb as part of the Manhattan Project. Yes, they wanted to beat Hitler of course, but they kept working on the nuclear bomb after World War II ended. And things got really
contentious for Hellman as the NSA was on his back.

And he literally thought
the NSA was Darth Vader and he himself was Luke Skywalker. He actually said that. It's pretty cool. Okay, so Hellman is less
focused on cyber security today and more focused on nuclear security, as there are parallels
between both of them, both are related, okay? So all of this stuff is now declassified, but it's important to discuss
this so we can understand how governments react to
cryptocurrencies today and in the future. And governments are
constantly fighting companies, just like how the FBI is
currently fighting Apple. And expect this to continue globally as cryptocurrencies, as we discussed, are potentially the greatest threat to national security, okay? And governments, let me
just put these down here, I'll come back to that in a minute, but governments thought and think that nuclear weapon deterrent strategies can be applied to cryptocurrencies. And our cryptography
visionaries like Martin Hellman and our space pioneers like
Elon Musk beg to differ, okay? Security and cryptography
will continue to be decrypted and we need to keep up to date on this so that our personal
cryptocurrency net worth is less likely be compromised
in the future, okay? And I don't wanna jump
into discussing wallets or buying cryptocurrencies
or mining until we thoroughly understand and cover security, okay? Let's move on.

A Berkeley student named Ralph Merkle pioneered how to distribute these keys. And it's important to mention
this as we will discuss Merkle concepts later on
when we talk about blockchain in this lecture here. And Merkle's Berkeley
professor criticized his work. And it's actually ridiculous. And just as ridiculous as the founder of Federal Express, FedEx, writing his business
plan at Yale University and then the teacher told him this: the concept is interesting
and well informed, but in order to earn
better than a C grade, the idea must be feasible, okay? So don't let teachers tell
you that you are wrong, okay? And these students were
so forward looking. Okay, so after Hellman and Merkle, after their discoveries, then
there's three brilliant men named Rivest, Shamir and Adleman, RSA.

You ever seen one of these things? RSA tokens, remember this? Okay. And they were the first ones to implement the public key crypto system. That's RSA, which used to be
a publicly traded company, ticker RSAS, until EMC bought them in the summer of 2006, okay. I used to cover that stock when I worked at a very big
tech hedge fund called Citadel. Okay, so these three people, R, S and A, are mathematical geniuses, which is what cryptography is all about. It's math, okay? Moving on. In my hand I'm holding a green key, okay? It's got a globe on it. And this is just a prop,
but we're gonna pretend that this is your public key, okay, which many people have access to, okay? Anybody can send you
money to your public key in your wallet, and I'll
talk about that in a minute what that means, okay? Okay, in this hand, I should
probably be consistent, hold this way, in this
hand I'm holding a red key, which is a private key, and it's got the word home written on it. You probably can't see that, but okay.

And there's only one copy of this, but there could be many copies
of this public key, okay? Great. So I've got a public key and
a private key right here. Great. And the person sending
money to you, right, the person that's sending
cryptos or cryptocurrencies or Bitcoin, Ether, whatever
cryptocurrency to you, they need to know where to send it, okay? And you need to know how to access the money sent to you, okay? So the way that people know how to send cryptocurrencies to you is knowing what your public key
number is or address, okay? It's kind of like an email address, okay? So think of the public
key like an email address.

A lot of people can get your email address but the private key is
like your email password, not many people have that, okay? Okay, great. And if people have your public key, they can send money to you. Now in order to access the
money in your wallet, okay, that was sent to you, to your public key, you need to access it
using your private key. Again, it's like a password for email. Now if you forget your email password, you can usually ask the
company or person in charge of the email system to
send you a new password, okay, like Google does
with Gmail, for example. However, it's a little bit
different with cryptocurrencies because if you forget
this private key, okay, then you can never ever, ever, ever, ever access your money again
that's in your wallet, okay? Even if you have the public
key, it doesn't matter. And this is why we're
gonna spend a lot of time on many different types
of cryptocurrency wallets in this course and how to
secure your private keys and personal data, okay? And we're gonna make sure
that security disasters should not happen to you, okay? So if you lose this, that's okay because your private key is smart and your private key can actually tell you what your public key is.

It's kind of like this, okay? So now I'll turns this around. So I'm gonna push this green
button here, my private key will tell me, my private key will tell me where my public key is, right? (keys beeping)
That's it. Right, it's kind of like tile. Okay, anyway, so I think you get the idea. Great, let me put those down for now, and we're gonna build on
this concept soon as well when we talk about blockchain
and other stuff and mining.

It's gonna be fun. Okay, great. And technically I will teach you how to set up wallets in an exercise in this lesson here, okay? I just wanna introduce
you to security concepts in this Introduction to Security lesson. And again, we're gonna build on this. Now please note that your public key can never tell you what your
private key address is, okay? So again, never lose your private key. Also, people can find
your public key address through using QR codes, which some people have on
their crypto wallets, okay? And so in order to explain
this concept a little bit, what happens is a lot of people
have cryptocurrency wallets that have these little QR codes on them. And all that QR code does is it tells you what this number is here, this public key. That's all it is, okay? So think of it as a keychain, and this is kind of
cute but people use this for their dogs now, so they
don't lose their dogs, right? People scan the QR codes,
tell them where their dog is.

So public can be written as
or represented as a QR code, and the same thing with a private key. And when we make our
wallet very soon together, our paper wallet, you
will see that on one side of our paper wallet is a
public key with this QR code, and on the other side of that same wallet is a private key with this QR code. And all the QR code is a way to scan it with your mobile phone,
and you scan the QR code and I'll tell you what this number is and this one as well, okay? But you never show anybody this QR code, only this one, okay? Great.

We'll do an exercise soon on that when you make your first wallet and this will make a lot more sense. Okay, great. And I wanna humanize the
education process here of security so that it's more engaging
and so that, you know, you'll be more interested
in staying up to date with new security and password
protocols in the future. And I promise you that
since there is so much money in this cryptocurrency sector, that cyber criminals will take our money if we're not vigilant and
very, very careful, okay? And many of our brilliant
technology visionaries are mindful of the fact
that what they create could have a negative impact on us, okay? So for example, we know that
Elon Musk makes rockets, and he is mindful of the
fact that with great power comes great responsibility, okay? And many of the people I discuss, as we do our security exercises, that have contributed so
much to enhance our lives through technology, are
often the voices of caution when it comes to computer
security and future trends. So if you want, you can follow in Twitter some of the people that
I discuss in this lesson and in this course in general, just so you can stay up
to date on cryptography and security trends that
could impact your net worth in the future if you invest
in the cryptocurrency markets.

And I really care, I care. And I wanna thoroughly, I want
you to thoroughly understand security and cryptography concepts before you buy any cryptocurrencies, okay? And if you're interested in learning more, please just click this button here to learn more about Stanford professors and the evolution of
public key and cryptography as presented by David Hellman here, who created cryptography in the 1970s. And he battled the NSA
who told him to keep quiet about his research. Okay, so the title of this
optional six minute video here is Cybersecurity, Nuclear Security, Alan Turing and Illogical Logic. And you can access it here, okay.

And the Elvis Presley rock
star of the security sector was a brilliant man
named Alan Turing, okay? And I'm sure you've heard of him, and he, along with his team, created this unbelievable machine to break the Enigma, okay? This is a replica. Okay, this is interesting. So he created this machine
with his team in England during World War II to
decrypt this, right, so he could find out, you know, all about what the Germans were planning. And this is a mini replica here of the enigma machine, right? So there's a great movie about this called The Imitation Game.

But anyway, it's kind of interesting, Alan Turing is a rock star to me. I respect him, he's amazing, okay? So we should generally expect governments for national security reasons to pour in a lot of money and resources to break codes, okay. Right, so when this happens, if we find out that we're
gonna need to change the security measures
that we use in the future, and I promise you that governments
will likely be spending a lot of money on this in the future. (suspenseful music) – [Man] Tell me where the bomb is. 10 seconds or you're dead. – Interesting. I'm the only one who
knows where that nuke is. – Well then in that case,
I'd say you better start (sneezes)
(gun fires) Oh. – Oh my god, why did you do that? – And so if the NSA kind
of did a lot of work to pioneer certain security algorithms, they also pour a lot of money
to try to break them, okay? And so what is very secure today will not be secure in the future, okay? And you might say Chris, wait a second, does that mean that Bitcoin
is not gonna be secure? It's kind of a different story.

When I talk about mining
I'll talk about this in more detail, but in order to compromise the Bitcoin security
algorithm, so to speak, you need to be able to take over 50% of all computing resources in the world that are currently working on Bitcoin. That's called 51% Attack. I'll come back to that later. Okay, so many non-American companies won't use American cloud
computing companies like Why? Because they can't be assured
that the US government won't hack into Salesforce for example using crypto trap doors and
view confidential information for Swiss bank account
holders for example. And I'm not picking on

It's just a very big successful
cloud computing company based here in San Francisco. And the founder, Marc Benioff, is a brilliant man, I respect him a lot. But the point is that a lot of governments don't trust each other's
software companies, okay? And that's why you're gonna have kind of the balkanization of cloud computing globally, right? We've got Amazon Web
Services in the United States that kind of powers Airbnb and a lot of great
companies, Uber, et cetera, and there's gonna be different
versions of that overseas only because other governments don't trust other government's
security protocols.

That sort of thing. A little bit off topic, I apologize, but just something to be aware of especially since you're gonna, if you're gonna dive into
this cryptocurrency market, you're gonna have to, you know, protect your own assets
using your own software and hardware products,
cold and hot storage, which I'll talk about soon. And it's really good to stay up to date on this stuff as well, okay, especially since banks
and credit card companies are not going to offer you the benefit of protecting your money. You're gonna have to do it yourself. Okay, all right. So there's something called SHA1, okay? SHA1 is S-H-A one.

And this stands for secure
hash algorithm one, okay? And this was created, for
what it's worth, by the NSA, which is the National Security Agency in the United States in 1995, okay? And we're going to encrypt
something using SHA1, okay? Now I don't wanna confuse anyone here but there is a difference
between hashing and encryption, and I will explain that later once we have laid down the foundations, okay? So just for now assume
that they are very similar. Just for now, thanks, okay? And so we're gonna learn by
doing in the next lecture, which is an exercise on
crypto security, okay? We're gonna learn about
the difference between SHA1 and SHA256, okay, invented by the NSA.

And this year is the basis for encryption or algorithm for Bitcoins, very important that we
understand this one. Okay. And every cryptocurrency
or most cryptocurrencies have different algorithms. And that matters a lot if you wanna mine cryptocurrencies as well. Okay, great. So if we go together to, okay, and this security protocols
stuff is so important and investors look at
it closely too, okay? So go to and enter in the ticker for Bitcoin, okay? And just enter this ticker actually. Enter in BTC-USD, that's
Bitcoin in US dollars, okay? And we can see here, okay, that included in this
market data on Yahoo Finance on Bitcoin is the algorithm, SHA256, okay? It's written there.

And again in the next lecture, what we're gonna do is we're gonna do a pretty fun exercise where we're going to encrypt and decrypt data
using SHA1 and SHA256, which again is the
basis for the algorithm, this one here, for Bitcoin. I hope you enjoy it, thanks. So how does general encryption work? Please open your Complete
Cryptocurrency Course dashboard Excel file,
and then please click on the button called part 1.1, Intro to Security and Wallets, so that we can, together, do an exercise. Okay, so once you're
there, I want you to click on the blue button on the left there with the label on it
called B, in brackets, for beginner track, Exercise on Creating SHA1 and SHA256 private keys. Okay, great.

And you can also access
the Intro to Security and Wallets tab by clicking on the tab called part 1.1 down at
the bottom there, okay? Intro to Security and Wallets. Or what you can do is you can click on the Formula bar here,
and then you can select GO TO INTRO SECURITY AND WALLETS, okay? And if you can't see the Formula bar, then just click up here and
select the Formula bar option. Okay, so in this course
I just wanna make sure that all students can
access all the information in many different ways. Moving on. Okay, so let's talk
about the first question where we will do our first encryption or securing of data exercise. And after this exercise,
there's a good chance that you will never ever, ever use a simple password for anything ever again, as it is very easy for hackers to figure out your passwords, okay? And I hate to say this, but in
order to understand security and protect your money when
it comes to cryptocurrency, sometimes you have to think
like a hacker does, okay? Just like when you
install your burglar alarm in your house, you really have
to think like a burglar does and understand where
to put sensors on doors and windows, et cetera.

(suspenseful music)
– A friend gave this to me. It's from The Complete
Cryptocurrency Course by Chris Haroun. Do you mind translating it? (speaking in foreign language) (men chuckle) – Good luck. Good luck. (good luck echoes) Good luck. – You don't remember me. We spoke on the phone two days ago. I told you I would find you. – So let's do the first
question together please. So question number one, you're gonna see a transparent blue lock
that looks like this, okay? And this lock is
obviously not that secure.

It's see-through, see? And there's a big market
for these things online as people love to buy these. They can learn how to hack locks. So it is what it is. Okay, and this lock is not
secure as you can tell. And on the lock, and you could
see it in Excel there, okay, on the lock there's a
label SHA1, S-H-A one, okay, which is the security protocol that controls this lock in
this hypothetical example. And this is just an exhibit, okay? So please click on the transparent locked, I mean the locked version, in your Excel exercise of this image. Not the unlocked one,
the locked one, okay? And once you click on
that, it's gonna take you to a website called, okay? So pause me if you need to and unpause me when you're there. Okay, great. Now we're going to encrypt some text. So for now, I want you to
please enter exactly this. And all in lowercases, okay? I want you to enter this
here in this website.

Please write exactly this: hello world. And then press that
hash button there, okay? And make sure there's no
space after hello world. And once you've done that, okay, once you've clicked the encrypt button, then I want you to please copy and paste your encryption results from that website into this white box here
in question number one to see if you get the, right answer, okay? And if you paste in the right answer, you'll see a notification saying that you got the right answer, okay? And I'm just gonna keep going, but you can always pause me to answer questions then unpause me. But the results from what you just did should be a string that
looks like this here. It starts with the number two and then it's aae6c34c, it
goes on and on and on, okay? Okay, great. And if it you got the answer right, you'll see green text at the
bottom saying congratulations, and the length of your string
is 40 characters long, okay? SHA1 will basically create strings that are 40 characters long, okay? Now if you had a space
after the word world, then you're 40-character string would be completely different as
it would be the following, 62886 and it goes on and on, okay? So one little space at the end can change what your result is here, okay? It would also be completely different if you use capital letters.

Now can we break the code and decrypt what we just did there? Hmmm, let's move on to question two to see if we can decrypt
this, open this lock. So in my head I'm holding this lock. And in my other hand, I'm
holding a bunch of keys. And because we entered a really
simplistic hello world key, or to enter in and encrypt,, I think we can probably decrypt it using one of these keys here. So let me try one of these keys to see if I can figure it out.

I'll make this pretty fast. Ah, this one looks like it might work. Okay, and there we go. We decrypted it, okay. All right, good. Now it's your turn to do this, okay? This was pretty easy to decrypt and this will make more
sense to you in a second. So I want you to click on
this unlocked blue key, okay, in Excel, in question two. And it's gonna take you to another website called, okay? So loading this website can
be a little bit slow, okay, depending on where you are in the world and how many people access it. Okay, and once it's loaded, it will look like this here, okay? Now I want you to copy your
answer from question number one, meaning the 40-character string, okay? The encrypted text, okay? Copy it from question one. And make sure you copy
it and no space after. Just the 40 characters, okay? And then what I want you to do is I want you to paste that into the website you just loaded, okay? In the green box, it has
to be in the green box.

And then I want you to press
the green decrypt button to see if you can decrypt
what you just encrypted, okay? So go ahead and do that. Pause me if you need to. And it could take a couple of seconds for the website to load again, and a few more seconds to decrypt what you entered in the green box because it has to try
all of these keys, okay? And once it's finished decrypting, you'll see your result
on the left side here which is hello world. Do you see that? Okay, good. Copy and paste that into the white box in question number two. So what happened was that
this decrypting website has access to lots and lots
of keys, okay, so to speak.

And it was able to unlock
this simple lock of ours that uses the SHA1 protocol. Why? Because hello world is such a
simplistic thing to encrypt. Kind of like the word password, okay? Or admin or user, whatever, okay? And after we're done with this exercise, you're probably gonna create
more complicated passwords in the future. You'll see, okay? Bear with me, we're gonna
do this little by little until you have this aha moment and it'll all make sense.

Okay, so I'm gonna put these down because they're a little
distracting, the sound. All right, we're done with the blue lock. Let's move on to question number three. Let's build on this. I want you now to click please
on the green lock, okay? SHA1. And I want you to enter the word password for your password here, okay? I want you to click on the green lock, it'll take you to SHA1 online, and I want you to enter
in the word password, all lowercase, no space
before or after, okay? And then I want you to please paste the encrypted text
you get from that website into the white box here
in question three, okay? And we could see that
the 40-character string that was created for us looks like this, 5baa61e, et cetera, okay? Great, next move on to
question number four. I want you to copy the 40-character string that you got, okay, from question three. And then I want you to click on the green unlocked key, okay? And again, I can take a
second to load this website.

And then I want you to
paste the copied text on the right side again
here in the green box, and then click on the
green decrypt button. And once you've done that, as you can see, it is decoded here as the word password. Okay, good, we're almost
done with this one. We're still talking about SHA1, okay? Okay, so in question number five, I want you to do the same thing, okay? Except I want you to use the
password, password1234, okay? All lowercase, password1234
and no space in between, okay? Again make sure there's no space.

Then if you click on the
locked big lock, okay, this one here, and you paste password1234 into that website and
you hit the hash button, what you get is this string here, okay? And then in question number six, you're gonna copy that string
you got in question five, okay, the e6b, yada yada one, okay? And then you're gonna click
on the unlocked pink lock and decrypt what you just did earlier. And you'll see, and you
can pause me if you want or just watch me, you'll see
that when you decode this, you get our password,
which is password1234.

So you're able to decrypt it. Okay, cool. Okay, now why does our encrypted password keep getting decrypted? What's going on? You know why? Because somebody has already tried many, many, many, many
combinations, or many keys, okay, to unlock these things, okay? Okay, so somebody tried
many, many different keys and they were able to crack it. Crack it, okay? Because what we entered in was a pretty simplistic code there,
password1234 or the word password. Or earlier on the word hello world, okay? Okay, great. We're almost done with SHA1, okay? And once we're done with SHA1, then we're gonna graduate on the SHA256.

Okay, cool. Question seven, I want you
to do the same thing, okay, with the orange lock,
except I want you to enter the word password. And then right after the word password, immediately after it, I want
you to put in for numbers that are not sequential. And don't tell me what they are, okay? All right. Meaning don't use 1234, okay? And don't have a space in
between the word password and the numbers, okay? And then I want you to click on the locked orange lock, okay? And paste the password
that you just created, or just made up, I should say, and then click the hash button, okay? All right, almost done here. Now for question eight, I want you to copy your text string from question seven and then I want you to click
on the unlocked orange lock and paste your text
string into the green box and then hit the decode button, okay? Okay, now after you're done with that, I want you to move or delete
this black box here, okay, that you see in question eight to check your answers under the black box.

Pause me until you've
done number eight, thanks. And then unpause me. All right, welcome back. You should have gotten an error message from the website, okay? And that's a good thing
because your password was more complex and
harder to decrypt, okay? Okay, good. We're building on this slowly. You're probably thinking,
okay, Chris, I get it. Make a password that's hard to remember so you can't get hacked. Yes, but SHA1 is not secure
enough anymore, okay? As someone might eventually figure out your password eventually. And so what happened was by the year 2005, a lot of smart technical people decided that SHA1 is just not worth using anymore. In fact it was only until 2017 when Microsoft, Google
and Apple and Mozilla all stated that they're no
longer going to allow websites to use secure certificates, or what they call SSL using SHA1. You know, the little keys you see in the bottom of your browser. Remember the old days you used to see those little locks in the
bottom right hand corner of your browser, okay? So SHA1 used to be a big deal.

It's not anymore. Okay. (keys clang) Whoops. Okay, so we're going through all this for a very good reason because
we need to understand how security works in case we are tempted to invest in a cryptocurrency that has security issues, or if in the future other
encryption methods get cracked, which can be done with a tremendous amount of computing resources. And if this occurs to a crypto, then of course the price of that crypto would go down a lot as
investors would lose confidence in the underlying security
of that cryptocurrency, okay? There's a reason why I'm introducing you to all this stuff. And many US government agencies still use SHA1 for
unclassified security, okay? And SHA1 is now being phased out because, as we know, and
based on what you just did, it's not secure enough anymore, okay? And I'm kind of oversimplifying this, but we're gonna build up on this and this will all make a lot more sense.

Okay, great. So I wanna impress upon
you the fact that all codes can be broken, given enough
computing power and time. And we really need to be aware of this. All locks can be broken over time. You know, I remember
when I was a kid I had, I can't remember the name of the lock but I had a bike and I
have this kryptonite lock or whatever it was, looked like a big U, upside down, black thing. And I remember people started
loading on the Internet videos of using pen caps to open it up, which was ridiculous. So anyway, there's criminals everywhere and they'll eventually be able
to crack all these things. And I got a little side
note if you're curious on how to unlock these. Yes, they can be done, okay? You can click on this button
here if you're curious. I'm not gonna go into detail on that. It's a little bit off
topic, but it's interesting.

And just understand that most locks can and will be broken in the long run, which is why you really
need to be ahead of it, ahead of the curve, right, when it comes to securing your stuff,
especially cryptocurrencies. And when we discuss mining
cryptocurrencies later, if you're interested
in that stuff, mining, you'll be (mumbles) this exercise. Okay, great. Okay, fine, we understand that SHA1 is not secure enough, Chris. We get it, fine. Did you really have to use
that many colored locks? You couldn't just use one example? I know, sorry. Actually no, I wanted to
build upon it, make it fun. So what happened was in 2001, the NSA, because SHA1
was not strong enough, they created what's called SHA2 And to make a long story short, a variation of SHA2 is
called SHA256, okay? And this is really
important because Bitcoin uses SHA256-based encryption when coins are being mined, okay? And later on when we mine, right, this will all make sense.

