Bitcoin explained from the viewpoint of inventing your own cryptocurrency.
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Special thanks to the following patrons: http://3b1b.co/btc-thanks
Some people have asked if this channel accepts contributions in cryptocurrency form as an alternative to Patreon. As you might guess, the answer is yes :). Here are the relevant addresses:
Supplement video: https://youtu.be/S9JGmA5_unY
Music by Vincent Rubinetti: https://soundcloud.com/vincerubinetti/heartbeat
Here are a few other resources I'd recommend:
Original Bitcoin paper: https://bitcoin.org/bitcoin.pdf
Block explorer: https://blockexplorer.com/
Blog post by Michael Nielsen: https://goo.gl/BW1RV3
(This is particularly good for understanding the details of what transactions look like, which is something this video did not cover)
Video by CuriousInventor: https://youtu.be/Lx9zgZCMqXE
Video by Anders Brownworth: https://youtu.be/_160oMzblY8
Ethereum white paper: https://goo.gl/XXZddT
Music by Vince Rubinetti:
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Various social media stuffs:
But I did not get how does the value of Bitcoin vs real money fluctuate? And moreover is everyone's entry in ledger broadcasted to everyone else's ledger in the world? Because considering the limit on amount of transactions per second this becomes unfeasible of sorts as a currency.
Same way as gold and stocks - value fluctuates based on global market demand. yes, broadcasting every ledger entry to every node is inefficient, but it ensures total global consensus of the ledger. the idea to scale will depend on building 2nd layer technologies, such as the lightning network to get hundreds of thousands of transactions per second.
The only thing I still dont understand is how bitcoin becomes a real currency that is exchanged with dollars/euros/etc. Like the functionality makes sense and how you create it/ add more to it. But how does it have any value compared to real money?
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What happens if all the miners get together and plan to help a single account to get all the money (for them to share it later) , All they need to do is to create new block chain entries which can be done in a day with that much computational power(I mean all the miners in the world combined) , Lets assume even the new miners agree to this since they get a share of the sum , Will it not make the system break ? I'm just curious.... I think that won't happen in a life time right ? or What if we stopped paying miners , and they turn on us(And eventually destroy all true data , and by the protocol , it will only choose the fraudulent branch because its the largest) ?
Miners don't have power to forge transactions (even if they all teamed up). Transactions REQUIRE the sender to supply a valid digital signature, miners are simply not able to forge that signature. If they tried, then they will fork themselves into a brand new blockchain that no one else uses (it will be a new blockchain following broken consensus rules). To ensure you stay on the valid blockchain (regardless of what miners try to pull), you should run a full node on your own computer! By running a full node, you are validating all the work the miners do (constantly watching for any rule breaking). Once you keep studying this tech, it should become clear that miners have very limited power to cheat/alter the rules.
it comes down to an issue of private keys (these are not stored on the blockchain). basically, if you are sloppy with securing your private keys, then it is really your own fault. The story you read was likely about an exchange getting hacked - which leads to rule number 1: don't trust others to hold your coins for you!
While I am still not fully clear on how it all works this video certainly makes it much more clear than all those articles with unnecessarily fancy words but ultimately vague actual content that does not explain blockchain at all.
I need to make a presentation to introduce cryptocurrencies to some high-school students and I was wondering if it would be a problem if I explained it using your same train of thought. I'm creating my own graphics and will obviously give credit to you but I was wondering if it'd be a problem if I used your same approach for the explanation.
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The criticism regarding the number of transactions per second is not valid.
If we would have increased the block size that would lead to centralisation as the cost of running a node(verifying and broadcasting transactions) would go up.
The good thing is that now we have Lightning Network that is a robust way to scale off chain.
I would like to add that the other proof of whatever have some very inconvenient trade offs.
Having more cryptos is like having more internets, it's beside the point. All this benefits that this cryptos promise will become irrelevant as the Bitcoin protocol improves and grows. The big fee argument is a good example of this. We have a good scaling solution. You can make off chain transaction for nearly 0 fees.
This is a really amazing video about cryptocurrency, and it explained it much better than any other video i could find. however, i got curious about how someone trying to commit fraud could succeed, and wanted to know how a system could deal with this kind of situation:
Here we have 7 entities; Alice, Bob, Charlie, and 4 Miners. All 4 miners have roughly equal computing capabilities. Alice and Bob are not miners and cannot contribute computational work. We'll say Alice and Charlie are secretly two accounts belonging to the same person, although that is not critical to the situation.