And we'll talk about hashing rates as well and the strength of processors that we're going to use in computers that we're gonna make, okay? Okay, great. And I wanna stress that
I really oversimplified what I just said there and went through. But I did so for a reason because as we build on
the foundations of this in this course, you'll understand how mining Bitcoin works, okay? Let's now encrypt using SHA256, okay? SHA1, see-through lock. SHA256, not see-through, okay? All right, now please go to question nine and click on the black
secured SHA256 lock, which is not transparent, okay? And the security protocol for SHA256 is definitely much better than SHA1. And you'll see that the
website defaults to SHA1, okay, once you click on this.

But bear with me please. I want you to please click
on the drop down box here and select SHA256, okay? And then I want you to enter this, password1234, with no space after it. Then press the hash button, okay? Then I want you to copy
your resulting text into the white box here
in question number nine. Okay, now we can see that the
hash generated is as follows. And please notice that the result you got is much longer than the 40 characters generated by SHA1, okay? So SHA256 is more secure of course, and we could see the
length of the text here is 64 characters instead
of 40 characters from SHA1. Now let's see if we can decrypt this one. Do you think you can, even
though it's a lot longer than 40 characters? We'll see. So I want you to copy that long code that started with b9c95 et cetera, okay? It's 64 characters long.

And I want you to click on the black lock and then I want you to decrypt it. And I want you to paste
it right here, okay? And when you do this, you
might have this, I don't know, this little pop up that's
saying are you a computer and you got to click on the right windows or whatever it is, okay? Once you've done that
and you've entered in your 64-character string,
please unpause me, okay? Okay, welcome back. And yes, it knows the code
and it can decrypt it. But it's better than SHA1
for several reasons, right? One of them of which
the length of the string was longer, okay? A little surprising there, right? You probably thought it would
not be able to crack it.

And it is stronger, but
it can still be cracked. It can still be cracked. And when we talk about
mining, I'll build on this in more detail, okay? So behind the scenes, it
actually took many more attempts to break this, right? It actually took longer. And so instead of using, instead of using this many keys here, it actually used a lot more, but it was eventually
able to crack it, okay? A little ridiculous, I know. You can buy anything on eBay. All right anyway let's put those down. Ow, they're sharp. Well we know that passwords
must be a combination of letters and
non-sequential numbers, okay? Doesn't matter what algorithm you use. Always make sure that all your passwords are a combination of letters
and non-sequential numbers. And if you can use a hash
or special character sign and capital and lowercase, that's a good thing as well, okay? And if you do it that
way, then longer term you won't get compromised
in the long run, okay? Because I promise you that, and I'm not a fear monger
but just given the fact that a lot of people are now purchasing more cryptocurrencies, a lot more people are gonna get hacked as well.

And when we talk about cold
and hot storage products, okay, for wallets, this will kind
of make you think twice about having less secure
cryptocurrency wallets. Okay, so try doing question nine and 10 again if you want, okay? I'm not gonna go through it with you, but if you want you can do it. But this time, I want
you to create a string of a bunch of characters and letters that are mixed up, like you
know, lowercase s, eight, uppercase D, four, two,
that sort of thing, okay? And you can see that it's
gonna be more difficult when you do question number 10 to decrypt what you encrypted.

So just play around with this. And if the website makes
you do many of those I am not a robot CAPTCHA test, then open a browser in private mode, okay, and try again. Now why would I bother looking at more than one security protocol with you? Because when you do your due diligence on potential cryptocurrency
investments this year or next year or 10 years from now, I want you to understand why there are many different
security protocols as many of the ones that we
use today, I promise you, will be broken, okay? That's crucial when it comes to security, your money and investing
in cryptocurrency accounts.

So it's very important to
understand this concept. So let's wrap up this lesson by looking at our green and red key exhibits here again, okay? So let me go grab them. Green, red key, okay? Now we use more secure
encryption processes like SHA256 with harder-to-remember
passwords that are a combination of text and non-sequential numbers in order to create our
private key here, okay, with rock solid encryption, okay? So that our passwords that we create can open our wallets, okay? Open wallets and basically access money that sends this public key, okay? So that's the way I want
you to think about security when you create your private keys, okay? And I'm gonna show you
a really cool process for making private keys when we do our wallet exercise together. We're gonna create a paper wallet, okay? Cool, now that we understand
security a bit better and we understand SHA256,
we'll be able to build on this and we will not only be able to understand how cryptocurrencies our mined, but we will understand how to make our first paper-based
wallets in the next lesson with our first wallet exercise,
which is a lot of fun.

And as a quick side note, governments create secure protocols and then they try to
break their own protocols because if they don't break it themselves, then other governments will, okay? And so it's so interesting
how the whole concept of cryptography is created by governments, for the most part, and
a lot of protocols are, and then they try to break
their own protocols, okay, which is why you gotta stay up to date on all of these secure protocols, okay? So I did a lot of research
for this course on security, and this is a little bit out there, okay? But I actually bought this book, it's called CIA Lock Picking, okay? That's why I purchased
those transparent locks because this will teach
you how to unlock them and that sort of thing.

CIA Lock Picking, Central
Intelligence Agency. I don't know if that's for real or not. Anyway, you got to think like a hacker, just like you got to think like, and I hate to say this, don't misquote me, but you got to think like
somebody that's unethical when you're thinking about security. Not just your house, right, when you're putting in a burglar alarm but also when you're securing
your cryptocurrencies. And I'm gonna show you a ton of products on how to actually do this in the next couple of lectures. All right, enough of me
talking like a burglar. Now that we understand SHA256, we can make our first wallet together, which we'll do in the next lesson. Thanks. Now that we understand more about security and how SHA256 works, let's talk about wallets. This will be a lot of fun. I have a real wallet
here that's pretty cool as it looks like a piece of paper. It's actually a wallet. And if you know what my
public key address is, okay, my public key, okay, you can send money to me
in cryptocurrency, okay? And so this is my public key,
we talked about this before, anybody in the world can get it.

Okay, see, global. And we have a QR code as
well if you wanted to send money to that QR code. Again, this is a dog tag, this QR code's got nothing behind it but a lot of people have wallets that have QR codes on them, okay? Here we go. So in order to send
cryptocurrencies to this wallet, you will have to know what
the public key is, okay? A public key represents the wallet. And so all a wallet really
is, for the most part, is two lines. One line is a bunch of numbers and text for your public key, and the other one is your private key,
which you show nobody. Okay, so you can send
cryptocurrencies to me by sending cryptocurrencies
to this public key. Now I can never open this up unless I have my private key.

I will never ever be able
to get these Bitcoins, these cryptocurrencies from
the inside of my wallet here unless I have that private key. You can never ever lose it, okay? So now what we're gonna do is we're going to create a wallet, okay? And I wanna tell you first of all that not all cryptocurrencies
work with all wallets. It's really bizarre, right? We know that we can put any
kind of paper or fiat currency we want in here, it doesn't matter, right? But when it comes to
cryptocurrency wallets, they don't all work with
all cryptocurrencies. It's bizarre. A lot of them take Bitcoin
because Bitcoin has been around for, you know, longer than the others. And it's the largest market cap or largest coin out there right now, okay? But there's so many
different types of wallets.

And order to understand
which wallet to accept these 10 cryptocurrencies
here in the course, what I want you to do if
you want, you can pause me and then you can go and click
on button 1.5 here, okay, and you can scroll
down, you can select any cryptocurrencies you want
there, right, see in step one? And then what you can do
is you can scroll down here to see what wallets work with
that cryptocurrency, okay? I'm jumping the gun here a little bit, but if you're curious
and you're like, Chris, you're teaching us a lot
of high level macro stuff but I wanna learn more and more and more about individual cryptocurrencies, you can always use button
1.5 in order to learn more about individual
cryptocurrencies and compare them and to see what wallets accept them and what exchanges as well, okay? It's interesting.

All right, so for example in cell D13 here on that 1.5 button, you can select, say you select Ripple, okay? It's other cryptocurrency. Then you can scroll down to Row 117, okay, and you could see which
wallets accept Ripple. Okay, great. Now you know that if I
lost this private key, I can never open up what's in that wallet and I'll never share this private key, the details of this private
key, with anybody, okay? And so if I wanted to
send money to somebody from my wallet to someone else's wallet, all I need is their public, okay, meaning the blue key, okay? You probably heard of real
cryptocurrency wallets like these ones, the Trezor.

There's also one called Digital Bitbox, the KeepKey and then the Ledger Nano S. And these are all hardware wallets and they're in their original cases. And you can see here they
haven't been tampered with, okay? And if you jump the gun and
you order a wallet right away and you're not watching
my wallet lectures, just make sure that they haven't
been opened before, okay? And I'll unbox these and
explain everything about them in part three of the course. Let me put this down.

Okay, great. All right, and those
wallets I just put down are much more advanced and they've got fantastic security
protocols as well, okay? And before I talk about advanced
wallets like those ones, or Internet-based wallets like Coinbase, which you've probably heard of, we're gonna create a real
paper-based cryptocurrency wallet on our computer, and then
we'll print out the wallet. So all you need for this
exercise is a computer, meaning a desktop computer or a laptop, a printer and obviously
Internet access as well.

And if you don't have all of those things, you can watch me and
I'll do it for you, okay? But I prefer for you to do it with me, it's just easier to learn the stuff, okay? So paper wallets are stored offline, okay? And they're on paper
and people call wallets that are stored offline
cold storage, okay, as opposed to hot storage. So anything that you can store offline, people usually put them in
safes and more secure ones than this one, although you
can bolt it down here, I guess. But cold storage, and the
way you'll remember that is this is blue, blue for cold, right? And then anything that is in a wallet that requires a computer to be on, like Internet-based wallets for example, those are called hot storage, okay? It's hot storage offerings
like Coinbase, right, you need a warm computer
to access it, okay? So we're gonna make our first cold storage wallet together, okay? So let's do this.

Great, so I don't want
you to put any money into this paper wallet that
we're gonna create, okay? I just want us to go
through several more topics before you even spend a penny on anything cryptocurrency related, okay? I wanna save you money, okay? So please click on the
button here called 1.1 Intro to Security Wallets. And then I want you to please
click on the green button you see here in the middle. And we're gonna create a wallet
that looks like this, okay? And I've got an image there
as well in the course, okay? The end product will look
something like this here, okay? Cool, all right. Now do you see the
green text in this image on that tab, okay? See, the green text is called share. That is your public key, okay? And your public key is
just the green key, right? And then on the right
side where it says secret in red text, that is your
private key, the red key. And I put these images there as well. There's also something that
looks like a hash text line here which is similar to the text we created in the last exercise, which was based on the SHA256 security protocol, okay? And people can use their
cell phones to take a picture of the QR code and send money to your public key address, okay? And so please click on
this blue button here you see in the tab here
in Excel to take us to the wallet generator website so that we can create our
wallet together, okay? This is gonna be fun.

Now move your mouse around a
lot for about 30 seconds, okay, as this will help to
generate your keys, okay? And the code is being run on your computer and not on a server, okay? And the code is actually JavaScript. And if you right click in your browser, you can view the page source, meaning the code, which looks like this. Okay, but if you are
really, really worried, and it's good to always be
worried about security, okay, but if you're really worried about this, you could do this entire exercise while not connected to the Internet, okay? And the way to do that is
by clicking here on GitHub, and Github was just bought by Microsoft. Wow, big deal. So click on here on GitHub,
which will let you download the software to run on your computer. Now if I did that, then you would see here that I download the wallet generator files to run on my computer
only and not online, okay? So let me double click
here on this HTML file. And you can see here at
the top of my browser, we can see that we are
running a local file on my computer, okay? And this of course works
on a PC or a Mac, okay? And let's look at the code of this page really quickly, okay? Here's the JavaScript that
runs in my browser, okay? And ideally, I should be
offline when I do this, okay? Okay, here we just generated the wallet and you can see the public
and private keys right here.

And I can save this file
if I wanted to as a PDF using my private key as
the name of the file, okay, if I wanted to, although
that's not that secure. But what you could do is
you could save this file to a USB drive only, okay,
not to your hard drive, just to a USB drive. Any USB drive will work,
it doesn't really matter because I don't wanna
have this private key saved on my hard drive
because of hackers, okay? And so you can save it if you
wanted to onto a USB drive, and the name of the file, if you want, could be the private key. It's not that secure but you're
gonna take that USB drive and put it in a safe,
hopefully one more secure than my little blue safe I have. Okay. And you can get pretty creative with different USB drives to buy.

And make sure when you
purchase these USB drives that you save them in your safe. And some people actually
have started buying fire proof bags and
put them in their safes with their cryptocurrency wallets, okay? And we'll discuss more
advanced cryptocurrency wallets later in the course in part three. But as you save these things, these wallets, private
keys on your USB devices, you can use the standard
ones from SanDisk. Or what you can do is you can get ones that have a little bit more security. So there's one here I bought from, it's a company called, Chinese company, and I was just kind of playing around with it and testing it, but this one here, you put it directly into your USB port.

And then there's a thumb scan there. See this thumb scan is kind of covered up. But anyway, it's kind of cool, I've been playing around with
this when testing it out. And I've got a couple other
samples to show you as well. Now if you wanna get
back to the paper wallet part of this exercise, fast forward to this point in the lecture. But I'm gonna go through
a couple of these now as I think they're kind of interesting. So you've got military grade encryption by a company called Lepin, L-E-P-I-N, and this works with the
special code you enter in here. So it's kind of like an
additional layer of security when you put this USB token
directly into your USB port. But let me open this up and
show you really quickly.

All right. Oh, it's actually metal. Looks like a mini TV converter, right? But basically, I think you,
yeah you open up this way and then you type in a code
here, which is pretty cool. So it's another level of
security on this device. Yeah, feels actually
really nice and robust too. All right, cool. And I've got another example
that I wanted to show you just a couple more. There's this one here, it's
called a Cryptex USB flash drive and it adds an additional
layer of security as well. Fancy, look at that. Okay, let me check this out. This one here. Whoa, it looks like that
old video game, Myst. So it looks like there's a
special key you enter in here, a code, and then you just pull here and then the USB drive comes out as well. Okay, I'll put that down. I'll probably forget that passkey anyway.

And that's basically it. And I've got two more samples as well. I don't wear this, but I just
got it from a company called, well, it's from Verbatim. It's called Dog Tag USB, okay? And this one here, basically it'll allow you to, you pop this out here, I'll show you. You pop out this piece of plastic and you plug that into your
USB port if you wanted to. Kind of neat, I don't know. And then I've got one more here, which here is the bracelet, I guess. Anyway, it's pretty neat, you can get pretty
creative with these things. And a lot of people spend a lot of money on higher end ones as well. And here's another example,
it's a company called Integral Mix Crypto. This is not that big, it's only four gigs but it's got 256-bit
military level encryption. So anyway, there's lots of examples. Okay, let's move on. I had so much fun making this. Okay, great. So you can also, what you can
do is if you wanted to save your private key on a USB, you can open up a new Microsoft Word document
and paste the private key inside it, and then you
can set up a password like this one here to encrypt it.

It's not military grade but it's better than just having a piece
of paper lying around with your private key on it, okay? And only save these things
offline on USB devices, okay? And never ever on your computer unless that computer will never
be connected to the Internet because I promise you
viruses will start searching your computer for these things, okay? Okay, great.

So we'll keep building on
these security concepts by adding more and more layers of security so that instead of one
factor authentication, we have two factor authentication, which will make a lot more sense after we discuss how to
use more advanced wallets in part three of the course, okay? All right, so let's click
now on the Paper Wallet tab and print out our wallet, okay? Now if I wanted to send
money to this wallet, the address to send me money would be the public key here, okay? And you could see the public key there.

And I'll show you what it looks like here when I print it out. So I printed it out,
you saw this page here, you got the share and secrets, okay? That should be green, my computer. The color is not working that well. That's secret, that's your private key. Never share that with anybody, okay? So obviously this is not
gonna be a valid wallet because anybody can scan
the QR code right there.

And so when you print it
out, you can fold it as well if you wanted to. And never ever, ever
show your private key, only the public one. Okay, so I think you get the idea. Okay so we're gonna talk about Coinbase and other wallets later on in this course in much more detail, but I
just want you to understand cryptocurrency, security
and wallets and exchanges from a high level perspective
here first in part one of the course before we move
on to parts two through seven when we talk about individual
cryptocurrencies, ICOs, researching these companies; and then part 7.1, which
is the very detailed portfolio dashboard
that I created for you.

Now just for fun, I'm gonna
log into my Coinbase account, my wallet, and I'm gonna send some money to my paper wallet here that we just made. And this is not secure
because you all know what my private key is on my paper wallet. And I promise you that this wallet will not have any money
in it very soon, okay? So how can we check to see if that $1 was sent from Coinbase hot Internet wallet to my cold paper QR base wallet? Well, the beautiful thing
about cryptocurrencies is that transparency and visibility is so amazing with this digital ledger, which I'll expand upon in a lot of detail when I explain the whole
concept of blockchain in this lecture here, okay? Separately, let's go to and enter in our public key.

And the transaction is
now stored here forever on this blockchain, okay? So it's pretty cool, pretty
cool, amazing visibility. Here's what I'm gonna do
as a little teaser for you. I'm gonna put up this chain right here. Oh my God, it's the longest chain ever. Right here. And then what we're gonna do is hold up a little bit more.

All right, great. Does that work? Let me see that. Okay, yeah, it's good enough. There's a block on the
end of this chain, okay? And I hung this up here on this chain and this is gonna make a
lot more sense to you soon when we talk about blockchain, okay? But what I'm gonna do
is I'm actually going to glue my public key directly
onto my blockchain, okay, so that when we talk about blockchain, this will make a lot more
sense so you'll be able to tie together all of
the wallet and security and transaction concepts, okay? Stick with me here. Okay, this will make a lot
easier to explain blockchain coming up very, very soon, and it's revolutionary, it's amazing. Okay, all right. Now I want you to please take
your printed paper wallet and I want you to put it in a safe place like behind your photo frames. And I promise you it's safer there than on your computer or in the cloud, unless you use a computer
that is never connected to the Internet, which
most people don't do, okay? So please don't ever, also
don't ever take a picture of your paper wallet, okay, because your cellphone can be hacked and often files are
saved online in the cloud and it's frustrating but it is what it is.

Now the only reason you
should ever take a picture of something is if you
use an encrypted SD card stored inside in an at
home safe of some sort, which would be an extra step of security for the ultra safe crypto investor. And many cryptocurrency wallet companies will let you import the
contents of your paper wallet, and I'll show you later on in the course how to transfer your private key wallet to another wallet, okay? Because you don't wanna walk around with a paper wallet forever, right? This is part of the blockchain. I'll explain what that means soon, okay? In this completely optional lecture, I'm gonna give you some
ideas on how to store your cryptocurrency
wallets or other valuables. Again, this is an optional lecture.

The first one here is something my kids are not familiar with, which
is the English Dictionary, only because they use, I guess, computers for that stuff now. But this one here, you've seen these in the movies, whatever. This has got a lock for here, although I'm sure if
someone just takes it, they don't need to worry
about getting the key as well. But you store this up
obviously on your shelf, hide stuff whatever. Okay, it's pretty cool. And one of the reasons
I'm showing this also is because there have been
so many security breaches, whether its Target, a big
retailers here in the States getting hacked through its air
conditioning computer system, kind of like Nest but for big companies; or if it's the credit agencies.

It's ridiculous. Every large institution can
be penetrated and hacked, and I think that storage devices like this are worth at least thinking about. I know that it's a little bit out there but I thought I'd share
it with you anyway. Could be interesting. All right, this one
here is called Bolt Safe and actually, it's pretty robust. It's a big bolt, even has a washer. And you screw it on, it's real metal, and I guess it's here? Yeah, right here. That's where you'll put a USB device if it's small enough as well,
or paper, whatever it is.

And a lot of people that travel as well, they'll hide their
valuables in shampoo bottles or whatever it is. All right, so next idea here is Ajax, I guess it's a bleach product. Did I get the right side there? I think that's the right side. Oh, I unscrew it, that's why, yeah. So here you can put products in here, like USB devices, et cetera,
no one's gonna take this. Okay, and this one here is
not really that well designed. Looks a little bit fake but I'm
gonna show it to you anyway. It's a hidden wall safe. It's plastic just like any wall cover. My wall cover is not that white, it's a little bit off white. But what happens is… All right, yeah. Don't wanna make too
much noise there, sorry. But what you do is you put
this on the wall, okay, and it comes with a
little saw and you can saw through the wallet as well
with its cold template here. And then once you do that,
you put it into the wall. Actually, it's kind of cool. Put it into the wall
and then down like that.

And then I guess there's a key as well. A little cheap. I guess it looks like
this and you can lock it. And then you can unlock it as well. Yeah, I guess, okay. Oh I see, it goes here in the wall, and then when you turn that key, it'll lock it like this. Doesn't seem that robust
to me, seems kind of cheap. But you get what you pay for, it was pretty cheap to begin with. So all right, just an idea. Or you can get a safe. And this is obviously a small safe just for demonstration purposes. But if you buy a bigger safe, make sure you can bolt it into the ground. And most safes ship with bolt in. The interesting thing
was I remember in 2008 when were (mumbles) 24 hours of bank machines not working,
I had my analyst call around because we were looking at
investing in safe companies, they were sold out everywhere. You couldn't get safes
anywhere, right, or gold. People were buying up gold just like they'll buy up cryptocurrencies or Bitcoin one day, I'm sure,
if there's another crisis.

Okay anyway, so you'll get a bigger one. This has got multiple
authentication, key, this, whatever. Not robust, it's small so it can just (metal clanging overlaps dialogue) you get what I'm trying to say there. Another one is this, it's a Barbasol can. And all of these links, I'll provide links to all of these in Amazon
as well in this lecture. Actually, I'm gonna give it to you in your Excel documents,
okay, at this location here and you can just click through. And this here is I guess a shaving can. It's actually a brand I use. Pretty cool, where would I hide that? Aha, down there. Okay, yeah, right there. There's some sort of
powder in there as well. Strange. Okay, anyway. Barbasol Original. Okay, they never change
the logo on this thing, eh? Oh and there's this one here too, which I think I showed you quickly before.

This is just a clock. Most people don't have
clocks anymore, right? They just use their iPhones
or Android handsets. People used to have watches either. I don't see those as much anymore. And then there's this also. I wanted to show you this. This is something I do with my children, my wife's computer. I buy these little webcam
covers, really important, right? Put them on your iPad
as well or your tablets and then you can just
slide it, slide it open and closed like this. See here? And I also have it on my,
actually I'll show you my laptop I bought.

I got one of my laptop,
I got it from Udemy. Okay, see here? So you can buy these things
which just slide on and off for your laptop. Really good investment
because if you leave your private key details,
and even a QR code open on your desk, somebody
can hack into your, it's your webcam, right? It's happened, I'm sure, many times and take a picture, right? So anyway, these are just some ideas. These are pretty cheap. This is called Webcam Covers:
6 Pack, I got this on Amazon. Please do it for all your
computers, really important, especially if you're gonna be investing in cryptocurrencies. So that's basically it, it's kind of fun looking at all these devices here. Probably the only ones I would wanna use, maybe this one here, this
actually looks pretty robust.

And this one here and Ajax. So if you rob my house,
don't look for these, okay? Just kidding, (mumbles) of course. But anyway, that's it. If you have any questions about this, please let me know, thanks. Now that we understand
cryptocurrency security and basic cold wallets from
high level perspective, we can drill down and discuss wallets in a bit more detail now. Now we're not gonna discuss buying or selling cryptocurrencies
in a lot of detail until we thoroughly understand the foundations of cryptocurrencies, including the investment
framework that I created for you based on my experience working in finance, which we will access later on in our Excel dashboard, thanks. Okay, let's move on. Recall that we covered
some basic cold storage, meaning offline wallets like paper wallets and basic USB storage wallets
in the previous few lectures. Let's discuss advanced and
more secure cold wallets. Now please note that I will
introduce these concepts here in this lesson, and then
we will keep building on cryptocurrency concepts together.

Then we have an entire section later on dedicated to each type of wallet and all the steps needed to set up wallets and the pros and cons of
each type of wallet and more so that you can decide
what wallet or wallets work best for you. Okay, so after watching this lecture, if you wanna jump right in and start using one of these wallets, you can skip to watch these lectures here in part three, or just watch
the entire course in order as we continue to add more
and more layers of logic. Your call, okay? And the reason we cover
so many types of wallets is because some might not
work in some countries in the near term or long term. And some wallets only support
certain cryptocurrencies. And I want you to have a diversified cryptocurrency portfolio
and not have all your eggs in one wallet or one basket, so to speak.

And I want you to use more than one wallet after watching the wallet
lectures in this course, okay? And if we go to, and you can always get there
by clicking here in step six, but if we go to
and we navigate to wallets, we see that there are many
different wallet options. But not surprisingly, the
default page for wallets from is hardware wallets as these cold offline hardware wallets are much safer than
other alternatives, okay? And so here you could
see we have the Trezor. Some people call it Trezor. The Trezor, the Ledger. The Ledger Nano S, I should say. The Digital Bitbox and
the KeepKey cold wallets. And I have actually, oh
here they are, sorry. I have all of them here sealed, and I will unbox them in
part three of the course and show you exactly how
to use all of these wallets in more detail. Pretty cool packaging, eh? Okay, cool. All right, and these devices
have cool screens as well and advanced security features
so you can securely access the contents of your wallet after someone sends you money to your public key address, okay? Now the Trezor cold storage wallet supports these cryptocurrencies currently.

I'm sure that they'll be
adding a lot more as well in the long run, okay? Now Bitcoin is supported
by a lot of the wallets more than other wallets,
or more than other cryptocurrencies I should say, but you'll be amazed how
some of the more popular cryptocurrencies that have
emerged over the past few years are not really available
on that many wallets. It's really bizarre, it's strange.

Okay, now the Ledger
Nano S currently supports these cryptocurrencies here, okay? And that's a really, really cool one and it looks like a
little USB token as well. So anyway, it's pretty cool. I can't wait to open this up and show you how to use it, okay? All right. And the Digital Bitbox cold storage device supports these cryptocurrencies currently.

And then lastly, the
KeepKey, or KeepKey, sorry, cold storage device wallet supports these cryptocurrencies
currently, okay? And if these four cold storage devices don't support the
cryptocurrency that you want, you might be able to
download a software update or a patch that will let you use certain cryptocurrencies in these aforementioned wallets, okay? And we're gonna discuss
all four of these products in a lot more detail later in the course in part three here,
including the pros and cons and how to set them up. It's important though for me to introduce the storage and security
concepts early on in the course, and that's why I wanted to put these items on your radar screen right now. Okay, good. All right, we're done with cold, meaning offline storage wallets for now. Okay, so let's talk about hot wallets, meaning online storage wallets. And they're called hot wallets
partially due to the fact that they run on devices
that require power on like computers, okay? And you'll hear a lot of
people refer to Coinbase as a hot wallet, and then the
more purists in this industry, the people that have
done a lot of research on cryptocurrencies will say,
no, wait a second, Chris, you're wrong about that.

Coinbase is a hot and cold storage company because all these online
hot wallet companies now have cold storage offline as a backup. So it's just, you'll hear people say that. Okay, all right, so since
we access these hot wallets over the open Internet, then
these walls are not as secure as cold storage wallets, okay? And we're gonna talk about
several of these wallets later on in the course like Electrum, as well as the blockchain wallets, okay? And others also like Coinbase,
which you'll come to learn, if you haven't already, is so much more than just a hot mobile wallet
app for buying cryptos. It's an exchange company as well, okay? They own a company called
GDAX, which is a big online exchange we'll talk about
in part four of the course. Okay, online wallet are easy to use, but your private key,
remember that red private key, this dude here, okay, private key, your private key when
you use online wallets is stored on their servers, right? So it's online.

So it's not as secure as offline or cold storage vaults, okay? And believe it or not,
the paper-based offline QR code wallet that you
made earlier in the course is more secure than Coinbase wallets or hot wallets online, as
long as you don't show anybody your private key, remember that QR code, the private key side on your paper wallet. Cool, all right. So the four hardware wallets
that I showed you a minute ago are also more secure than
the paper-based wallet though because the private key
is stored on the device and there's two factor
authentication, okay? Now I wanna give you a very quick demo of Coinbase right now, and
you can skip this lecture if you already know how to use Coinbase. But I wanna kind of put it
on your radar screen now so you can kind of
understand how the whole online wallet process works. And Coinbase is super easy to use and it's very intuitive as well.

So Coinbase is a
software-based online wallet. Some countries might not let you use all of the online hot
wallet companies though, which is why we cover
so many different ways to do crypto stuff in this course, okay? And again, I'm giving you
a menu of many options like a restaurant, okay? So I set up this sample
real Coinbase wallet. So as you can see, and I own four types of cryptocurrencies in this wallet.

And if you set up a hot,
meaning online wallet, then please just leave a
minimal amount of money in it so you can pay for stuff
online if you want to with your hot wallet. So think of a hot wallet or
a hot storage wallet online as a checking account instead of your savings accounts, okay? So an online wallet I think
of it as a checking account. It's usually money I wanna spend online. And a lot of times, you
have to get Bitcoin first before you can get other
cryptocurrencies, okay? Because a lot of times, you
can't use your own money, your paper-based currency in your country to buy cryptocurrencies unless
you buy Bitcoin first, okay? We'll talk more about that in
the next couple of sections of the course, okay? So think of your hot
wallet as kind of like your checking account.

And your cold wallet,
meaning your offline wallet, is kind of like your savings accounts where you have much
more money in it usually because it usually has a
slightly higher interest rate, savings accounts, but more
importantly it's more secure for us too, meaning offline, okay. So cold storage wallets
like these four here that we will be talking about
in part three of the course, okay, these are like savings accounts and we usually try to have more money in our savings accounts that
in our checking accounts, okay? Our checking accounts are used
because we wanna spend money and not save money in a
checking account usually.

Usually, okay, hopefully
that's a good analogy. So Coinbase is like
you're checking account as it's a hot wallet. And these cold storage wallets
here are savings accounts. And no matter what anybody ever tells you, your data is not safe
online, period, okay? And hackers can destroy online retailers, they can change the outcome of elections, they can penetrate your
personal credit data, et cetera. And we talked earlier in the course about how retailer Target got hacked through its air
conditioning system online. Crazy, crazy. And so as a side note,
I really care and I want your currency to be safe as we all use more of these Internet of
Things devices in our houses, like Nest or other devices, like locks or Amazon Alexa, et cetera. And so the likelihood of
our computers getting hacked over our networks is
gonna go up materially and that's why I'm so
careful about security in this course with you, okay? Okay, so just stay up to date on changes in security protocols or other issues.

And whenever you hear about a store like Target, a retailer,
or any firm getting hacked, always look into how they got hacked so you can understand,
right, so you could be even more careful with
your own home network. So if Target got hacked through its air
conditioning-computer system and you have an air conditioning
computer system at home, just look into that, okay? And just make sure that you have a firewall up and running, okay? Just be really, really
careful with this stuff. Now if you wanna use these
less secure online hot wallets like Coinbase to hold
a significant portion of your net worth, which
I don't advise doing as it's not secure enough;
but if you want to do this, then please consider
having a dedicated computer just for that, okay? Turn on your computer
whenever you want to connect to the Internet and transact
in your online wallets and then turn it off immediately as well when you're not using it, okay? I know that's a little bit out there, and some people will correct me and say when you disconnect your
computer from the Internet, it is classified as cold storage because it's not on.

You get the idea anyway, my
heart's in the right place. Okay, so semiconductor
giants, big company, Intel, was so paranoid about
hardware-based security breaches that it actually bought
security company McAfee. And I like McAfee and
Symantec as software offerings for you to run on your
computer when it comes to security software. Don't use free security
products out there. Pay up for them, it's worth it. These are good companies, okay? And even if you have
extremely secure software and hardware set up at
home, if you're connected to the Internet, you're not secure enough when it comes to using hot wallets, okay? Or even cold wallets.

When you're finished with these wallets and they're plugged into your USB port, take them out right away. Like, don't leave them plugged in. You never know, you never know. Somebody could hack these things. Okay, cool, all right. So stay up to date on security measures as security precautions that we use today will be as relevant as security items like these antiquated ones that
we used in the past, right? These used to be state of the art, right? But a lot of these, a lot of
state of the art technologies, including these once, you
got to stay up to date and update the firmware if
you can in these products, just like how Apple and
Android will send us these notification saying,
hey, you might wanna upgrade your operating system because of these security vulnerabilities.

The same thing goes with
these wallets, okay? So just stay up to date
on this stuff too, please. You know, when it comes to
online security and wallets, I'm always worried about
hot storage wallets. Like Coinbase recently
sent me this message. I saw this message here, you
might have seen it as well saying how insecure PayPal
is using Coinbase, right? How not secure, I should say. And PayPal has been around forever, right? And if you want, you can
pause me and read this orange highlighted message
from Coinbase support. Okay, now it's important to
note that in many countries, your money is insured by governments up to certain limits, but not always when you store cryptocurrencies online. So just be careful with that, please. And to see if your money
is secure and insured in your bank accounts by your
government in your country, you can always click here
on the Settings button.

And what you can do is
just, after you enter in your country name, scroll down to row 46. And if I could find any
details on the security and the insurance of your
bank accounts in your country, I added it here too to this
pretty extensive dashboard which I had fun putting
together, took me forever. Okay, and I researched the data on every single country in the world when I made this spreadsheet here. And if you don't see anything
about details in row 46, then I couldn't find
details in your country and just let me know if you want, I'll update it if any of the
data is incorrect here, okay? And I mention this
because cryptocurrencies are generally speaking
uninsured at this point.

And I care and I want you to be careful when storing your cryptocurrencies in hot storage products online. And so Coinbase has
actually kind of started to ensure accounts, and
they state that they insure your money if you
live in the United States up to a certain amount, okay? So the industry is starting to insure, but just be careful, just be careful. If they do say they're insuring it, it's not like a government, right? So governments usually, when they insure your bank accounts,
they're pretty reputable. But companies, wallet companies, less so. So have multiple wallet accounts as well. And so with cryptocurrencies, you are sort of like your own bank. So you need a secure
and very secure wallet. Your wallet is your bank account, okay, when it comes to cryptocurrencies. And one factor authentication
like entering a password at a bank machine is not secure enough. And later in the course right here, we will do an in depth portfolio
diversification exercise and I will give you my very humble advice on what the maximum percent
of your net worth should be in individual cryptocurrencies
and all cryptocurrencies for that matter.

And in the diversification exercise, we'll even have an optional
exercise to discuss managing a diversified portfolio consisting of bonds, stocks,
real estate commodities, as well as cryptocurrencies, okay? I think that's the fifth big asset to have in your portfolio, okay? And I'll help you decide and quantify what percent of your net worth to invest in individual cryptocurrencies. Now before we discuss that
detail diversification exercise, I really want to explain many
more cryptocurrency concepts and investment frameworks,
which I hope you enjoy. And I wanna keep discussing
the foundations though before we transact, like part
one of course is foundations. Great job, please check
on the box here in row six to indicate that you are
done with the 1.1 intro to Security and Wallets
tab, and you can even go, after you do that, you can
go back to the dashboard and check out your progress to see how you're doing progress wise.

I hope you enjoy it. If you ever have any questions, I'm always here for you 24/7, thanks. Welcome to part 1.2 of the course which covers the unbelievable
blockchain concept. In terms of the what,
why and how of part 1.2 of this course, I'll kick
it off with the what. What are we going to look? Well, we're gonna build on the
security and wallet concepts that we talked about in part 1.1. And we will discuss exactly
what a blockchain is in terms of why, because
blockchain is so revolutionary that it will materially disrupt the way that not only the
way we use cryptocurrencies but more importantly how we
create contracts in the future. And this is a great thing
as we will learn about cutting out the middle
man in the long run. And I promise you, I promise you that every single Fortune 500 company, every big company in
the world no matter what they tell you, no matter
what they say publicly, they're all thoroughly researching how to embrace and leverage
blockchain technology in the long run.

Lastly, how. How are we gonna learn about blockchain? Well, I've created many
exhibits of blocks and chains and the old way of doing
business I'll talk about via ledgers like this one here. I'll also create a physical
and fun-to-learn blockchain that we'll build together
in this part of the course so that we're gonna be ready to understand and discuss mining and how mining works in the next part of the
course, which is part 1.3. And so I'm teaching all of this
from a top down perspective as it's easier to understand
the concepts this way.

pexels photo 8358147

And I will also have a
quiz for you to complete in part 1.2 of this course, right, which is the current part,
by clicking this button here. But as always, I will tell you exactly when to do the quiz, okay? And one more thing, one more thing. By the end of part 1.2 of this
course, which is blockchain, you will learn why Bitcoin was created and all about the genesis
block and the potential, we're not sure, but the
potential creator a Bitcoin whose name, we think, is Satoshi Nakamoto. And it's a fascinating story and I really hope you enjoy it, thanks.

Blockchain is not just
about cryptocurrencies. It's so much more. It's about cryptocurrencies
running on a secure platform while allowing for cheaper
and way more secure contracts so that you can spend a lot less money on lawyers, accountants, et cetera when you create contracts in the future. And before I explain that in more detail, I wanna talk about the way
that accounting and banking has worked for far too long. Not much has changed. And as always, I will build on the visuals so that we can thoroughly understand the future of money. Okay, so in my hand I'm
holding a check, okay? This check was used, I
got to go like this now, my eyes aren't as good as they used to be. This check was used in the 1800s, basically two centuries ago. Nobody is alive today when
this check was written, okay? And I say that only because the way that we do business
and we account for checks hasn't really changed much
since this time, okay? So what do we have on this check? Well, we've got the date,
which is September 1st of 1885.

I love eBay, okay. And on the check we have
the name of the bank, which is The National
Bank of Castleton, okay, I don't know where that is. We have where the money is going to. We have the amount, who
the money is coming from and the check number, okay? Then on the back here, we have
a number of stamps, right? You see that in the bank, they
still do that today, okay? These actually five stamps in total, proving that this is legitimate, okay? So newer checks have bank account numbers and routing numbers so we know
where to send the money to. And this person paid a lot in fees to send this check. And you know what, banking
hasn't really changed that much since then, okay? So what is this thing right here? What is what is thing there? Huh, huh. I got some old chains here. Okay, so I wanna take
you back in time, okay? I want you to come on a
journey with me as we go back in time together to January of 1958, okay? I gotta play the part okay, so I got to get dressed here.

You don't have to laugh with me, you can laugh at me. That's okay, I'm used to it. Oh, black and orange or black and red, it's kind of like the San
Francisco Giants here. Okay, I'm gonna do one more thing too. Oh yeah, I'm gonna grab this guy here. (whimsical music) Okay, try to set the scene here and put on a little bit
of music for you as well.

(majestic music) Okay, here we go. Great, see that? Okay, cool. All right, let me build on this now. Okay, so we're back in 1958. And how do people keep track of, how do they keep track of
what they spend money on? Or how much money they make? Well, what they do,
what they did back then, which hasn't really
changed much since today, is companies use what's
called a ledger system, okay? Now let me take this book here down, okay, from this old chain, the old chain. New chain, old chain? Okay, I wanna take it
down from this chain here and actually show it to you, okay? All right, so this is
a ledger book, right? And you think it's secure because it has a couple of locks on it, but it's not really that secure. Okay, so let's see what's
inside this thing, okay? Let's take a look to see how
people used to keep track and currently keep track of
their accounting stuff, okay? And this really isn't that secure and I've actually got the
keys to unlock it here.

Okay right here, let me open this up. Okay, there we go, we opened it. And I'm gonna put this on the
back here so I don't lose it. And I will put these
keys back in my pocket. I think I can, I can take it out even. Ah, all right, done, all right. This lock obviously is
not gonna work for us. So let's take a look, let's take a look to see what's inside this thing.

Okay, great. Smells like old comic books. It's not that secure as we know, we just opened it up there. Huh, all right I could see a
bunch of things about this guy. Looks like he was running a company and (thump)
oh, what is that? Looks like an old picture
of the family, I guess, and some kind of clock
tower thing or hill valley, whatever, okay, sorry,
little bit off topic there. When you buy these things on eBay, they have this stuff in them sometimes. So okay, let's see
what's in this thing now. Okay, so I'm gonna tell you a quick story about this ledger book, okay? I bought this on eBay, of course, and this ledger book was
owned by a Canadian farmer, and the farmer documented all
of the accounting transactions that he did between 1958,
January of 1958 actually; and 1978, okay, so about
20 years worth of data in this ledger book, okay? And so I wanna give you a
close up of what I see here, and I'm gonna look here at page two and we're gonna looking
at it together, okay, of this ledger book.

This is how people
account for stuff, okay, at least before they
started using computers. Things haven't changed
that much right now. Okay, so this ledger
book is used to account for all the financials for this farmer. And we could see here that this farmer made $26 from selling cream
and $92 from selling cattle as revenue, okay? That's how much money this farmer made. Now in terms of expenses, we see expenses of $70 for gasoline, okay, and we also see $19 for heating
and then revenue of $113 for selling 80 bushels of wheat, which is all organic food back then.

Okay. In fact we see every single transaction that this farmer made in
1958 on page two here, okay? And then let me just go to page 55, and I'll get a close
up there as well, okay? So here on page 55, I see
the expenditures for 1978. Here we have the farmer starting to rent the land out in 1978. Maybe he was getting
old, maybe he had some financial issues, I don't know. And then he started selling
his tractors in 1978. And then for whatever reasons, poor guy, probably had to pay a lot of
bank fees and accounting fees and legal fees over the years.

I know that for sure,
because everybody did. Okay, great, great. So the farmer also paid massive fees to send money to another
country using Western Union here in the 1950s, okay? He had to pay a doctor, the poor guy. Okay, I know there is
socialize medicine in Canada but he had to pay a doctor
for some reason, okay? Poor guy. So we're gonna call our
Canadian farmer here for fun. Let's just call him Marty McFly, okay? Marty McFly. I just made that name up. Okay, Marty McFly And the scary thing is that
the international wiring fees that this person had
to pay that I see here haven't really changed
that much over the years. The fees are ridiculously high. (thunder rumbles)
Not much have changed. What is that? Do you hear that thunder? I hope it doesn't rain. (heavy rain pitter-pattering) All right. – Who the hell are you? – Western Union.
(thunder rolling) – [Doc] Dear Marty McFly, if my calculations are correct, you're getting ripped off with high fees! Can you believe that all
those ridiculous bank and transaction fees that you mention here in the old ledger book in the 50s, how expenses that people
are still paying today? I mean, how can Western
Union and banks rip us off with these fees? We need a new technology like blockchain to help us save money and
transact in a more secure way! Only one man can save us.

Chris Haroun is not the man,
but he will tell you more about this Satoshi guy who can save us. – Wooh, looks like the storm has passed. Thanks for your patients
there, sorry about that, it's not very professional, it's just it started raining. Okay, all right, cool. So I'm gonna explain who Satoshi is and what this blockchain
stuff means in a minute.

But poor farmer, Marty McFly. He had to pay so many transaction fees, so many bank fees, you
know, whenever he transacted kind of like we do today. You know, I was looking
through this for a while there and I saw so many fees. It's ridiculous really, right? So he had to pay really,
really high accounting fees. I'll put it here so we can kind
of account for that, right? Very high accounting fees.

He had to pay really, really
high legal fees as well for all those contracts. Really not fair, poor guy, right? He also had to pay
ridiculous insurance fees, banking fees, underwriting
fees, et cetera, et cetera. So it's really unfortunate
and maybe that's one of the reasons why he had to sell his farm and all his equipment there in 1978. All right, so I count for
all his ridiculous fees there in Canadian money there, okay? Okay, but it's interesting to see how much disclosure and visibility and transparency we have for
this farmer, Marty McFly, over those 20 years.