Let's say Alice is attempting to commit fraud. Alice is paying Bob $100, and broadcasts that transaction to Bob, and only 2 of the miners. Alice broadcasts a fraudulent transaction, say Alice pays Charlie(Alice's own account) $100, to the other 2 miners.
Now Miners 1 and 2 have a correct block and Miners 3 and 4 have a fraudulent block that they think is accurate. 2 blocks with proof of work will be broadcast, one block with the correct transaction and one block with fraudulent transaction. We now have a fork in the road. The Miners will continue working on their current blockchain. However, since each side (Miners 1+2 and Miners 3+4) both have roughly the same amount of computational power, they can both contribute the same amount of work, and therefore the same amount of blocks. Because of this, no one fork will outpace the other, and both will maintain somewhat equal length.
This is where the confusion, especially for the Miners, sets in. Each fork will have roughly the same amount of blocks, and therefore, no one will know if they were working on the correct fork, or are still working off of the fraudulent transaction. Bob might know which is correct if he was expecting a transaction; he can look through the blocks at the beginning of each fork and determine that the block where he gets paid from Alice is accurate. But even then, since Bob has no computational power, he cannot contribute work to the correct chain in an attempt to prove that is the correct chain. To top it all off, Charlie can even claim he was expecting a transaction from Alice.
So even if Bob picks up what is happening, how will the Miners? How can they settle which fork is correct? All comments are appreciated, I'm just really curious how a cryptocurrency could combat this.
Can someone please explain what controls the expected output when the Proof of work passes through the hash function? In the video his examples include 30 0's or 60 0's etc...What exactly determines what hashed value is expected? What controls the number of 0s expected for a confirmed Proof of work?
I have seen a few presentations and talks about the subject before. Most are trying to dumb it down, and their presentations are either aimed at the converted and insiders, or just there to inspire awe about the speaker’s greatness - And some are just selling snake oil.
Now, This presentation is a rare exception. It is the best introduction so far that explains in quite some depth and does not oversimplify.
Dziękuję za doskonały film Panu. To wielka sztuka aby powiedzieć w prosty sposób o dość skomplikowanym temacie. Mało co zrozumialem :) ale napewno jest to najlepsze wytłumaczenie na temat kryptowalut i block chain. Dzięjuję. To wielki zaszczyt słuchać Pana.
actually if you watched the video, you would know that the ledger is public, so arguably bitcoin txs are more transparent and auditable than cash or private bank transfers in places that don't reveal your financial information like Luxembourg, Bahamas, Malta, etc.
so, ban cash? end the war on drugs? remember that in the 1980's, it wasn't normal to own a mobile phone except if you were a criminal or company manager. criminals are usually the first to adopt disruptive tech because it increases opsec and legislation lags behind.
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Can any savvy miner answer a question? At 20:40 when Alice falsifies the block chain and the other miners prove her "wrong" by filling up the longer block-chain with the "right" ledger, why would Alice not broadcast her new ledger with a "proof of work" to the miners? Because essentially she has "won" the proof of work, so why would the miners keep going? Wouldn't they say, "Okay, we have a proof of work for a new ledger and Alice won the lottery. Therefore we will take her ledger and start again on a new proof of work?" Essentially, why does a miner keep working after a proof of work has come out just on the off chance the the "winner" falsified the ledger?
I'm not a miner but maybe I can answer this. She can totally do that, but that would defeat the purpose. If she broadcasts the fraudulent block to other people, it is not fraudulent anymore. Everybody would know that she has spent the money. The miners would accept the new block and continue the blockchain from there. And because each new block starts with the hash of the previous block, all subsequent blocks have to include the "fraudulent" transaction from Alice.
i have a question, how does a cryptocurrency holds a price i mean why would someone will trade cryptos other than their own country currency how can users trust it. it maybe said that the computation power/electricity spended on mining may give it a value but why and who care if someone waste his/her electricity & computing power on a system and why should i give my own real money in exchange of it ?
please clear my query. i am new to blockchain and trying to learn.
Who actually Owns this and Who would. Manage it?
No different than the paper system - there's no value in the *Federal Reserve Note*
Rothschild removed all metals of value from coins and all the "notes backed by gold/silver"
It's a system that must be considered - *MAYBE NOW THE US CITIZENS - will realize that the Federal Reserve is not part of the USA Gov, the US Treasury, nor are the Private Owners USA Citizens or ethical towards protection this country/people.
Did you watch the video? No one owns it. It's a protocol dependent on computational power -- no trust or authority needed. Falsifying chains isn't hard because it's illegal, it's hard because it's mathematically impossible.
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