It's amazing, okay? So it's a lot of detail. And I was thinking, wouldn't it be great if we could get a lot of detail like this when we transact with other people? It would make us feel more comfortable having more visibility into
a ledger system like this when we transact. And also, better security than
this old lock here as well. So there's got to be a solution. I think you know what
I'm talking about here. All right, so let me
just hang up this ledger. I'll hang this back up here. And where did my lock go? All right, oh here it is here. All right, the older I
get, the better I was.

I know I've used that joke before but it doesn't get old, right? Okay, so let me hang this up here and then we're gonna go from the past to the future, I think
maybe, we'll see, we'll see. Okay, so it doesn't really matter, right, if we have a lot of transparency, if we lose this book, right? If you lose this book,
you're kind of out of luck. And you might wanna try to,
I don't know, fire proof it.

And I've got a fire bag here as well that I think the farmer was using, right? But it doesn't really matter, right? So if we put this here, it doesn't matter if it's fireproof if you lose the book. Okay, cool, all right, moving on. All right, so wouldn't it be
great if we could transact and have a ledger system
where we don't pay as much in banking fees, right? We can save some money, right? We don't pay as much in accounting fees.

Be great if we had a ledger system where we didn't pay as
much in insurance fees and miscellaneous transaction fees. It'd be great, more money
in your pocket, okay, for the farmer at least. Here's a pocket here, okay, good. All right, great. So let's build on this old school physical accounting ledger concept here and how it relates to a
virtual, new and better way that is cheaper, and a way that is more, to transact where there's
more visibility as well, okay? So let's build on this.

I see a shiny chain here
that looks a lot newer than this old one, so let's
talk about blockchain. And I hope you don't
mind but I'm gonna take this jacket off because it's really hot and we're going to the future
anyway, we don't need this. Okay, looks like a life jacket, right? All right, so now what we're gonna do is I'm gonna introduce to
you, if I can get this down, the concepts, right, eh, binary? The concept of blockchain, okay? All right, great. Out with the old, in with the new. Okay, so let's talk about
a digital ledger system, a better way of accounting for this, okay? So the visualization process
that I'm gonna show you is really gonna help us when
we discuss mining, okay? Or whatever it is you might
wanna mine in the future.

So please make sure you
watch the upcoming lectures and introduction to mining,
which I think is in part 1.3 of the course, okay? Okay, great. Now I hung up this old, less secure accounting financial ledger system, okay? And believe it or not, not
much has really changed since our farmer Marty McFly documented what his expenses and income was in this ledger book here, okay? Now let's talk about
blockchain because it addresses all of farmer McFly's problems, okay? And it is the future of money. And almost everything related
to money and contracts and secure information
based polling stations like elections, et cetera,
and much, much more, really will benefit from blockchain, okay? And I'll explain this in a second. Blockchain is not only
virtual so it's easier for more people to access it, especially the unbanked, right? But it's also a revolutionary
and extraordinarily more secure way of transacting, okay? And blockchain is made so that
you have complete visibility on every single transaction.

Yes, every transaction. Amazing, eh? So how does it work? Well, blockchain is to cryptocurrencies what the Internet is to email, or what land is to our farmer, okay? Blockchain is like a platform. Let me explain that in more detail. Okay, so let's build our block here, okay? Okay, in my hand I'm
holding a block, okay? And a block represents
a bunch of transactions that are secure and linked together, okay? And this block in my hand represents, actually it's pretty historic
my pretend block here. This is the first
transaction or first block ever done with Bitcoin, okay? And so Bitcoin was invented
by a brilliant man or woman or group of people we don't know, but the person's name is Satoshi
Nakamoto, we think, okay? And you can read Satoshi's
game-changing white paper at this link if you're interested, okay? And a white paper is like a blueprint explaining what a cryptocurrency is.

So kind of think of a white paper as being similar to a business plan that an entrepreneur
writes and usually writes before launching their company, okay? And I mention the white paper now because when we discuss doing a research on cryptocurrencies and
initial coin offerings, which are ICOs, which
we'll do in part five of this course, okay, ICOs are like IPOs; when we discuss ICOs in the course, we're gonna have to read
about the white papers as part of our due diligence
investment research process. Okay, all right, moving on. So Satoshi called the very first block or Bitcoin transaction the genesis block, which is a really, really cool name.

Obviously it's somewhat biblical as well. And so this here, genesis,
was the first, okay? It was the very first block
to actually get created, which is pretty cool. And you could see the permanent date on this first block, okay? January 12, 2009, that
was burned in, okay? Pretty interesting stuff. And during the first year
of Bitcoin back then, you could buy 1,300
Bitcoins for literally $1. Wow, okay? And we can also see that the
center of this block here is Satoshi, and Satoshi
sent this to a developer named Hal Finney, from
Satoshi to Hal burned in. It's there forever. Okay, also on this block here is this very historic
64-character hash address, okay? They used to start with
a lot more zeros, okay? 64 characters.

Amazing, amazing. Okay, and Satoshi included
the contents actually of this January 2009
article that you see here in this block, which indicates that Satoshi might have
been in England at the time. And I'm gonna put this image here of the Times cover on this block, okay? So let me put it on here as well. Okay, let me just read
the title of the article from the Times in 2009 that
Satoshi referenced here. It says, chancellor on the brink of second bailout for banks. So you know what's on his
mind then, or her mind or their mind, whatever.

Okay, cool, so there we go,
I'm gonna put this here. And what I'm gonna do actually is I think I'm gonna
just hang this up here. Yeah, I'll hang it up here as so you can see, the address. Whoops, okay, all right, cool. And we're gonna build on this. And when our block gets really long, what I'll do is I'll hang them up higher.

Okay, great. But the actual code for the genesis block can be seen here, okay? And in the genesis block
here are the contents of that article that
I had mentioned, okay? Starting with the word chancellor. Okay, great. So we hung it up here and we're building our digital ledger, okay? Great, now let's build by getting the second block here, okay? I've got the second block in my hand, and this block in my hand here is what farmer Marty, what his
ledger would have looked like if farmer Marty used the blockchain instead of his old ledger book here, okay? It would have looked something like this. Let me build upon this, okay? And this is small, but
here is the first page here of farmer's ledger, okay? And there's a lot of transactions on it. And so I'm gonna put
this on the block, okay? Okay, great, so that's the digital ledger. I'm gonna keep building
on this now as well. All right, great. So how do we know what
order this block is in? Like how do I know which one comes first? This one or this one or another one? How do we know? How do we link to previous blocks? Well, there are links
between all of the blocks and I actually, I tried to
put this together myself, I got really frustrated, as you can tell with this little video here, and I have my sons help out.

I have three sons so I
had to get three of these, I get three of everything. My wife Christine says
that she has three boys, or four boys actually in the house. So I don't know what that means. Okay, so I'm gonna put this on here and this will link to the previous block. Okay, so let me… Try to not break this, this time. Okay, cool. All right, so this was the address of the very first block, the genesis box. Number one, okay, right here. And we've got a link here,
so this is from Zelda, this is the character Link, Zelda is the princess apparently, my kids are explaining to me. Actually, I explained it to my kids, okay? I played Zelda, it is what it is. Okay, there we go, I'm honest. Very good transparency, okay? All right, but anyway
you've got Link here, linking back directly to this block here.

It's the same address, okay? Great. And then there's other
details on this block as well, which we'll get to in a second. This took me forever to
make so if I drop it, it's not cool, not cool. This is like my 10th take on this, hopefully I'll get it right now. Okay, okay, great. So again, Link sort of
references the previous block. Let me build on this for fun, okay? Here's what I'm gonna do. I'm gonna hash the contents
of a bunch of text, okay? And I'm gonna show you in
a video how I do it as well and you'll kind of
understand what this means because of what we did
in part 1.1 of the course when we talked about security
and we had that whole secure SHA256 versus SHA1 exercise, okay? So what I've done is
I've hashed the contents of part of a ledger page here,
part of this page here, okay? And it starts with the
words $26 from selling cream and $92 from selling cattle,
yada, yada, yada, all that.

And all that long string
becomes a shorter string, which here is hashed with
SHA256 starting with d, okay, d56b7, all of that good
stuff which you can see there in the video, okay? This is not an exact science, but let's just take that
64-character SHA256 address and put it on our second block here, okay? I've got one of those printer
machines I've put on here. And I made two labels for it because I pasted one on here, and
we're gonna need another one for the next block to
link back to this block so we know what order the blocks go in. Okay, great. Okay, so we also have other information on this block as well like
who's it from, who's it to? So this looks like it was
from Marty to the Doc, right? So anyway, it's more information on the transaction here as well.

And this is burned in this
block forever, forever. So let's attach this now
to the chain very gently so that Link doesn't fall
and I don't have to get Matthew and Andrew to help me again. Okay, careful. Okay, great, excellent. And I think I might have to
actually put this up higher as we build upon this. I'll do it very gently. Okay, great.

And that's yeah, you'll be
able to see it a little more. Okay, great, moving on, moving on. Let's build upon this logic. Okay, block number three, okay? The third block would have to reference the previous block, okay? So what we're gonna do is we're gonna take this third block here
and we're gonna put on our Link character. And what letter do you think what Link is carrying
starts with on this label? What letter? D because it's referencing
the previous block. And just remember that
we printed two labels, one is here and one is here
because it links directly. Okay, Link, I'm gonna put
this on, fingers crossed. I'm gonna put them in backwards here, I don't think it matters. Please. Okay, good, good. All right, great. And so the contents of the third block is actually the next page
of Marty's ledger, okay? And so let's just pretend
that we hashed a block and we got 64 characters here, okay? And let's just pretend
this block here is called, this is the next page or
yeah, this is the next page of a ledger that Marty
made when we hashed it, and you know how to hash as well, right? Okay, and we put it right here.

Okay, great, great, we're making good progress here. All right, oh, I almost forgot. I have to put the contents here of the other page in the ledger. Okay, great. So I'm gonna put this one
now on this blockchain here. Okay, great. And I don't think there's
gonna be room for the next one so let me just put this up higher. Please. Okay. Beautiful, okay good, good. Great, okay. And I wanna stress that the
information in blockchain is not just about sending
and receiving money. It's about a more secure
and more transparent way of sharing information and contracts.

And in the future, we're
gonna be using blockchain for so many more uses,
so many more cool things. So let me give you an
example of what we'll do in the future with blockchains. Okay, so let me get my next block here. Okay, and I'm gonna give you some examples of what could be included here. Okay, so on this block here, and I guess before I
move on I have to put on, you can tell I dropped
this one a couple of times, I couldn't find the left eye there. So sorry, if you want
a refund, I understand.

Okay, there we go, good. Okay, cool. All right, great. All right, bonus points
if somebody can tell what kind of car that
is on the bottom there. Okay, let me move on. All right, and what can
happen is that in the future in the blockchain, you can
have election data, okay, so that elections cannot
be tampered with, okay? You can also have other
cool things like contracts for sports, sports contracts. Number 23 there, okay? You can also have, I'm
having fun with this. Isn't this fun? I'm having a good time, man. All right, you can also
have cars or leases. You can have that as well. You can have health-based data in a more secure way,
kind of better than HIPAA here in the United States. I found this, sorry, that's dad humor, I won't do that anymore. Okay, great. And then we got, just you
can have historical data as well, okay, like this. All my friends are, poor guy,
dinosaur, historical, old.

Not funny, I'm trying, sorry. I'm trying. Okay, great. And you can also have other stuff like (hip hop music) Why is Snoop Dogg here? Should I rerecord? No, screw it, I'll keep going. All right, so I'll put Snoop Dogg on here and he can be part of
the block party as well. Yeah, yeah, yeah, that was on purpose.

Okay, no more dad humor, I promise. And when I do stuff like
that around my kids, my oldest son, Andrew, he's 14 now, he goes like this. He puts his head into his hands and I don't understand why
he wants me to drop him off at his friend's house like a block away. I don't know, you tell me. But okay, all right. But there's so many things you can do with blocks in the future. And you know, in the future you'll be able to think of basically any type of contract to add to this, okay? So let me just hang this up here.

Okay, we're good. All right, good, good. Great, almost done here. Okay, and so all transactions
on the blockchain are permanent, okay? Remember when we made our paper wallet and then I went to
to see the transactions? Well, I can hang that up here as well because now it's part of the
blockchain forever, okay? Sorry, Marty. Okay, okay, great. So just like how I
burned the wooden blocks, this information here is permanent, okay, unlike this old ledger,
which is not permanent, it can be lost or destroyed, okay? You can't lose this. The reason you can't lose
this digital ledger here, the blockchain, is because
there are a ridiculous number of distributed copies of this blockchain all over the Internet, okay? So it can never be lost or destroyed, there's so many backups,
it's unbelievable, okay? So it'll last forever. And you can actually download
the entire blockchain if you wanted to, but
it's really, really big so I don't recommend doing it. And a new block is created
every 10 minutes or so when it comes to Bitcoin.

And over time, that
number will decrease a lot as more people transact in Bitcoin. Okay, great. So you know what, let me
show you the current size of the blockchain. I'll put it by graphic right here and you can go to this link, okay? As with all links in this course, you can go here to part
six and you can drill down or just click on any link
that's of interest to you. And every single link I
mention in the course, and there's many of them, are
included there in part six.

Okay, moving on. Okay, okay, it's a massive file. So let's look at a couple
of blocks just for fun in the blockchain, okay? And if you want you can
click here in part six along with me, okay. This here is block number 341670, okay, from a long, long time ago in 2015. Okay, and notice the
reward here for this block back in 2015 is 25 Bitcoin
if you mined it, okay? We're gonna cover mining
soon in this lecture, or in this lecture here coming up, but a lot of the data
you see in this block might not make sense to you. But as we continue to build upon the logic we have discussed in the course, you're gonna have this
incredible aha moment when it all makes sense to you, okay? And you can go to this exact web page here by, again, clicking in
part six of the course.

But you notice here how it's 25 Bitcoins? Okay, it's now lower, it's 12 and a half, and eventually it will be half of that. You get the idea. Okay, now we can click
on the next block here, which is 341671, okay? Comes immediately after
the previous block, okay? And you could see that there's a link to the previous block there as well, kind of like we had here with Link here. Okay, okay, and if you go
to, we see every 10 minutes or
so a new block is generated. And you could see more recent ones, like ones that had been published in the past couple hours or
so if you go to that web page. Okay, so we are now out
of time for this lecture. I hope you enjoyed it, I
hope you have a good sense as to what the blockchain is
and why it's way, way better, the digital blockchain that is, than the traditional old
farmer Marty ledger book.

After this lecture, we have a short quiz. And then after that, now that
you understand blockchain, we can continue in the
next part of the course, which is part 1.3, and build on this logic so we can discuss
mining, which is awesome! So please put on your seat belt. Okay, this is gonna get,
it's about to get real. This is gonna be a lot of fun, okay? So we're going on a trip now, okay. – Roads? Where we're going, we don't need roads. (majestic music) (rockets roaring) – Welcome to the Introduction
to Blockchain Quiz.

So please click on the button called 1.2, Introduction to Blockchain,
and then complete the quiz. And after you've completed the quiz, then please click on the
check box on this tab on the six row here to mark this portion of the course as complete. And you can then see your
progress in the course if you want by clicking on
the Course Navigator button. And so I'm gonna see you in part 1.3 where we're gonna discuss mining. And I think you're really
gonna enjoy this part because everything that
we've learned about blockchain, security,
et cetera, will all make much more sense as we discuss mining. And you don't have to
have any background at all in building computers in order to complete the next part of the course
as I'm gonna teach you how to build a mining
computer from scratch, including ordering parts and
how all the different parts of the computer work together so that we can successfully
mine cryptocurrencies later on in this course.

Thank you. (drill machine revving) Oh, hey there! Sorry, I didn't notice you, just preparing a couple of
things for this next lecture. All right, now that we
understand security, now that we understand wallets and now that we understand blockchain, we can talk about mining, okay, which is so much fun, okay? So welcome to 1.3 of the course. In terms of the what,
why and how of part 1.3 of the course, I'll kick
it off with the what. What are we going to learn? Well, we're gonna build on
the concepts that we learned in the past couple of parts,
meaning security in part one, as well as blockchain in part two. And all of that stuff
will come to a crescendo, you'll understand how
mining works in this part, which is part 1.3. More importantly, we're gonna
have a lot of fun doing this. And I've got many, many
different exhibits here, which will make the whole
learning process a lot more fun.

In fact, these are some of the machines I'll be using to mine, okay? And we're also gonna make
a computer from scratch to mine other stuff as well, okay? So how are we gonna learn the concepts? After I explain the high
level concepts of mining, then we're gonna have a quiz, okay? And then after the quiz, we're
actually gonna take apart this old Antminer here. It doesn't work anymore to mine Bitcoins. These things can go out
of a date pretty quickly. I used to use this one, I don't anymore. We're gonna take it apart, which will void the warranty of course. All right, great. And then later on in
part 2.1 of the course, I'm gonna teach you how to configure a newer version of this product here so you can mine Bitcoin. And that newer product
is this one here, okay? It's an Antminer. Both of these ones here
are made by a company called Bitmain, that's the power supply, I'll talk about that later.

And I'll teach you how to
configure this from scratch, how to make it work for you from scratch. Okay, also in the current mining section, meaning part 1.3, I'm gonna teach you how to build a mining
computer from scratch using these parts here, okay? Even if you have no
experience with this stuff. I'm gonna show you how to
assemble the right parts and how to assemble a mining computer so you can actually mine
cryptocurrencies, okay? And the more popular
cryptocurrencies often need a dedicated machine, like
these ones here, okay? And these things do only one thing well. They mine cryptocurrencies,
they do nothing else, and this is called an ASIC. And this is used to mine Bitcoin, okay? It does nothing else
except to mine Bitcoins. Very loud as well, it
uses a lot of electricity. And soon I'm gonna show you how to know how much electricity will cost you based on where you live, okay? I'll teach you that later on in the course because I don't want you to
spend a penny on anything, okay, until you understand the process and you understand if
mining is even profitable where you live based on the
cost of electricity, okay? And this stuff costs a
bit of money, it's true, but what's more important
is the price of electricity because light bulbs actually
can cost a dollar or two, let me show you a couple here.

These are all 100-watt light bulbs and I'll explain how
wattage works later, okay, in the course in part two. And they cost a couple of bucks, right, each one, whatever. Cheaper if you buy them in bulk. But they use way more
electricity in that per year, so electricity is
really, really important. And if you have bigger ones like this, this one here actually
could use five or $600 worth of electricity per year,
this big light bulb that people use for growing stuff, which I don't but I got this
just to show you a sample because it actually uses
the same amount of power, I probably just ripped
it, ruined it there, but it uses the same amount of
power as this one here, okay? And I'll give you demos later so you understand this much, much better. Okay again, I don't
want you to spend money on anything at all until we understand if it's profitable for
you where you live, okay? And some of the concepts
we're gonna teach you when we discuss mining in this course, some of the concepts I'm gonna teach you, you can apply to other cryptocurrencies that have not been invented yet, okay? And that's important for you when you're doing research
on other cryptocurrencies that you either do trade
now or will soon trade when we discuss ICOs in
part five of the course.

Okay, so by the time
you've completed part 1.3 of this course, meaning the
mining portion of the course, then we're gonna talk
about an introduction to many cryptocurrencies
in part 1.4, okay? And I'm drilling down a top down because I don't want you
to buy any cryptocurrencies till you thoroughly
understand the whole process. And then after I give
you a brief introduction to cryptocurrencies in
part 1.4, then in part 1.5 we're gonna go through our very thorough research process, okay? And then I have to mention this now but in part two of the course when we talk about all
the cryptocurrencies in way, way, way more detail, I will teach you exactly how to mine each of those
cryptocurrencies, if you can, using this equipment here.

Okay, so we're still in the
foundations part of the course. Now as always I'm gonna
use just a ton of exhibits to make the whole learning process, as my eight year old
says, much more funner. Thanks. In this lesson, we're gonna build upon what we've already learned
about the blockchain by adding more layers and concepts so we could introduce
the concept of mining. So let's talk about mining
from a high level perspective so that we have this aha moment by the end of part 13 of this course, and mining makes much more sense to you. This will be a lot of fun too. Okay, great. So in my hand I'm holding
an ax that was used in the San Francisco Bay
Area in the year 1849, okay, during the Gold Rush year,
San Francisco Gold Rush.

That's why our team here is called the San Francisco 49ers,
and that's, I guess, kind of why I have 49-steps
in my research process. Again, you don't have to
follow all of them, okay? So quite often when gold rushes occur, the people that make the most money don't own the gold. You know, they actually own the companies that supply the tools, right? And at first I wanted to go
to Levi's headquarters here in San Francisco and see how the whole jeans movement out here, the blue jeans, was started because of the gold rush, but that's actually not true,
it came after the gold rush. So too much information, Chris, please. So as we think about
investing in cryptocurrencies in this course, I also
want us to think about which companies that supply products to cryptocurrency users
will do extraordinarily well in the future, kind of like what happened in the late 1990s with telecommunications and router companies like Cisco. Cisco, ticker CSCO, you know, was the Internet sector in
the late 1990s and even today. I mention this because many
cryptocurrency companies will eventually be going public, meaning that they will
list on the stock market as part of an IPO or
initial public offering.

And so when we talk about
cryptocurrency companies and the companies that make stuff for the cryptocurrency market in general, I want you to have Cisco, ticker CSCO, in the back of your mind, okay? And we're gonna discuss ICOs, which means initial coin offerings, later in the course, okay? There's more ways to
profit from this whole secular growth movement
of cryptocurrencies than just buying the
currencies themself, okay? Cool, back to mining.

All right, I'm gonna
actually take this hat off. I hope you don't mind. All right, all right, here we go. Okay, so miners in the Bitcoin world are mining for something
better than gold, right? Because demand for Bitcoins, (reverberating thump) thank god it didn't hit my foot, but demand for Bitcoins in the long run will be much, much higher
than demand for gold. And everyone uses currencies, but not everyone uses or needs gold.

And the price of any product as we know is always based on supply and demand. And the number of Bitcoins
that will ever be produced or ever exist is 21,000,000 Bitcoins. So there's a dearth,
there's a supply limit, and that limit will be by
the year, I think, 2140. 2140, all 21,000,000 coins will exist. And I'll explain how this process works as we go through this course. There's actually a good reason why people talk about digital gold, right? And people think of
Bitcoin as being like gold, and other currencies
having different purposes. And when we talk about other
currencies in more detail in part 1.4, as well
as during all part two, I'll talk about the purposes
of other cryptocurrencies. But the bottom line is that
other cryptocurrencies exist not just because of this everyone wants to get
rich process, whatever, but more importantly because
Bitcoin has limitations, which I'll talk about as well. Okay, all right, let me put this down because I'm not very good at sports. Okay, so several years
ago, the Washington Post put out this chart of the amount of US dollars in circulation.

And it's fascinating, and it's no wonder that Satoshi, let's see if I got him here, yeah, remember this, this
is the first block ever sent from Satoshi to Hal, okay? Okay, it's no wonder that
Satoshi started Bitcoin apparently in 2009 as the
writing really was on the wall in terms of how diluted the
supply of dollars would get. And we know for a fact that mathematically there won't be more than
21,000,000 Bitcoins ever to be created, okay? And so Bitcoin and
cryptocurrencies in general are, for the most part,
regulated by mathematics, okay? And you might be thinking,
Chris, wait a second. 21,000,000 Bitcoins is not that much. You're right. However, Bitcoin are expensive
so many people now own fractions of a Bitcoin. And you can buy what's called one Satoshi, which is 100 millionth
of a single Bitcoin. You can slice and dice these
things, okay, just like with the American dollar,
the lowest denomination you can get is a penny.

But with cryptocurrencies,
you can actually slice and dice a lot more. Okay, so how does all
this mining stuff work? Well, the brilliance of Bitcoin mining is that there is a, I don't wanna get hit
by these things, sorry, is that there's actually, there's a reward whenever you mine. And the reward goes to whoever makes the blockchain more secure. And so capitalism is the
quintessential motivator in this industry of cryptocurrencies.

Fascinating, isn't it? So how does mining work? Well, it's similar to digging for gold or drilling for oil or
any natural resource. Initially, it's relatively easy to do so as not many people are looking for gold or oil, right, there's
very low hanging fruit as they call it. And the golden oil industry was initially close to the earth, right? And there was, again, a
lot of low hanging fruit. And it was so easy to mine gold at first as some miners would just, you know, put a basket in the water and they will be able to get some gold. And the same thing with oil. It was easier to mine oil years ago as a lot of it was very, very
close to the surface, right? And there wasn't that much competition. And then what happened was there was a lot of competition for oil, these
companies like Petrobras as well as Exxon and many, many others, ConocoPhillips, Chevron, et
cetera, started mining oil.

And you had to actually go off shore and create these big rigs, right, and there's a company called Transocean that makes these massive rigs offshore. And Petrobras does a lot of
drilling off shore as well, deep, deep, deep in the ocean
off the coast of Brazil. And there's a lot of parallels
when it comes to rigs, when it comes to mining for oil and other commodities
and cryptocurrencies.

We're actually gonna
be creating our own rig and we'll be talking about
mining rigs like these ones here and many others as we
mine cryptocurrencies. There's the same mindset. And years ago, it was really, really easy to mine Bitcoin because there
wasn't that much competition and you didn't have to use those computers or really, really expensive
graphics processing units. So initially what we did years ago is we used computers
kind of like this, okay? So I wanna introduce this to you.

If you haven't seen this
before, this is a Raspberry Pi. It's great to get your kids involved with these things too. They're little computers. And initially, when we started
mining cryptocurrencies, we used computers that
are kind of like this. They didn't have much processing power because there wasn't much competition. So instead of using a big
ax, right, to get gold, you can use little ones back then, okay? I hope that analogy makes sense. And I wanna show this to you only because when we build our computer
in this part of the course, part 1.3, it's gonna look
a little bit like this but obviously much bigger. So let me open up this Raspberry Pi. I'll take the case off. And our case, when we
make our computer later on in this part of the course,
is actually gonna be open concept because what happens is the graphics processing unit chip, which I'll explain soon in detail, uses a lot of electricity
and generates heat.

Okay, so this open concept
here, this Raspberry Pi, here you've got some USB port in the back. This is kind of like a motherboard, which we'll build in a
couple of minutes, okay? And then you've got
Ethernet connection as well. And what we'll do is we'll
have an Ethernet port on our computer that we'll build so that we can connect to the Internet and mine cryptocurrencies. And then you've got a
couple of chips here. We're gonna use a chip from
AMD because it's cheaper, one I could find, and then
we're also going to use a graphics processing unit, GPU. This one here uses Broadcom,
which is like fraudcom. Sorry, that was, I worked
on Wall Street years ago and we used to call it
that company, fraudcom, because they pre-announced negatively and a lot of people lost money one time.

Actually, I'm kidding. Not one time, many times. Okay.
(chuckles) And this here actually, it's a little heat unit. You can't see it that closely, but (thump) oops, sorry, the microphone there. But actually, let me see if
you can see it closer there. If not, Chris, just zoom in here. Okay, and this here is
to absorb heat, okay? And that's an important thing to mention because these cryptocurrency
mining machines use a lot of electricity
and generate a lot of heat.

Okay, so I'm gonna put this
little Raspberry Pi down. I don't know why they
call it Raspberry Pi, but it's kind of a cool name, I guess. All right, moving on. Okay, cool. So back then, the price of Bitcoin, 2009, was really, really low
and people thought that what we were doing was crazy because we were buying
these virtual gems, right? Kind of like how kids play Clash of Clans and get gems, et cetera, okay, apparently. Okay, then what happened was
the price of gold and oil went up a lot, okay,
there's parallels here, and people started using
expensive equipment to mine gold and oil, right? Like those offshore drilling rigs, okay? And mining for resources
became a huge, huge business. And the smaller miners, like me early on in the Bitcoin market, were
priced out of the market, okay, because what happened was you had these massive data centers, these big buildings
that were being created with tons and tons of
mining equipment in them and I just couldn't keep up anymore, kinda like how the oil industry, you've got companies like Caterpillar making these big rigs, these big trucks that I can't afford, they're
just too expensive for me.

Okay, and so what happened was because everybody was getting
into the mining business, it got really, really expensive. And what happened was people
actually pooled together, became part of a big pool, right? There's strength in numbers. And I'll explain that to
you in a lot more detail when we mine Bitcoin in
2.1, that's part 2.1; and when we buy Ether or as
part of the Ethereum section, which is 2.2, et cetera, for
many other cryptocurrencies. I'll explain the whole pool process, okay? Okay, so I mention this also because these Raspberry Pi-like devices, they started not working anymore for mining. And I'm simplifying the process here. Things change really
fast, and I promise you a lot of the equipment I'm gonna show you that's relevant today is not
gonna be relevant tomorrow.

Things change quickly, okay? But what I want you to understand as part of this mining part of the course is how to mine, how to
set up your own equipment and that sort of thing. And the crux of it actually,
it all comes down to using what's called a GPU, a
graphics processing unit, which looks like this. Now I'll unbox this soon and
I'll explain what this is and why it's relevant to mining more so than any other part of the computer.

Okay, moving on. Okay, and then after
a while, after smaller Raspberry Pi-like devices
didn't work for me, I used my laptop and then
I had to actually use kind of a super computer. And then we even thought
about taking apart PlayStation 3 gaming consoles at the time because of the graphics card. Didn't end up doing not. So again, what I did was end
up pooling with others, okay? And people are all part
of mining pools today. And there are many
examples in the menu there, if you go to part six, and
then you just go down to mining and you'll see there's some pools there that you can check out right now. It might not make sense to
you yet, but it will soon in the course because every single link that we have there in part
six and that menu there I explain at some point in the course. Okay, moving on, moving on. So this next chart here
blew me away, okay? So if we go to this website here, we can see that China controls over 80% of the mining pools in the world, and that just blew my mind.

And there's many reasons why, including very cheap access
to electricity, okay? And I will help you build
your mining computer based on the cost of electricity in the country you live
in later in the course. I'll explain it all in a lot of detail. What I'll do is I'll explain the analogy between larger light
bulbs and smaller ones and how the whole process
of kilowatt hours or kWh and watts works so you can calculate how much it's going to cost you to mine before spending a penny. I wanna save you money as well. Okay, all right, okay, cool. So what does it mean to
mine a cryptocurrency? Well, from a high level perspective, the best way to think about
it is that the very first Bitcoin block, which we have right here called genesis, the first,
genesis, okay, sorry. Funny, no? I'm trying. Okay, but the first block here
which we have called genesis that we talked about in
part 1.2 of the course, this one here wasn't secure enough, okay? And what happened was you can kind of think
of it like it had a lock like this one here attached to it, okay? It wasn't a secure lock, but it was something.

And then what happened was
a bunch of other people worked on it and made this
much, much more secure, okay? Remember this one here? Remember that address
we have here on the side all starting with zeroes? Okay, that's an important and historic Bitcoin address there too. Okay, great. So what happened was if we
could incentivize people, meaning miners, to crack the code, right, then what happens is, think about it kind of like when you break your arm and it grows back stronger, right? So it's kind of like that
process when you mine.

There's a mathematical problem
that somebody has to crack. And once they crack it, this kind of grows back stronger, okay? I'm simplifying it, I'm
gonna build upon that in a minute because it's
somewhat accurate, okay? Okay, so how do make this
first genesis block stronger? Well, it was easy back then because it only took, you
know, one quick will step, right, so to speak. This lock is see through
so it's not secure and it's easy to open it up, okay? And I looked into how to open
these things just for fun, you know, you got to kind
of think like a hacker when you're teaching a course
and this sort of thing. And I kid you not but
I bought a hacking kit just to kind of check it out,
right, for hacking locks, made by a company called Honest, the Honest lock company. (chuckles)
Anyway, sorry. Too much spare time on
my hands but anyway, you got to kind of think like that too if you wanna work on hacking
computer vulnerability, networks, all that sort of stuff, kind of like your house, right? You got a burglar alarm
in your house, so do I, but when I put it in I
thought to myself, okay, if somebody gets through
that crawl space there, I should probably put a sensor there, that sort of thing.

Okay, all right, let me move on now. Okay, so we understand the analogy, Chris, but how does this really
relate to technology? Okay, okay, so we make this
genesis block more secure by taking the SHA256 hash here, okay, which we know is 64 characters
long, remember this guy here? Okay, remember that, that's historic. And again, I'll oversimplify this, okay, but we're gonna build more logic on this. But if you wrote a program that cracked a special piece of code
on the first block, then your solution is
used to secure this block and the others below
it, and you get rewarded for cracking the code, so to speak, okay? And your solution is then
used to help calculate the solution for future blocks.

And each time you secure another block, the ones behind it become
even more secure, okay? So the ones up here, okay, so that future Bitcoin blocks here that are getting built
next are more secure, okay? This is starting to makes sense, right? And whoever figures this out, meaning this puzzle so
to speak, gets a reward, which was many, many Bitcoins, okay? You get that as a reward
in the early days. Many Bitcoins, like tons
of them in 2009, right? And then a few years after that, if you cracked or helped
to secure other blocks, then the reward got smaller
and smaller and smaller, right, and we refer to this as proof of work.

I'm proving that I'm working and making this more secure, right? And eventually the reward
got to 50 Bitcoins. Isn't capitalism an amazing motivator? It's amazing, it's amazing. So you actually got,
you got Bitcoins, right? You got paid to make this more secure and work better for everybody. Okay, fine, I get it, Chris,
you're thinking, okay? So what about the second block? Well, the second block is
going to be stronger now than the previous one. And I hung these on separate ones here because it was a disaster. These things were breaking everywhere. Okay, and I got this all over my shirt, these rusty things, so I got this one. Okay here, so this second one came along, the second block, right,
and remember it's linked to the previous block. See the Link? Zelda? Link? Clever, sort of, okay? So that number there is the
same one as this number here. It references it to here. And this block has its own unique number that the next block
below is gonna reference with a Link as well. And recall on this block here, this was from Marty to the Doc, and this was the ledger,
remember the ledger, right? So this is a digital ledger, right? So this one actually got
a lot stronger and…

And so this lock here is actually stronger than that one there, here
are the codes in the back. Let me just put that aside. Okay, so this lock here
is stronger than that one because that one's see through. And we know that most locks can be cracked if you're curious, and I
mentioned this before, whatever, but these things can be cracked
by anybody really easily. Here's the video if you care, whatever. It is what it is. Okay, great, so that's
a little bit stronger as you can tell, right? And more sophisticated people started working on cracking the code of the second block because they heard that the reward was 50 Bitcoin, okay? Again, capitalism is a great motivator. And the price of Bitcoin
went up like crazy, went up a lot, a lot, and more people started mining. And then instead of a reward of 50 coins, it got cut in half to 25,
and now it's 12 and a half. And eventually, there will
be a very, very tiny reward where the maximum number
of coins are created and people will make money
off of transaction fees, that sort of thing, which
will never be as egregious or as crazy high as the
banking transaction fees that we currently get charged, okay.

And so the reward gets cut in half roughly every 210,000
blocks that are mined, okay? And mathematically, once
block number 6,929,999 has been mined, then there will be about the maximum number of
Bitcoins in circulation, which is 21,000,000, which
means no inflation, okay? Okay, and so by the 2030s, yeah, the 2030s, that's how you say it, the reward will be around one Bitcoin. It keeps going down. Then when no more Bitcoins
are being created, people will make money
off of transaction fees. How do I know? Well, it's not just speculation as Satoshi wrote about
this on page six of nine of the Bitcoin white paper, which you can download
from right here, okay? And well, we know that
the second block here is more secure. And you and I can literally
crack this black padlock here as we know in eight steps, okay? I'm not gonna bore you with the details, we talked about that before.

Now by the time we get
to the third block here, let me see if I can not
drop this again, okay, by the time we got to
the third block here, it's much, much safer, okay? And so I'm gonna put this on here. I know what I have to do actually. I have to put this up here. Link, if you drop, I'm
not putting you back together this time, I promise. I mean it this time. Okay, so here we have the third block. And the third block is
getting even more secure. I've got that double enforced up there. We should be okay. Okay, so this third block is
much, much more secure, okay? And so it's got multiple
factor authentication as well. And so let me just enter the
code here to open this up. Just kidding. You know when you go to a bank machine, you're with a buddy and your buddy starts typing in their code and you look away because god forbid they
think you're a criminal? I'm just kidding.

All right, here's the code. It's one, five, nine but please keep that between you and me and
whoever else you tell. Thank you. Okay, open, okay. Aha, good. And I'm gonna put the third block in here. All right, see how it's
getting more secure? And remember this one here
referred to the previous block d56, and here we have,
do you see d56 there? Yeah, good, okay, great. And here's part of the
ledger from farmer Marty, and here's the Link. And here's the number of this block, it starts with four seven. So I'll put this in here. And Link, if you break, I don't care, I'm not fixing you, I'm
not picking that up. Okay, sorry, I was just
giving Link attitude. All right, good, we're lock. Excellent, great! It's getting safer and
safer and safer now. See, stronger, stronger, stronger. So I guess next will
have to be even stronger. I don't know what I'm gonna do there. I'll figure something out, okay. All right, so clearly
this block is stronger. The next one has to be
even stronger, okay? And so I've actually got one here.

Here we go, eh? Check it out. Better change, eh? It's got another lock here too, and it can't be compromised
unless you pick this up and leave with it. Actually, all these
safes have little holes in the bottom to bolt them in. Okay, so I could put this here. And actually, what I'm gonna do instead… Anyway, so this block here will
actually be inside of here, and it's much, much stronger. And you see how on, I don't
know if you can see it but on Link's sword there, it
starts with number four seven which references that the previous block, and remember we talked
about how smart contracts in the future on the
blockchain will include election, voting so that
elections can't be tampered with, as well as cars for
leases, health care stuff, sports contracts, DeLoreans, et cetera.

I think you get the idea. And historical records as well, you know, this dinosaur there. Okay, you know what I'll do
is I'll just put this here but pretend, and Link if you break, I am not picking you up. Okay, hold on. I don't care, I'm done with that. Okay, I'm not editing that either, okay? All right (laughs) okay. Look at this dude. He lost an eye, he's been
dropped so many times. He's just not cooperating, okay? All right, I'll put you up here. You can still hang with the big boys here. All right, we're good. So pretend there's another
one here hung up below, okay? Okay, okay, so you get the idea of how these things keep getting
more and more secure, okay? And we all have access actually to all of the transparent, I'm
actually nervous this thing is gonna fall on my foot because that link is a pain in the ass to me. So I'm gonna put this guy down here. I think you get the idea now. Okay, yes, I'm done with that forever. That is finished, all
right, we're good to go.

Sorry, I digress. Okay, so we all have access to all of this awesome transparent data
online in the blockchain, and we eliminated the middle man, right? And now you can be your
own financial system, which is amazing, okay, we
can save a lot of money. It's just we have to worry about security. And when I talk about wallets as well, I will help you understand security much better instead of just
the public/private stuff I taught you before. We're gonna talk about
multiple factor authentication. Off topic. Okay, so the incentive is in place to make all of this really
ingenious security a reality.

And without the 2008 crisis, Bitcoin would likely
not exist today, okay? That's just my humble opinion. And sometimes you need a
storm to clear the skies. And Bill Gates once
referred to the concept of friction-free capitalism. And finally now, finally
because of the whole mining process, this has become a reality, friction free capitalism,
especially when it comes to cryptocurrencies, right? The government has less
control in the long run. And libertarians love this. Okay, great. Now how this whole
process of paper currency still exists today is astonishing, right, instead of the new secure version of money that we talked about. And the fact that more
than 2,000,000,000 people, that's going to charity, the fact that more than
2,000,000,000 people are unbanked is extraordinarily unfair. It's not fair. And the beauty is that
when you think about the future of money, people
will be using their smartphones if they can't get bank accounts.

And they'll be able to
bank on these things using cryptocurrencies
or micro transactions. I'm really excited about the future when it comes to currencies. There will be a lot of
speed bumps of course, as with anything new. There are those that'll
try to scam the uninformed. And part of my humble role here is to help you not get scammed
as we do our due diligence investment research process
throughout this course.

Okay, so when thinking
about the future of money, not only will more people have
access to cryptocurrencies using their smartphones, but
I think that cryptocurrencies will lead to governments either creating their own cryptocurrencies
or improving the security of existing ones. And they really have to because cryptocurrencies could
be the biggest threat to national security, and
traditional currencies until now really had no competition. And we know what happens with monopolies. They don't innovate
unless their livelihood is somewhat threatened. One day in the future, you will be telling your grandchildren about
how banks used to work and your grandchildren will
look at you astonished.

And your grandchildren will say to you… – Do you mean to tell me
that banks charge you a fee to take out some of your hard earned money from a bank machine,
while they lend your money to other people? And at the same time,
the government diluted the value of your money
by printing more of it? While credit cards all got away with charging you 20% on money you spent? I can't wear this sorry. And do you mean to tell me that the CEOs of these big banks almost destroyed the world in 2008? And then a few years after that, you as a taxpayer bailed them out, and those same CEOs got
paid record bonuses? Why did you stand for that? And why wasn't there a
redistribution of wealth and competition for better currencies? – Well, that's a great question– – Shhh, quiet old man, I'm not finished.

Then when you wanted
to send money overseas to your brother, some old
company called Western Union charge you crazy high fees while taking a few days
to transfer your money? Then at the and of every year, you actually paid somebody
called an accountant to tell you what you did with
your money during the year so that you know potentially
how much more money you need to pay the
same government in taxes the diluted your hard earned money? I mean, WTF! Oh grandpa, that stands for why the face. – I would likely respond
to my punk grand child with something like this.

Well, we had to use our currency. I mean, we didn't really have any choice. And I actually wrote, I
wrote a thesis about this when I was at Columbia University
during my MBA years ago. It was called Investment
Banking and the Internet, then I wrote, The Financial Power Shift from the Institutional Investor
to the Retail Investor. And I got it nicely bound,
which is why I think I got an okay grade, whatever. It was fun to put together,
I made a lot of mistakes, but I wrote this in 1999. And I was always interested
in the libertarian efforts or of individuals having much
more power in the long run instead of being over
governed so to speak, okay? What I was missing though in this paper was why anyone would
bother trying to change the banking system as
bankers make so much money and they donate to political
campaigns, et cetera, okay? And if it weren't for 2008 and
the fact that we were within 24 hours of bank machines
actually not working, this here would still
be a pipe dream, okay? And so now there finally is competition, and we know that competition
is great for the consumer.

And if all we had were iPhones and there was no Android,
then we would still be paying a ton of money for operating
system upgrades like this. Let me show you here. I was explained this to my kids that, I don't throw anything
out, drives my wife crazy and my mom too when I was growing up, which I still am kind of, but I was explaining to my kids, I was like you guys are lucky, right? They get excited when a new
version of iOS comes out because there's all
these cool new features, but I had to pay for this. I had to pay for this Mac system upgrade on 1.4 megabyte floppy disks. I had to pay for this Windows 95 upgrade, which was basically Mac '84.

It was a nice upgrade
though to Windows 3.1. And then when I had my servers, I had Windows NT Workstation. But I had to pay for
all of these upgrades. And the reason I spend a
couple of seconds on this is because competition
is good for the consumer, and this whole cryptocurrency competition with fiat currencies is
fantastic for us, okay? It's amazing, it's amazing. Okay, cool. We just covered a lot so far, and this is still the first
part of the course, okay? High level drilling down, okay? Next up, what we're gonna do
is a very quick mining quiz to kind of reinforce
the high level concepts we learned in this lecture. Then we're actually
gonna, this will be fun, we're gonna take apart this Antminer, which is made by a company called Bitmain. I'm gonna show you what's
on the inside, right? Should be fun, this mining rig. Then what we'll do is we're gonna build a computer from scratch okay, even if you have no experience doing this, even if you don't know
what a CPU is, okay? We're gonna do it from
scratch, gonna be a lot of fun.

And you'll know exactly how to do mining by the time we're finished with part one and part two of this course. As always, if you have questions, please let me know and thank you. Welcome to our mining quiz. Please click on this button here called Intro to Mining Cryptos and answer the four mining quiz questions, thanks. Mining Bitcoin has gotten
really competitive. And therefore, unlike most
other cryptocurrencies, we can't really mine Bitcoin
anymore on a normal computer.

So in order to mine Bitcoin, we have to use a special tool that does one thing really, really well, meaning all it does is mine Bitcoin. And they look like these ones here, okay? So these tools here are
what are called ASICs, okay? And ASIC stands for application specific integrated circuit. Here's the old Bitcoin
miner I used to use, and here is the new one here. And both of them require a big
power supply to work as well. And so since I don't use this one anymore, I'm gonna take it apart and
show you what's on the inside, which will really be helpful
I when we configure it and when we create our
own computer as well. It's important to understand
what's inside these things and it's fun too. I get to use a power drill. Okay, so basically an ASIC means a device that's got a microchip on it that does one thing
incredibly well, right? That's all it does, okay? And so we're gonna use this
Antminer to mine Bitcoins later on in this lecture here.

And both of these products
here are made by a company called Bitmain, these two, as
well as the power supply here. And before we mine Bitcoin from scratch, I wanna open up this machine
here, this ASIC machine, meaning the older Antminer
to quickly see what's inside. And these things again go
obsolete very, very fast. And even if you don't use
an ASIC machine to mine, I want you to kind of
understand the process because in the future,
some cryptocurrencies that are easy to mine
now you might have to use an advanced machine
like this called an ASIC and it's good to understand
the whole process. And then later on, what
we'll do in part 2.1 when we talk about Bitcoin in detail, we'll actually mine and configure
this from scratch, okay? And you don't need a monitor for this one because it's actually
got software inside it and you hook up to it through the Internet through the Ethernet port, which is actually right,
see, right there, you see it? Okay, okay, great.

But you'll see once we
power these things up, they're extraordinarily loud and they use just a ton of electricity which is why I'm gonna spend
a lot of time in this course on helping you understand
how much electricity costs where you live so that
you don't have to buy a single piece of equipment until you know that it's going to be profitable for you. Okay, great. So I've got my network set up here at home and so I will plug this
in later to the side of it so that we can mine. They'll actually go right in,
let me spin this over here, right in here. And actually I'm gonna
move this down here. This guy is quite heavy. I wanna power this new
one on quickly for you before I take apart the old one just so you can understand
how loud these things are. Okay, so give me a second here, I'll plug this in here. This is the Ethernet obviously. Oh, I'm not wearing shoes
so that could be deadly. All right, and when I do
the GPU configuration later when we make our computer,
I'll bring this closer.

Okay, great. All right, I'll power on a second. Okay, so the power is a
separate component here, right? It looks like this. And what you do is you just plug it into the wallet here, and please make sure that you order both of
these from the same place or you understand what
kind of power goes in here as you know how concerned I am when it when to safety. I always have one of
these things close by. Okay, so I'm gonna get the power cord and I'm gonna connect
this in a second, okay? So I'll show you here. And we have to order a separate power cord for our computer that
we're gonna make together.

In the next lecture I'll show you which power cord supply to order. Okay, so I'm gonna plug this in now. It's gonna get really, really loud. And before I do that, I'm
actually gonna turn off two of my lights so I don't blow a fuse because this thing uses a ton of power. One light. And I'll turn these back on in a minute. Gosh, I'll go up here. Great, okay.

Here we go, ready? Ear muffs? It's gonna be loud. (ASIC fans whirring) So this unit here is now on, and there's fans on both sides. These things get really, really hot, and it does get even
louder at times as well when it's mining stuff. Okay, so I'm actually
gonna unplug this now and put this way, and
then we'll take apart the other Antminer, thanks. All right. It actually still runs for a little bit after you unplug it, which
freaked me out the first time. (chuckles)
All right, let me turn the lights back on. We didn't blow a fuse. And if you're gonna do
this, if you're gonna mine, I recommend having one of those
little fuse box power plugs so you can plug your
computer into that one and then this into maybe another plug. Up to you, up to you. Okay, so let me put this down. All right, and we'll come
back to that guy later. All right. These here are where you would
hook up the power supply to.

And the other Bitcoin machine I put down had a lot more of these
slots that's more powerful. Okay, great. And basically, I was the kid growing up that was so curious about
how stuff works that I took apart a lot of stuff in the house and my mom was not happy about that. Okay, good. So now what I'm gonna do is I'm gonna open this up
and we'll take a look inside and see what's inside this guy here. So the first thing I'll do
is I'll take off the fan here from both sides. And I'll go into fast forward mode so I don't waste your time here. (power drill whirring) Okay, so here you can see these are little heat sensors. You might have seen these
on air conditioning units. And basically, this is to absorb the heat.

Again, the biggest
expense when you're mining is not the equipment,
it's the electricity. Look at that. And this one's kind of old, you can see it's got
dust in there as well. This Antminer is called S3. It's out of date. So anyway, I got a newer
one that's a lot better. And you could see the fans here. See here, all right.

Now I'm gonna take off the case. (power drill whirring) And so you've got the fans plugged in the motherboard here. You've also got these ports here, which plug directly from the power supply into the motherboard here. And then on the inside,
you've got the ASICs, the chips that basically
tell the Antminer what to do. And you can see a lot more
heat sensors here in the inside and on both sides here. Right, looks just like
an air conditioning unit, as well as on the (grunts) backside here. This is just to help you
manage heat a lot better. Okay, great. And remember earlier we talked
about the Raspberry Pi unit and how the motherboard basically house all of the components and
told a computer how to work. That's what we have here as
well with the motherboard. Okay, great, so what I'll
do is I'm gonna unscrew the motherboard and the heat sensors and take every single other screw off so I can explain what
else is inside this thing. Again, I'll go in fast
forward mode to save you time.

(power drill whirring) And this grate here, this
is one of the heat sinks to get the hot air out. And there's fans as well
on both sides, as you know. So the most important thing to ensure is that these things don't overheat, which is why there's so many
fans and heat sinks like this. And recall with the Raspberry Pi, we had very small heat sinks as well. (power drill whirring) It is amazing how much
dust gets in this thing. This is gonna be difficult clean up job. I am never putting this
thing back together again. (power drill whirring) All right, and then right here you can see this is where
the Ethernet goes into from your home network. This here is a little speaker, and then this here is the
lights on/off indicator. And that's actually
the power switch there. I don't know if you can hear that.

(switch clicks) Okay, all right. And as you can see, this here is all about how to deal with heat, the heat sinks. But I hope you have a good appreciation for what's inside these things here. The most important thing to stress is that there's a lot
of things that help it deal with heat and electricity as well, hence the two fans as well. Okay, all right. I'll clean all that stuff up later, okay? I probably shouldn't have
worn a nice shirt for this, but you know, I make a lot of mistakes. And electricity is a
huge expense when mining. And now we understand why
companies like Facebook and Amazon build their data centers,
meaning big buildings with lots of computers in them; we understand why Amazon and Facebook build their data centers
with massive, massive air conditioning systems. Obviously much better
than this little fan here. And a lot of times, these
big companies like Facebook and Amazon will locate their data centers in places where electricity is cheap or where the climate is much cooler, okay? And so I'll give you a couple
of examples just for fun of data centers here.

So here's a picture of
Facebook's Iowa data center, and here's Facebook's Oregon data center which actually runs its own weather system to keep the temperature
down per this image here. It's amazing, amazing. And here in this image
is Facebook's data center in Sweden, very nice, cold climate. And you can see the importance of keeping all of these
machines very, very cold. Having low electricity
prices is very important if you're going to profitably mine. And I'll help you understand
how much it costs you electricity wise before
you even think about buying any of this stuff, okay? Now if you wanna see the
inside of a data center, then check out the promotional
trailer for this course as I rented part of a big data center to film the promotional video in Prague. And I actually had to do voice
overs of what we recorded here in Prague in this trailer because the data centers
are very, very loud, not just because of the
many computers running there but because the air conditioning and fans are very, very loud there, okay.

Back to our Antminer. The chips you see here in
this Antminer are ASICs, which means they have one purpose only which is to mine Bitcoin. Now in part 2.1 of the course here, we will use my new Antminer,
the silver one I put down here and we'll mine Bitcoin from scratch. And I'm gonna teach you how
to configure the software the easy way and just how it all works. And in part 2.1, I'll also
teach you how much money you can make while you mine Bitcoin. In the next two lectures after I clean up this awful mess here and wash my hands, but I'm gonna show you how we can create a computer from scratch so we can mine some of the other
non-Bitcoin cryptocurrencies in this course. Thanks. In the previous lecture,
I introduced the concept of the Bitcoin mining
machine called the Antminer, also referred to as an ASIC.

Now since mining most
other cryptocurrencies is less competitive, we
can use a computer to mine instead of buying an Antminer
ASIC specialized machine. We can actually build our own computer. However, it can't just be any computer as we need to have a very, very high end graphics card to do this. And graphics cards are
also called video cards and they're also called GPUs, which stands for graphics processing unit. Now I'm starting with this component before discussing others
because it's the most important component when
you're building a mining PC, way more important than the
central processing unit.

So let me just take this out here. All right, I'll take this out here and what I'll do is I've got a monitor up, or pardon me, my iPhone
up here recording as well so I will show you everything here. All right, so here's the unit here. There we go, and this thing is bad ass. I mean, check it out,
it looks like something out of the Dark Knight. And I'll just get rid of this box here and I'm gonna lay out all
the other boxes out here for this stuff that we're
gonna be mining, okay? It's pretty bad ass. When you turn it on, you see the lights, it looks really cool, my
kids are gonna love it. Okay, let me get rid of this stuff. All right, great. So I'll put this over here. Okay, that's a GPU. So video game enthusiasts
really don't like cryptocurrency miners when the price of cryptocurrency spikes
in a short amount of time because when you see
a crypto market spike, when you see prices go up a lot, people buy more mining
components to build rigs, or mining PCs as some people call them.

So what we're gonna do is in this lecture we're gonna talk about ordering parts, and then we will put together
all of the parts from scratch so that we can start
mining cryptocurrencies. And there are so many terms. And if you're an expert,
you probably don't need to watch this lecture when
it comes to building a PC, but I'll go through them. Gigabyte, RAM, SSD, HDD, there's
so many intimidating terms that you often hear. But they're really not as
hard to handle as they sound. And so building a PC or
a mining rig, same thing, is as easy as building a Lego set.

All that's involved is
following directions and plugging in all the
stuff into the motherboard and then the outside rig,
which I'll explain in a second, like the case, okay? So it's really easy to do and it's a lot of fun
and you have to do it if you wanna mine
certain cryptocurrencies. Now depending on your budget, you can make a PC with better parts. However, many times, just
because a part is more expensive does not mean it is better. And just like how my kids' Star Wars Legos are more expensive than
that the normal Lego sets, even though the product looks similar it doesn't mean it's better.

So an analogy in technology is how some mobile phones are expensive just because of the brand, even though other phones
are cheaper and better. Okay, so no matter what your budget is, make sure that you spend more
money on the important parts when mining like this
graphics card here, okay? And you can save money on
the less important parts like the CPU or RAM. I'll explain that in a minute, okay? And make sure that all
your parts fit together.

And many older parts no
longer work with newer parts so make sure everything can work together. And I'm gonna teach you a really, really simple way to do this, okay? So if you're not sure how to do this, I want you to please go
with me to And then I want you to select
the parts that you wanna use. And I'll show you how
to do this too, okay? So think of as being like an instruction manual that
ships with Lego sets, okay? And will
automatically filter out the parts that don't work with
your computer pieces, okay? And just like that, you
will be able to understand which pieces to order through the help that PCPartPicker will provide you.

And then what we'll do
after we have the list of parts for our mining
PC, we'll go to Amazon and we'll buy the cheapest
ones we could find out that have decent enough
ratings that can ship on time for me to make this video. And you can access all of
the resources that I discuss in this menu here, the categories
are in alphabetical order as you know, so let's
scroll down to M for mining and access the part picker website here. Okay, so let's go to This website is so amazing
that it will not only help you build the PC that fits your needs, but you can also check out other PCs that other people have
made and kind of use their configurations,
kind of like downloading Lego instruction manual PDFs for free. Okay, and you can access
complete builds for PC, like a gaming PC, et cetera. Okay, cool. Moving on. So let's imagine that
each part of the computer is like a part of the body, okay? The CPU, also known as the
central processing unit, is the brain of a computer.

And it kind of controls
everything that you do on your computer, and it's
usually one of the most crucial parts for the computer. And as we pick out
parts for our mining PC, we will be building this
computer piece by piece, okay? So make sure that you select the GPU, meaning graphics processing
unit, video card first, okay, as this is the most
important thing to choose and everything else is
less important than this. So let me just put this box up here just so you can kind of
visualize what we're doing here. And I'll lay out actually
all the boxes here of the stuff we choose
and I will put this away safely over here for now. Okay, so our computer
that we're going to build is going to use this GPU,
this graphics chip, okay? It's called the Asus Radeon RX Vega 64, eight gigabit video card.

And that's important for
me to mention because we're gonna be using the
name of this product a lot when we're downloading
mining software to install and also when we're calculating if it's going to be profitable
at all for us to mine. Okay, and recall please
from the last lecture how cooling these items
is super, super important. And that's why this guy here has got three fans on it, okay? As my son would say, that's dope. And I chose this graphics card as it's one of the better ones out there, and I also wanted one that
could mine several cryptos in this course, which
I'll show you how to do in part two of the course. Okay, so as I made this course, it's important for me to mention the price of this GPU dropped a bunch,
which is somewhat expected because the price of cryptocurrencies dropped as I was making many
parts of this course, okay? And what you can also do is you can hook up your TV to this.

Okay, I'm gonna use an HDMI port. See how it's on the back here. There's also an HDMI
port in the motherboard that we're gonna talk
about ordering in a second, but we're gonna hook our
monitor up to this guy here, which is the HDMI port. And I'm just using a television
I have from the house because it uses HDMI and I
wanna save some money as well. Okay, great. And my son is gonna get upset with me because he is playing
a Fortnight right now, it's a Saturday, and I need
to get the TV for this anyway. I'm not that popular in my house. Okay, so you'll remember
that in the last lecture, I did not discuss connecting
the Antminer to a monitor as what we'll do with the
Antminer is we will ping it, meaning we will connect to the Antminer using your home network
and your home router. And I'll explain how to do
this in this lecture here on mining Bitcoin in
part 2.1 of the course.

Okay, back to building our computer now for non-Bitcoin crypto mining purposes. Okay, so as you can see here, I will build a PC here from scratch on this amazing website. Now let's select here
start a system build. And by the way, I already
have all the parts here in this room for this
computer we're going to build, but it's important for me to show you how I use
to choose these parts. And so I did a screen record before. Okay so on the website
we're gonna choose the parts that we might need in order
to build our mining PC.

We've already got the GPU here, okay, which is called the video card. And PCPartPicker makes
sure that I only select compatible products when building our PC, which is why I start with this first because I want everything else
to be compatible with this. Okay, great, so let's
add our graphics card to by
searching for it here. And we know that the brand
name is this one here. Okay, again, we start with the GPUs because it's the most important
component when mining. And the important thing
to consider when picking a great GPU for mining is what is called the hashes per second, okay? And I need to get my ax to
show you this one, okay? Here we go, hashes per second. And hashes are what the
video card will process. And the more you can process,
the more you can mine, okay? And hashes basically means the speed at which your mining rig
PC will mine at, okay? So anyway, just think of
how fast this mining ax can dig for gold.

Okay, I'm gonna put this down over here. Okay, great. And to find out how many
hashes your video card will mine at, we're gonna
go to another website so you might wanna have
two tabs open, okay? We're gonna go to a website
called Again, every one of the
Internet addresses we mention is here in part six, just sort by mining. Okay, so we're gonna go to and we're gonna go over here to knowledge and select the GPU hash rate option, okay? And on this page you will
see many graphics cards that work well for mining, okay? And the graphics card
market is really dominated by just three, two or
three actually companies.

Like AMD has a subsidiary
called ATI, okay? Those are their graphics cards. There's also NVIDIA. Now AMD makes CPUs, and
that's important for me to mention that because I'm gonna show you an AMD CPU really soon, okay? So AMD make CPUs just like Intel does. And AMD bought a great
Canadian company called ATI. So AMD graphics cards are really Canadian. I gotta represent, I am Canadian. And Intel, I'm sure, it's
important for me to mention this, Intel, I'm sure, has always
wanted to buy NVIDIA, right? The other graphics card company. But with anti-trust
government bodies globally, the anti-trust divisions would never ever allow that to happen. And I mention that because then Intel will become too powerful, and we know that competition
is good for the consumer. And the fact that fiat
money, meaning paper money that we use, and the fact that fiat money has not had any competition till now is a reason why fiat currencies have not seen much innovation.

Okay, great. Now once we're on this page, please scroll down and
we'll look for the GPU that you decide to purchase. And as you can see here, the AMD Vegas 64 that I bought is definitely one of the
more pristine graphics cards. And we have high rates here for mining Ethereum, ZCash and Monero, okay, which we'll discuss in part
two of the course, okay? And it's also more expensive because it's got a higher hashing rate. Okay, great. Now the parts that I will
show you that I decide to purchase are not only
compatible with each other, you know, per, but I also made sure that the products were cheap enough, that
they were in stock, that the ratings were good enough and that I could get them
delivered to me on time to make this video, okay? And what I did was I didn't
just look at the ratings on's website.

I also went to Amazon,
looked at the ratings there. Amazon has better ratings
because there's more of them. And one or two data points
doesn't make a trend, but Amazon has a ton more data points than does. Okay, okay. And I promise you that
prices will continue to come down a lot, as they
always do in the long run, with computer components. And as I prepare these lectures, every time I went back to
these websites here in Amazon, the prices kept dropping. It drove me crazy, but
it's okay because prices will even be way lower by the
time you watch this, okay? And this course is meant to teach you how to build these things.

Prices will come down, but the methodology will always stay the same. Okay, great, all right so what
does this stuff mean here? Well, per this image here
from the BuriedONE website for our graphics card,
our graphics card can mine the Ethereum algorithm at a speed of 34 mega-hashes per second, okay? Now do you see the mining
OC here as 40 mega-hashes per second for Ethereum? OC means overclocking, okay? Or Orange County if you're from
Southern California, right? So OC means overclocking, which means if you're
super, super technical and you wanna modify
or overclock your GPU, this thing here, then
you can make this card mine at 40 mega-hashes per
second for Ethereum mining, okay? And we're not going to do that though as it can be very dangerous
as you can overheat and fry your graphics card, okay? So safety first always, always, always, and this is why, and I'm
driving you crazy with this, I apologize, but I care.

This is why I always have these fire extinguishers close by. Okay, great. Now you could see here
that it's easier for us to mine ZCash and Monero as
you can currently mine them with my graphics card at lower speeds. So for Monero, we can mine
at 1750 hashes per second, which is the same thing as 1.75 kilo hashes per second, okay? And I'll explain this soon,
I'll come back to this concept later in the course. And this will be much easier to understand as we actually mine these
cryptocurrencies with this GPU. But I wanna put that on your radar screen just for now, that concept, okay? And the last thing I'm gonna
say about our GPU for now is that I purchased this one
to show you in the course as it mines a bunch of the
cryptos covered in this course at a decent rate.

Okay, now in the mining lectures
in part two of the course, we're going to revisit how to mine the other cryptos mentioned in this course with this GPU if applicable. Okay, make sure it's still recording. We're good, okay. And some coins like
Ripple cannot be mined. And we're gonna cover each
crypto's mining characteristics in the parts there, in the 10 parts in part two of the course, meaning part 2.1 for Bitcoin,
2.2 for Ethereum, et cetera, up to 2.10 for Stellar.

And then if you click on
that button at the top here, if I add more cryptocurrencies
based on your demand, then we'll cover those there. So in each of the aforementioned 10 parts, we will talk about how to mine or why we cannot mine certain cryptos. Okay, let's move on. So let's keep building our mining PC. Now let me explain the selection process of the non-GPU items,
meaning everything except for this one here, okay? GPU is also called the video card as it is the part of the computer that video gamers love, as a great video or GPU card makes games look savage.

I have no idea if I'm
using that word correctly, but my sons say it, and
I'm always up to date with how cool people speak. Okay, groovy, far out, right
on dude, moving on, okay. Right, so let's select a CPU here. And notice how the green text here says no compatibility issues okay. As we select the correct CPU, we'll find out if there's
compatibility issues or not. Okay, so let's click choose a CPU, which means central processing unit. It's the brain of the
computer kind of, okay. And luckily for us, unlike most computers that you and I all use daily, mining computers do not
require much brain power from the CPU, as the
GPU does the hard work. Okay, and so I wanted to find a cheap CPU with decent enough ratings and I wanted it to have a speed of at
least three gigahertz. And anything about three
gigahertz has multiple cores. So let's sort by price,
lowest to highest of course.

And we're gonna go with the AMD A6 6400K. All right, now I'm gonna put this here so you can see it actually. I'll put it this way here, I'll just lay everything out
in the table here for you. Okay, okay, and this
processor was great value, and I'm amazed at how
much prices have come down for CPUs like this. And I chose AMD here. Okay, great. Now not all of the
components that I select will show up for you if
you try this exercise as inventory changes a lot. But this website is great as it will help you understand if the parts work together per the green compatible message in the top left hand corner of the PCPartPicker website here. Okay, all right, next on
our list is the motherboard. And just like how my mom
kept our house together and made sure that all of
us, my brother and sisters, all of us got along together growing up, the motherboard is the
foundation or the rock.

It's the foundation of
our PC, and a lot of stuff plugs into the motherboard, okay? And so I'll show you this
motherboard in a second, but since the main focus
of our rig is only one GPU, we do not need a specialized motherboard with many slots for GPUs, okay? However, if you plan on making a rig, which is what miners call mining PCs, if you plan on making a
rig with multiple GPUs, then has great
guides that you can base your mining rig off of, okay? So what I did was I bought
the cheapest motherboard I could find that would
ship in time for this video. And one of the coolest things
about building your own rig is that you can build a
rig that fits your budget and your needs, okay? And I'm gonna take this out of the box because I wanna show
you in a minute or two how stuff plugs into this, okay? So let me just put this over there.

Okay, so I'm gonna keep that there and soon I'm gonna show you what plugs into these sides here. (mumbles) Good enough, great, okay. Next up we need RAM, that's
random access memory. And we need to have a lot of RAM if you wanna have a lot of
programs open at the same time and you wanna multi-task. And when you're mining though, it doesn't really matter with RAM because we just wanna
have one program open, which is the mining software, along with Windows of course,
your operating system, or Linux, which I'll
talk about in a second. Okay, so four gigabits is
more than enough, okay? And this is one card that has
four bits of RAM on it, okay? And when I open this
up in the next lectures after this one, I'll show
you how to install this and everything else on the motherboard.

It'll be a lot of fun. But you can cut costs here,
you can get cheap ones, okay? All right, so scroll down here. And on the bottom left
side, you can see that you can change this here just to show four gigs of RAM one
time, meaning on one card. Not 2x. 2x means two cards with four gigs each. I want 1x so I selected that
little check box there, okay? And you can get more
RAM if you wanna be able to play games on your computer, or if you wanted to
have many programs open at the same time like
PowerPoint, Word, Excel, you get the idea. But if this PC you're
building is only for mining, then four gigs is good enough, okay? And just check out here, our prices have continued to come down. It really is amazing.

Okay, and so I bought this brand here, the Patriot brand. I bought the Patriot brand as I need this to ship on time from
Amazon just for this video. But if you can, I recommend getting higher rated RAM than this one. The ratings aren't that good but I've worked with them in the past. This will work, okay? I've worked with Crucial, I've
worked Macronix, et cetera. It's good enough, okay, get moving, okay. Next up we have storage. Now there's two kinds of storage, right? There's faster storage called SSD, and then there's a larger
one, it's not SSD, okay? And I'm oversimplifying
this for a second okay? Now I have a personal preference for SSD, which is faster storage. And since we're mining, we
do not need a lot of storage. And SSDs stands for
solid state drives, okay? And here's the one I got here, okay? Solid state drives. And there are very few
moving parts in this so it can run very quickly unlike traditional larger hard drives that operate like a record player. They're slower partially
because they have many more moving parts like a record player, and they call that a GMR head which companies like TDK,
a Japanese company, make.

Okay, little bit off topic
there but this is an SSD, okay? And I'm gonna put it down here so you can see it from the camera above. And I'm always amazed at
how much prices keep falling over the years for SSD drives. All right, so I got
this Kingston drive here as it is not too expensive, and the ratings are great. Then I added this to my Amazon cart, and you can also see
the amazing ratings here on Amazon for this dude here, okay? All right, next up we need the heart.

We need the heart of the computer, it's also known as the power supply to provide the life actually
to our machine, the power. And you're gonna want a
sufficient amount of power or your computer will not run well. So if you're mining where
you're just gonna have more than two GPUs, okay, this is one here, you're gonna have to figure out how much wattage you will
need for your rig, okay? And if you plan to have
many, many, many, many GPUs, I personally recommend
having 1100 watts and up as that should be more than enough to power multiple GPUs, okay? Okay, great. And I'm going with a
reasonable 750 watts here since we only have one
GPU card for now, okay? The 750 can handle two GPUs, but I'm just gonna do one card for now.

Now when I chose this power supply unit, I chose a brand called
EVGA as it is reputable and the prices are not egregious,
they're not crazy high. And as you can see the
ratings here on PCPartPicker for EVGA are decent, and I
don't wanna be too cheap though when it comes to power. Safety always comes first. Think of it like how you spend additional money on insurance. I like to buy good brands
when it comes to power. And EVGA has excellent customer support, and a company is only as
good as its customer service in my very humble opinion, just like how Amazon has
great customer support.

And speaking of Amazon, I actually had to buy power cables as well from Amazon to connect
to my power supply unit. When I put together this
entire computer or mining rig, as people call it, this will
make much more sense to you. So I'll put that there a sec, okay, great. Now if we look at the website, it says a cooler or fan
for the CPU, CPU cooler. I'm gonna skip it because this AMD here already has a fan that comes with it. And I'll show you how to
configure it in the next lesson, but you could see here, okay, there's the processor, here's the fan and you got these cooler
things, great things. So it already ships with a fan, okay? And I'll show you how
to configure that later. It's kind of special
goo on the and as well.

I'll explain what that means. It's a little bit messy
if you're not careful. Okay, I'll put this here, put this over here so
you can see the brand. We don't need additional
memory, we have enough, or hard disk space, so
let's just keep moving on. And PCPartPicker doesn't
recommend a case for it, meaning the shell you put on
the outside of your computer or the rig that you attach these parts to. So I'm gonna get the cheapest
one I can find on Amazon with a decent rating. And I chose this one
here as it got delivered in time for this video as well. It's in this box here. The brand name is Open
Air Miner Mining Frame. The Ethereum Steel Coin-Ebanku. It doesn't mean it's just for Ethereum.

That's a branding thing. I'll put this down though
because it doesn't really tell us much on the outside of the box. Okay, we don't need a CD drive because we're gonna install Windows directly into the USB
port of our computer. I'll come back to that in a minute. And of course PCPartPicker makes sure that all the stuff we have selected is compatible with each other, okay? We're almost done here. Now we do not want to buy more software. And I'm actually gonna use my TV to hook up the motherboard to
my GPU using an HDMI cable. When I assemble all this
stuff, I'll bring the TV in. I don't need an expansion
card or anything else, and I ordered the cheapest mouse, that's how we say it in Canada, mouse.

Okay, I ordered the cheapest
mouse I could find on Amazon. Anyway, and then the cheapest
keyboard I could find as well in this box here. I'll open it up later and
show you how to configure and install that stuff,
it's pretty simplistic. Okay, and if you scroll down here, you'll see the price history
of all the items selected. And it can be frustrating,
it can be frustrating to look at the chart after
you order the components as quite often, this is
crazy but quite often, the price drops literally by the time your components arrive in the mail. And sometimes you'll see prices
go up a little bit though if there's a spike in the price of cryptos as more people mine when
prices go up and vice versa. It's all about supply and demand. Okay, now we need to order
what are called risers, okay? These are risers, okay, and
I'll explain what this means.

Risers are something, and I'll put it here so you can see it, risers are something unique to mining rigs because what they do is
they allow GPUs, okay, they allow GPUs to
connect to the motherboard in a more space friendly manner. And I'm not gonna put a cage
or a case around this computer. I like the open concept rig,
which I'll assemble soon as the open concept rig doesn't
get as hot as a computer with a case around it. And just make sure if you
do this that you don't have kids that are nearby as they can get hurt or electrocuted, whatever, if they touch the equipment, okay? Thank you.

Okay, so here's the raiser
product that I selected again. It will plug this guy into here so that I have more space
to move around my components if I want to. And the last thing I'll say about risers is I like them because
they keep them away, they keep the GPU away,
a little bit farther away from the other stuff in
your computer so that this, which gets hot, doesn't
overheat other products. Now when it comes to the
frame, this thing here which I'll put together soon, when it comes to this frame, a lot of people, they use milk crates or they go to the hardware store and they make their
own just to save money. And I don't recommend doing that unless you're really, really advanced when it comes to this stuff
because what happens is you have to be careful
with electricity grounding.

And just to be safe, I recommend
buying just a rig frame instead of making one yourself, unless you're really, really advanced. Okay, now we're gonna
assemble all this stuff in the next lecture, okay? But there's a couple more
things that we need, okay? So you're gonna need an Ethernet cable. You probably already have one at home, and we'll use this to
plug into the back here of our motherboard, okay,
it goes in there, okay? Great.

You'll also need a power switch. A lot of people forget to get this, right? A little power button, which I'll show you how to install soon. It's made by Electop. Okay, I'll put that right there. Now that all the hardware is here, there's one more thing which
I briefly mentioned before, which is Windows, okay? And I wanna drill down on this, okay? We need an operating system, which we know is a software platform
program that's installed in all our computers on hard drives, okay? That's where the operating system is. And we know that the
operating system is what makes your computer easy to navigate with icons and lets your mouse work with it. And ordering an operating
system is pretty easy to do. Order the cheapest version
of Windows you could find that's a recent version,
like Windows 10, okay? You don't have to get a
high end server version, which is more expensive,
because all we're gonna be doing is mining with this computer, okay? And I didn't wanna order
the CD version of this because I don't wanna
buy a CD drive as well.

And you could buy a CD
drive for 11 or $12, they're pretty cheap, but
I wanted to keep it simple. So what I did was I bought this, I actually got it from
Google shipping online as Amazon didn't have it or
couldn't ship it in time. And I bought a USB version, okay? And the reason I did that
is so that we can plug this USB version of the
operating system into here, one of the ports on our motherboard, okay? And you'll see there's also ports here for the mouse, as well as the keyboard.

Now if you don't want to use Windows, you wanna save money,
you can use Linux, okay? And I love Macs, but it's
a pain to open a Mac up and customize components so I recommend, if you're newer to
mining, use Windows, okay? If you're advanced, then what you can do is you can use Linux, okay? And so here is a list of
everything from that we ordered, and as you can see, all the parts are compatible
with each other, okay? This is fun, huh? And we'll assemble this
in the next lecture, which is even more fun. And assembling all this stuff
is actually a lot easier than assembling, you know,
the Zelda Link character, which gave me issues
earlier on in the course. (chuckles) Okay, so and make sure again you always have a fire
extinguisher close by in the very unlikely event
that you need to use it. Okay, I'm excited, this is gonna be fun. After you've ordered and
received all of your parts, it's time to piece together the rig, meaning the mining PC.

And this is gonna be a lot of fun. But before we begin piecing this together, we got to make sure that we
have all the tools necessary, okay, as well as we have to make sure that we are not charged with static, okay? You don't wanna shock the computer, which can cause issues, okay? And so what that means is this. If we touch the pieces of the computer and we're charged with
static from a carpet, it could actually damage the hardware. And just to make sure
that you're not charged, what you can do is you
can touch a metal surface before you touch the parts.

And make sure that you
work on a solid surface if you want to, meaning in a room that doesn't have a carpet, okay? Up to you, up to you, okay? Now I'm gonna take the cage out of here, which is what's gonna house our rig. And I like the open
concept approach because it's easier for you to see all this stuff that I'm gonna put together here, and it also keeps it cooler as well, okay? And after I assemble this cage here, then I'm gonna take the motherboard and drill it on to here.

So I'm gonna go into fast forward mode so I can save you time. Now that our frame is complete, I'm gonna install all the components on this frame right now, and I put the microphone
here so you can hear me a little bit better. And all we're gonna need is
this and this, and that's it. And the screws actually,
it doesn't really matter what screws you use. The real purists will say you
have to use certain screws for certain parts. I don't care. The only thing I'm gonna
do is I'm just gonna use these little risers that came
with it for static reasons so that the motherboard stays cool because it's elevated a little bit with these little things underneath, and I'll show you in a
second how to do that. And also so that there's
less static charge to hit the motherboard. Now people will complain
a lot about static hitting their boards. I've never had that issue happen to me, but just in case I'll put
these risers here for you.

Okay, great, so let me start. The first thing we'll do is
I'll put in the motherboard. And I'm gonna put these
risers in right now first, and then I'll screw the motherboard into these risers, okay? And when you're using a
screwdriver and a motherboard and any components, do it gently, okay? Don't don't do it as hard as you can or you could crack the board. And I use this a lot, but I make sure not to make it too tight so
I don't crack the components.

But these things are
actually more resilient than you think, than you think. The only thing you have to
really, really be careful with, I think, my humble
opinion, is the processor when you put it on. And there's this thermal
gel underneath it, which is really cool,
I'll show you in a second. All right, let's move on. So what I'm gonna do now, and hopefully you can
see in that camera there, is I'm just gonna screw in these little components here, okay? They don't have to be too tight.

Okay. This here. Oops, and when you look
at your frame here, there's a lot of holes in it. Don't worry if you don't have a screw in every single hole here
through all of these, just a couple to make sure
that it's secure enough. And I'll show you what that
means in a minute, okay? So for example, these ones here are gonna screw directly
into the motherboard, but these ones here are not. And that's fine because I've
just got these risers here that are gonna support it
slightly off the bottom of the case here. All right, screw it in. Doesn't have to be too
tight, it's fine, okay. Great, now I will put
this in and here we go. I'm gonna line these right here. Okay, and again there's tons
of different types of screws that come with this frame that I bought. It doesn't really matter
which ones you use. They're all the same to me to be honest. Some are shorter, some
are a little bit longer, some people say no you have
to use it for the hard drive, you have to use it for this.

Doesn't matter to me, it's all fine. Okay, so put this here, okay? Good, and then just to get
them, the teeth slightly in, I'll start with this. Good, and what we're doing is
we're screwing these directly into the risers, okay? So these four (mumbles) risers, you'll notice that, and it'll
pick this up in a minute to show you, but there's little gap about the size of my finger
just so it stays cooler and so it risks shock,
or it doesn't shock.

And as I mentioned before,
I've never had shock issues with boards I've built in the past. Okay, let's go here. Good, teeth are in a
little bit on all four. I'll take this. I won't make it too tight. (power drill whirring) Make sure it's going the right way. All right some white stuff there because I was drilling the dry wall and the ceilings for my
camera to be up there.

Okay, so… (power drill whirring) Fine, I know it sounds harsh but it's not really tightening
as much as you think. Okay, get the teeth touching slightly. (power drill whirring) That's fine. Good. Good. That's again from the dry wall. Okay. And that's secure enough. Again, it doesn't have to be too tight. I'm trying to get these to latch on to the little risers below it. It's fine, okay. And people call them standoffs as well. Okay, great. So as you can see, it's
slightly elevated here, okay? Let's see if I can get you
to see it in that angle. You can kind of see underneath there. Okay, kind of peek into it. All right, great. Okay, cool, all right. Now next up, what we're gonna do is I'm gonna put the processor on, which is one of my favorite parts.

Let me go grab it. And so my AMD processor, it shipped with a fan as well. Most of them do. And what you'll notice is
that there's this thermal gel that's on it, okay? It ships with it on it,
and I'm actually going to put this on here. And sometimes you have
to align what's called the little golden triangle. You can see it there, okay. And you align it with the corner here when you put it on, and I
see a little triangle here. Now I'm gonna put it on
incorrectly on purpose, okay? Watch this.

It doesn't fall in, okay? You never force the processor, okay? It doesn't fall into
those little slots there. This is the right way. I'm gonna do it wrong
again, just to show you. It's not falling in, okay? And then I'm gonna do it the right way. Ooh, just fell in there. It's pretty cool. Okay, great. I'll push that down. All right, now next up
what I'm gonna do is we got the thermal gel already on there. I put this on before,
I'm doing it again now, that's why there's a little
bit of gel already on that. But it usually just
comes on this part here. And the purpose of this
is to keep the chip cool. The same thing with the
gel, the thermal gel, right, to make it cool. And there's a fan on here as well. And remember when we were looking at the, hold on a second, when we were
looking at the Raspberry Pi, so I left this on the floor, this was one of those little cooling units on the Raspberry Pi as well.

And remember when we were
looking at the Antminer, the one I took apart and
voided the warranty forever? Like it matters, it's old. That had devices like this
just to cool down the unit. Okay, let me put this
Raspberry Pi piece aside here. All right, cool. And if you have kids, you
should buy a Raspberry Pi and assemble it with them. It's a lot of fun. Okay, so I'm gonna put this here and then we're gonna clamp it down. You see the clamps? Okay, so I'm gonna clamp one side here. Can you see that? Okay, and then I'm gonna put this here. So let me get the clamp there. Okay, good, okay. I don't wanna force it, I
wanna be gentle with it. Okay, okay. All right, hold on a second. Okay, that side is on this side here. Good, now I'm gonna clamp in in. Okay, see here? Clamped in, okay? And this here is so that we
can power this fan here, okay? So I'm gonna plug this in,
and they're labeled as well.

So hold on one second, here you go. You see that there? It says CPU fan, might
be tough to see, right? And when you get your motherboard, if you look at the instructions, which is usually just a couple of pages, you can see that they
clearly lay out what is what here on the motherboard. Or you can just go to the Internet and download a PDF for it, okay? Or go to YouTube if you're not sure, okay? All right, so I'm gonna put this here. Okay, hold on a second. Good, okay, great, we're done with that. And sometimes this gets
caught in there, okay? So what some people do is they tie it very gently. So let me do that here, I'll tie it into a little bit of a not there,
just very gently, okay, okay.

That will kind of get the excess wires from getting caught in the fan. Okay, that's good enough. I think you get the idea. Okay, great, all right, we're
done with the processor. Now I'm gonna move on and
we're gonna put in RAM, okay, random access memory. And recall that we bought this, which is just, this is from
Patriot, not the best brand. I recommend getting
something that's a little bit higher quality like Crucial or Micron, but I wanted to get this
in time to film this video.

So we've got four gigs of RAM here, okay? Four gigs of RAM on one stick. And usually, when you put these in, there's usually two slots at least. You'll wanna match them. So if I wanted to have eight
gigs, I put a four and four. If I wanted to have 32, I put 16 and 16. But since this is just a
mining PC, a mining rig, it doesn't matter how
much RAM you have, okay? We're just gonna do one
thing with this computer, and that's it, which is mining. If we wanted to have
PowerPoint, Excel, Word and Fortnight, which my
kids play a lot open, we'd have more RAM. Okay, let's move on. So when you put these things in, you pull these apart. See there? And then you just clip them in, okay? And you'll see that you can
align these here, right? Okay, so I'll plug it in,
doesn't matter which slot you put it in. Okay, so let me grab that there. Okay, good, good, good.

That's fine, okay, it's good enough. Okay, great. So we're done with the RAM, and what should I do next? I'll do the hard drive now. Okay, I'll do the hard drive. So let me go grab that. It's right here. Now when we install the hard drive, what you can do is you can actually skip this hard drive, which I bought.

It's a pretty cheap drive,
but you can actually, you'll see here, see the USB ports, you can put a thumb drive
in there, a hard drive, and that's good enough, right? I chose this because it's
a little bit faster, okay? And when we install Windows very soon, I'm gonna show you how to do it, I do it on a little USB drive as well. Okay, cool. So in order to install this, we're gonna need that
power cable to be plugged into this as well. And you don't have to screw this in. What I'm gonna do just
to keep it simplistic, I'm actually gonna screw it
into the top somewhere here just because I want you to be
able to see everything here. Okay, so what I'll do is
I'll put this down here and I'm gonna get the
power supply now, okay. Okay, so this is the power
supply we're using here. And before I go ahead
and put the power supply on the connected cables, I
know I've said this a lot but I care, I always want
you to have this available or another fire extinguisher.

I've actually got two here just in case. That's how careful I am with this stuff. Because what's gonna happen,
I promise you, I promise you, if you play around computers like this and using power supplies
over many, many, years, decades for me, I'm dating myself, you will see smoke sometimes if you put the wrong cable in, okay? And what happens is if
you smell burnt plastic, even a little bit, immediately the first, and sometimes you won't
see the smoke, okay, but the first thing you do right away is you unplug the power from the wall then you grabbed this right
away and you look to see. And if the smoke has stopped, you don't have to use this.

But if you still see smoke
and start to see a flame, obviously (imitates
spraying noise) right away, right away, okay? Okay, and I taught my kids
how to use this as well. Okay, so anyway moving on. So there are just a
tons of cables that ship in this thing here, okay, and this looks pretty cool eh? Isn't that cool? So we're gonna install this in a second. There are a gazillion cables
that come with these things, and they're labeled as well. MB for motherboard, CPU for
central processing unit, VGA for the graphics card,
SATA for these things, and the power, other devices as well.

And I'm gonna show you
exactly how to do this, okay? Now let me put this down for a second. Grab a bit of water. All right, so with these things, everything is really nicely
labeled already for you, okay? So you've got here, and I don't know if you
could see it up there, maybe you can pause that,
Chris, in post edit, but I'll just hold it right here.

You've got motherboard here, okay? CPU here, VGA here, which is
for the graphics card, okay? Then you've got SATA, okay, SATA, which we're gonna use here for powering a couple of things, okay, one of which is the hard drive, okay? Then you've got peripheral one, which I'm not gonna use. Okay, and then on the side
of this thing, there's eco, which is, I guess if you wanna save money you can turn the fan off. Just leave it on always, okay? Better safe than sorry, okay? And this is obviously the on/off switch. Okay, great. So what we're gonna do
is I'm actually gonna install this right here. And it's not perfect, but I wanna put it right here
so that you can still see into my rig as we continue
to build it, okay? Great, so let me do this.

So I'm going to turn this around just so you can hear
me speak as I install. Okay, move this here. Put the hard drive there. I know where my fire extinguisher is. Great, all right. So what I'm gonna do is I'm just gonna install it loosely here,
and the power supply doesn't have to be too tight. Just make sure that it's secure enough so it doesn't fall on
your motherboard, okay. Again I'm installing it
this way so you can see me. All right, hold on. I'm just gonna screw this in here. It's good enough, yeah, it's fine, okay. And I am actually going
to tighten this a bit. (power drill whirring) And these things aren't
as powerful as you think. If you turn a screw
driver as much as you can, as hard as you can, it's way more force than this
thing will ever give, okay? So I wanted you to know that
as I'm screwing this in.

I don't want you to think that
I'm tightening this too much. Okay, and I'm gonna do something a little crazy now, cray, cray. And I'll hold it this way
just so you can see there. Okay, see here? So I'm plugging it in here. (power drill whirring) It's good enough. Okay, I have a little
bit of dry wall material left over here from when I was screwing in the camera up there. So try not to have dust like I have. So it's good enough, okay? It's secure enough so it won't fall over on my motherboard, and now
I'm gonna turn this this way so you can see what I'm doing, okay? It's good enough. All right, cool. Now what I'm gonna do is I
am going to plug the power into this guy here, and
I'm gonna install this. This is the hard drive. Again you don't have to
use a hard drive like this.

You can get a USB stick
and just put it on there. I like to use it though. All right, okay, good. So again, there's just a
ton of cables in here and… I'm actually gonna take all
the cables out one by one. All right, okay, cool. All right, let's see if I
can do this all in one take. Okay, so this one here
on the side, it says VGA. So this one here is gonna
be for the mother card, or pardon me, for the GPU. Mother card, getting confused
with all my stuff here. Just gonna drop that there, okay? This one here (cable
noise drowns out dialog) this here it says MB on the side. Do you see that? MB. And that's gonna be for
the motherboard, okay? This one here is for the CPU
because it says CPU on it.

Okay, simple enough. And then this one here, it says SATA on it. Okay, so what we're gonna
do is we're gonna use this to plug into a couple
things, one of which is this hard drive here, okay? And I've got another one here
just to plug the hard drive directly into the motherboards
so the motherboard knows where the hard drive is. Okay, cool. And then the last thing I'll do is, the very last thing is I'll plug this into the power supply unit.

Okay, so I'm gonna put this here just so I can come back to it later. I know it looks a little crazy that I'm tying this here
just gently for now. I only do that because I have
a couple of power supply units and different cables for
them and I don't wanna put the wrong cable on this thing
or I could start a fire. Okay, and one more thing I'll
say before I start connecting all the power and the
other components here is if you're not sure what to do and you've watched a lot of YouTube videos or Udemy courses, et cetera, if you're not sure what to
do with that power, okay, you're not 100% confident
and you're worried about potential fire
issues or whatever it is, I want you to pick up your
rig, okay, this thing, and I want you to take it to a specialized computer store, okay? And these stores are great because they're kind of like GameStop where the avid video gamers work and they're really
passionate into video games.

When you go to a PC store, and I'm not talking about a Best Buy, I'm talking about like
a really good PC store, you have these people that work there that are so passionate about what they do that they want to help you, okay? And plus, they'll get
business from you later. They know that as well. So bring it in if you're not sure, okay? And ask them. Should I plug this cable into here? Is this going to here, that sort of thing, just in case, right? And again, I'm gonna
mention this one last time, I'll never mention this again, but if you smell burnt plastic, okay, as you're building your rig, don't look to see where
the issue might be.

Immediately unplug the
cable from the wall, okay? Okay, great. And you can tell I've got kids, I'm really careful with this stuff when it comes to safety. Okay, cool. So what we're gonna do now is I'm gonna plug in this,
okay, SATA right here into the hard drive. Okay, okay, hold on. All right, good. And this is gonna power the hard drive. Okay, good. Now what we're gonna do is
I'm gonna plug this side here into this device here. And I'll turn this over,
it's a little messy but I want you to see.

I think you could see from there. Okay, so here's a question for you. Where do I plug this? What port on here in the power? SATA, okay. So I'm gonna plug it into SATA here, put it in the first one. Okay, clicked in, great. That's done, let me turn this back over this way here, okay? Great, and I'm actually
going to screw this in up here for now. I know that's a little ridiculous but I wanna have space open
so I can show you stuff here as I put in the GPU. Now when I put the GPU in, I
can put it anywhere I want, and this rig is set up so that I can have multiple GPUs, okay? Multiple GPUs in case you want a very high powered mining machine, okay? And I don't want you to spend a penny on any of this stuff until you understand if this
can be profitable for you, which you'll see in many
lectures in this course, including the following here. So when I talk about how
to mine each cryptocurrency in part two of the course, before I show you how to mine, in the lecture immediately before it there's a lecture that tells you how profitable it can
be, if at all, for you.

And I want you to watch that first because I don't want you to
waste money on this stuff unless you think it can
be profitable, obviously. Okay, so this again is a little ridiculous but I'm going to screw this in up here just to get it out of the way, okay? And again, there's specialized screws to go into different parts here. I don't really care about that,
I just use whatever I see. That's fine, not too tight. Again, these things
will not screw as much, or it won't be able to screw in as tightly as using your hand.

So if you hear it stop working (power drill whirring)
Like that, don't think it's screwing in a lot, it's just not strong
enough and it's saying hey, this thing's not strong enough, okay. Again, the little white fragments you saw there is dry wall. Try to clean this off first
before you screw it in. (power drill whirring) Okay, it's fine. All right, good. So we've got the power now
connected to our hard drive. We need one more thing,
which is we need to tell the motherboard, hey, talk
to the hard drive, okay? So what we're gonna do is
we're gonna plug this in here, okay, and then I'm going
to plug the hard drive in over here into a
SATA slot here, hold on. Okay, good, good. I think that's fine. And after you complete your rig, what you can do is you
can get those little plastic tie things just
to kind of have the cables bunched together, not too
tightly but just a little bit so it's a cleaner look to it in case you want to expand later.

Now before I go on, and before I forget because
I have forgotten this before, I'm gonna put the power button on it. I'll show you what that looks like. Okay, so these are really cheap. They usually sell them in twos. This is one of the two. So I'm gonna put this
here onto the motherboard and all motherboards are different, you have to look at the
manual or the PDF online to find out exactly where this goes, okay? So I just remembered
that it goes right there. Okay, and so once
everything is plugged in, that will turn it on. (switch clicking)
Okay, good. That's the clicking noise. I'm gonna throw this
dude over here for now. Okay, good, we're done with this. We got the RAM. What should I do next? (talking gibberish) Okay, I'm gonna do the graphics card now. Okay, now what happens
is these graphics cards plug into the motherboard in
a slot that looks like this.

However, if I plugged it in here, I'd have to kind of have
this motherboard hanging or it just wouldn't look great. It would be really difficult for me to kind of configure this
so that's I could add more GPUs in the future. And you see it's got a
nice slot in the back here, which is for PCs, usually
you put it into a slot on a PC that has a case. This doesn't have a case,
I like the open concept for two reasons, number
one, so I can show you; and number two, so it
doesn't get too hot as well. And I like the open concept way of doing, building these things anyway because if you see, you won't be able to see smoke as you're building them if
that ever happens to you if it's closed, okay? And so I know I'm being a little bit, I'm overdoing it when it
comes to safety, but I care.

And if you build PCs
long enough, like I have, and I'm dating myself, you will get smoke by putting the wrong cable in, especially to the connectors here. Okay, great. So what I'm gonna do is I've
got this cool adapter here, and let me put this
down here gently, okay? And the thing you got
to be most gentle with is the processor, but we
already have it on in here. Okay, so I've got this
adapter, it's called a riser. I refer to a couple of
components here as a riser, but this is the official name for this. And it ships with this unit here, as well as this power supply here. And then it's got a USB
cable as well, okay? And then it's got (clears
throat) pardon me, this little adaptor here that's gonna go into your motherboard.

So again, you don't have
to put this thing in there. Okay, so I'm gonna plug this in right now. All right, that should be fine. Great, there's multiple slots
in case I want to install more graphics cards later. Okay, so what I'm gonna do, now what I'm gonna do is I'm going to install this here, okay, and I can pull this back. Some of them you pull the white slot over and then slide it in to click. This one is pretty simplistic. I'm just gonna go like this here. Okay hold on. (clicks)
Okay, we heard a click. Fantastic, all right. And now I'm in nerd heaven
because all nerds, like myself, before installing a graphics
card you get to peel off this plastic thing here, kind
of like when buy a new car and you get to slide it off the dash.

Let me see if I can do this. Okay, hold on a second. And it says here remove
protective film before use, so that's why I'm doing this here. Here we go, pretty cool, eh? That's dope! All right, so throw that over over. I got a big mess (mumbles)
I got to clean off. I still have little Zelda
Lego pieces or Link, whatever you call that character.

Okay, so now what I'm gonna do is I wanna make sure you
can still see this here. I think you can, we're good, yeah. So I'm gonna put this on here, okay, and then I'm gonna screw it in okay? And it's got this nice material
here, which is anti-shock and fire proof, whatever. If I had a bar going down the middle here and I wanna rest it on
there, which I don't have, it's fine, okay, okay, all right. And I'm gonna put this
right at the front here because I want you to
be able to see exactly what I'm putting inside the computer here. Put this underneath as well. That should hold. All right, now I'm going to
put a couple of screws in. Oops, many screws ship
with this case here. Okay, and again the purists will say, Chris, you're using the wrong screws.

Screw it.
(chuckles) No more dad humor. This time I mean it. All right, good. Teeth into the slots. (power drill whirring) Make sure it's going the right way. And you push a little button here to make it go the other way. These things are great. (power drill whirring) Good, doesn't have to be too tight. It's good enough, it holds well. And if you wanted to, you
could put a little bit of material here just to hold this, which ships with a lot of these. All right, I found it. I have to be honest with you, I went down on the ground and that was about 20 minutes of me crawling around to find this thing, although it didn't look
like it was 20 minutes. Okay, but I actually found
Zelda too, Link, okay. Actually, this guy is bad luck.

I'll throw him over there. Okay, so I'm gonna cut a
little piece of this off, okay? It's made by 3M, which is Minnesota Mining and Manufacturing company,
that's why it's called 3M. Ticker is MMM, triple M on
the New York Stock Exchange. All right, let me just
pull this open here. Great, and I'm gonna stick this here just for safety so we can absorb a shock. It's this rubber-type material. Okay, all right, good,
it's down there now. All right, we're making good progress. And now what I'm gonna
do is this riser, okay, it's already plugged into my computer but I need to power it, right? So it's always two things. You got to plug all these peripherals into the motherboard
and the power as well. They all need power, okay? Pretty much, most of them. Okay, so now what we're gonna
do is I'm gonna use the same power source as I used
for this drive here, and I'm keeping it real, see
how it's not long enough? Okay, you're seeing me mess up.

The older I get, the better I was. So what I'll do is I will uninstall this and move it over and I'll go
into high speed mode right now so I don't waste your time. All right, I'm back. I don't really move that
quickly in real life like the Flash does on Justice League. I like Flash, the TV show Flash. I don't like the character
in Justice League so much, he's kind of annoying. Okay, good. So now what I'm gonna do is
I'm gonna plug this in here. Good, we got power. And we shared it, okay, with
the hard drive one as well. I will have as few cables as possible as I show you how to build this. Okay, we're still recording? Good, great. All right, now you need even more power for this thing, okay? Even more power because
it's a beast, right? We have the power in the bottom there for the little riser dude, but we need to power
this guy as well, okay.

And I ordered another
cable for the yellow cable, but I actually found out that in the box there's a cable that works. Okay, and this one looked
more robust as well. You don't wanna be cheap when
it comes to cables as well, or anything power oriented. Don't be cheap when you buy power supply, buy the expensive one, please, okay? Buy a good brand name like EVGA, which is the one I use okay? Great, now we're gonna
plug this in, right, to power this bad boy here, okay? So I'm actually gonna turn on the side because I wanna show you. It's fine, everything is secure anyway. All right, you can see
that I think, right? Yeah, good. All right, so I'm gonna plug this here into the VGA port, okay? VGA is here. Okay, we still recording? Yeah, good, all right. VGA. Good, I heard a little bit of a click. And turn this back on the side. All right, and now I'm gonna
plug this in here to power it. There's always a 50/50
shot I can get the cable in the right way, but
because of Murphy's law, it's always the opposite for me.

All right hold on. There we go, good. All right, we're making good progress. Cool! All right, what's next? All right now we got to plug in the CPU power unit here, okay? And you only have to use one of these things on one
side, I'll show you, okay? Can you see there? Good. All right, so here I'm
gonna plug this in here. Okay. Good. And then this one here I'm gonna plug it in, I'm
gonna turn it sideways so you can see it again.

Okay? All right, and where does this one go? It goes in the CPU here, okay? I'll put it in CPU1. Great, we're almost done. Now I have to power the motherboard. So this cable here, it says MB on it, obviously for motherboard. All right, so I'm gonna
put this one here, okay, the one that's all together, not the one that's cut in two. This one here. And again, all these parts ship with a box that your power supply comes in, okay? And I recommend just using the cables that came with the
power supply if you can. Otherwise I get it, you
might have to buy other ones. All right, so I'm gonna plug this in here, and this one, once you plug it in, it's really, really hard to unplug only because there's 24 pins on it. (grunt) Okay, good. Now actually I'm gonna
unplug the CPU for a second because I wanna put it under here and have kind of a cleaner look to it so that when we add more
GPUs, if we do, whatever, you don't have to unplug this stuff here.

Okay, good, all right. And now I plug in the
motherboard cables here, I'll turn it sideway so you can see. I hope you can see. As you can see, everything
is secured enough. Doesn't have to be perfectly secured or too tight, just enough
so that things don't fall when you turn it sideways like I am now. My hand is stuck. Now it's unstuck. Okay. Can't seem to find it. Oh, there we go.

Okay, great, done. All right, I think we're ready to go. You could see all this stuff here? Cool, all right. So the hardware is all in. Now I'm going to plug this power here. I feel like the guy from TMZ. All right, hold on. I'm gonna plug this bad boy in here, okay? I'll show you what I'm doing actually. Okay here, (mumbles) the eco on, make sure it's off before
you plug it in, okay? So I'll plug this in there. (grunts) And then I'm gonna show in a minute how to do the software side. Hold on a second. Okay. I got it plugged into a special plug so that if I short it, it
doesn't screw up electricity of my other equipment in here.

I think we're ready to
go, I think we're good. Are you ready? Ready, eh? Just like in Christmas vacation, when he puts together the lights outside? Here we go. Didn't work. All right, oh, you know why? It's not on here. Okay, now it's on. Now let's try again. Eh? There we go. Okay, and don't worry that the
middle one is not spinning. It will, you'll see later, okay? All right, it looks
pretty bad ass though eh? Look at that, look at those red lights. Looks like it's right
out of the Dark Knight. Okay, good, all right. Now you could see the fan here, ow, ow, the fan for the CPU is on, okay? We're good to go.

Let me just make sure. Good, it's all working. We're great, we're great. Okay, good. So next step, and it's okay
that that turned off, okay? It actually only powers up here when it needs to, okay? When it needs to cool down. And so I'm touching the side here and it's not hot at all, it's cold. But what happens is, and
I'm gonna show you later how to test the temperature of this and how to turn on the fans
manually using your PC, but what happens is when
this gets really, really, really hot, okay, because
we're gonna be using these and really taxing the system, these things turn on. And if you touch the back here, it's so ridiculously hot,
it's actually as hot as, hotter than a cup of coffee. It's insanely hot, like
80 degrees Celsius. Not Fahrenheit, Celsius.

It gets nutty hot. Okay, good. So next up we have got Windows. I'll get the monitor
in a second too, okay? So what we're gonna do is the way we're gonna install Windows, okay, is I'm actually going to
plug it into the side here, and this is Windows Home. Get the cheapest version of Windows. If you wanna use Linux, I'll
explain how later, okay? Linux will save you money, okay? So what you do is just peel
this little unit off here. Okay, this is Windows 10 Home and then you just plug
it into the side here. Now let me do this very
carefully because it's on. Actually, too dangerous, forget it. Okay, so I'm gonna plug this in here directly into the USB port, okay? And this is Windows. And I didn't get the CD
version of Windows or DVD because I didn't want to
spend money on a drive. I'm trying to keep this
as cheap as possible. Everything here is the cheapest
pretty much I could find, except for the power unit
is, you know, it's premium for obvious reasons.

And also, this is premium here. Everything else is cheapest
I could find, okay? And again, you don't have to buy Windows, you can do Linux or whatever. So I'm plugging it in here. Can you see that up there? Good, all right. And we'll install Windows. All right, good. Now what do you think we have to do next? Okay. Actually I almost forgot there.

And when you teach in classes, which I do, what I do is sometimes
I repeat the question when somebody asks me a
question so I can buy time, which is what I'm doing right now. I need the keyboard and the mouse. Got the keyboard, I've got the mouse. That's the right way
to say it in Canadian, my home land, my beloved people. So all you do is you plug the USB mouse and keyboard into the ports here. I've got four ports on this motherboard. Good, we got the keyboard in. I'm gonna put the mouse. All right here, good.

Cheapest I could get. It's amazing how cheap all this stuff has become over the years. All right, good. Now I am going to move these things aside. And I am now going to plug in the monitor. And I am the most unpopular
person in my house today because my son who is Fortnight, had his Fortnight TV taken away just so I could do this. I know I'm not the nicest guy. How am I gonna do this? All right, it's gonna
screw the lights up a bit. That's all right, here's what I'll do. I'll turn this sideways so you can see it. All right, that's good enough, I think you get the idea here. I just don't wanna get the power supply. Okay, it's fine. I'm gonna plug this into
the electricity port.

Yes I have a fire extinguisher here. I have multiple ones just in case. And the kids know how to use this too. All right, so one more
thing, HDMI, let's do that. Okay, and I actually,
I like to plug the HDMI into the motherboard first so I can configure and tell the computer to recognize this GPU if
it doesn't already, okay? And then what I do is later on I plug this into the graphics card, okay? So just a simple HDMI, okay? And I plug this into the TV here. All right. All right. Turn the TV on as fast as I can so that
Andrew can play his Fortnight, which has taken over my house. All right, great. Cool, all right. So now what we're gonna
do is we're gonna install Windows on this. And sometimes you can hit the F2 button when you're starting up a computer and you can go into what's called the BIOS where you can kind of
change what ports are used, where to boot from, et cetera. Okay, so if I wanna boot
from another, a CD drive, I could do that.

If I wanna boot from another drive, I could tell that as well. Make sure I got the right input here. HDMI two, I think. Come on, it's a live demo, you got to work for me. Enter. Yey, all right, good, it works. Okay, great. So I actually, I installed
Windows on this one here, and all you do is you plug in
this little USB Windows drive that came with Windows. And then you reboot the computer, okay? You can use it with this thing here. Remember you have to hold
the power button there.

And then what will happen is it's smart enough to be able to say hey, do you wanna install Windows? And then you say, yeah, I do. And you can do 64-bit or 32-bit. I did 64-bit, okay? And I install Windows. And then what you got to do next is, it's gonna be hard for me to show you this but you have to tell it to
recognize the graphics card. You go to the Device Manager. I'll put a screen shot up here actually.

So you go to the Device Manager and make sure that your
card is recognized, okay? And if it's not, then what you
do is you download software from, I actually went to, although this is made by Asus, I went to AMD's website and there's a utility I downloaded, which is this one here. And then what I did was
I installed the software so that it would automatically recognize the graphics card when I
restarted the computer, okay? And what I also did was I downloaded, let me just log in here. It's not that I don't trust you. All right, hold on. All right, says welcome crypto miner. Can you see that there? All right, so it's Windows here. What I'm gonna do is I'm actually
gonna make a screen share. Actually, I'll do it right now. All right, so I'm
recording the screen here.

So what I did was I download
this software here, okay? And it's called MSI Afterburner, okay? And what this will allow me to do is to control this graphics card as well, if you wanted to OC it,
which means overclock it. And overclocking means
really pushing this thing to the limit, right? Don't do that though because what happens is you could burn this out unless you're very, very advanced. And this is for both tracks
here, okay, all right, cool. So what you can do is, and you could see here
in this screen record is once you download and
installed MSI Afterburner, you can change the fan speed here and take it off auto and
click that check button there. And then you'll see that this here is, isn't that cool? It's awesome, it's pretty neat eh? All right, and you can ramp this thing up as high as you want to. So I'm gonna go up to 100%. (GPU fans whirring) Isn't that wild? That's dope! All right, cool. Still recording, great. All right, cool. So let me now go back. Now I'm back on auto.

Hold on a second, auto
and then check, good. And this actually will turn off because I'm not, you know, I'm not using the graphics card for anything. Sorry about that, my
camera ran out of film. I wanted to do this all on
one take, but it's fine. Okay, so I'm really taxing my GPU now. One more thing I wanna show you
before I wrap this lesson up is please make sure that you have anti-virus software installed, okay? From a good brand, not a free one, okay? So I personally like
to use Norton Symantec. You can use McAfee, whatever you want, but I recommend paying
for something good, okay? And you're gonna find that when you're, because you're dealing with money, people will try to take
it from you online. I know that sounds like
a stupid thing to say but with NiceHash, which is
what we're gonna use soon to mine a couple of cryptocurrencies, they were hacked recently. And so people that had
money stored on NiceHash that they mined had it stolen from them. Okay, so anyway we'll
talk a lot more about that when we do mining.

And that's it, I think we're
pretty much done with this. So I recommend watching
the course in order, but if you really wanna
get into mining now, what I recommend is go to section 2.1 and then you can watch this lecture here on Bitcoin, say how much
money you can make mining. And then what I'll do is I'll
explain this guy here, okay? And this one here is a… All right, I had to shake
the cable off there, sorry. I love what I do. So this here is the Antminer
that we're going to use to mine Bitcoin, okay? But Bitcoin, because it's
really, really, really, really competitive, you
cannot mine it effectively making your own GPU
configuration like I have here.

So with the Bitcoin Antminer, this here is the power
supply from a company called Bitmain, okay? It's a Chinese company
that makes this stuff. And then this here is the ASIC, which basically only does one thing, which is mine Bitcoin, okay? And this guy doesn't
need to have a monitor. There's no HDMI port here at all. You can hook up a monitor so what we're gonna do is
we're gonna hook up to it and you'll see here in section
2.1 in this lecture here when I configure this, what
we'll do is we'll hook up an Ethernet cable to this right here. So that's it now, I'm done showing you how to build this dude here. I hope you enjoyed it as
much as I have doing this. Again, safety first. Always have an extinguisher
handy and that's it. If you have any questions,
please let me know and thank you.

(bubbly music).

As found on YouTube

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