Bitcoin explained from the viewpoint of inventing your own cryptocurrency.
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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
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Music by Vince Rubinetti:
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+JOe-HOs there is no way to see the number of individual miners, however, we do know roughly how much total mining power there is. Many miners team up together into mining pools - just googling "bitcoin mining pools" should show the big pools out there.
Then transactions would stop getting included in the blockchain. But it would also mean it tons of profit being left up for grabs, which would lead to many people (my self included) to jump into the mining game to get some easy money, and thus mining would resume.
2^256 roughly equals to 10^78. Which is not very much, because our Universe consists of 10^80 elementary particles. And if you want to measure the volume of a Universe in PLank volumes, you will get something like 10^185. So please, do not judge astronomy ;)
In the spirit of your 2^256 cryptography security video, could you do a follow up on the ecological impact of cryptocurrencies ? My understanding is that all these protocols require an insane amount of energy, and that therefore if we all relied on cryptocurrencies, our impact in term of energy consumption would be colossal.
The only question I have is:
Why on Earth was the underlying core computation (SHA256) used instead of some provably NP(Hard) computation? That is, we -think- reversing SHA(256) is NP(Hard), but as you stated in the video, it's really "Well, we don't know a way to reverse this."
Sorry I find your example at 21:14 confusing how would bob not know whether or not Alice paid him $100???
my understanding is that there is a large database of "miners" that hear all transactions, and thus their ledgers are always the same
+64standardtrickyness By fraudulent transactions (or blocks that contain them), I mean they are transactions that are breaking the network consensus rules. Some obvious examples: a transaction that tries to spend bitcoin without providing a digital signature from the private key (ie. spending bitcoins from an account you don't control) or trying to create a transaction that references an x amount of bitcoin but making the output be greater than x (ie. trying to spend more than you have in your account) - these types of situations are not a concern at all as the network instantly disregards those transactions and blocks that may contain them. The only issue left is double spending (which is what I think you are getting at in your example) - if someone has say 1 bitcoin, then makes 2 different transactions referencing that 1 bitcoin. On the face of it, neither transaction on its own is fraudulent, but both can't be true. If two different miners solve competing blocks, but each includes one of the two contradicting transactions, then both branches at that point are still fair game (there is no false block yet), but one branch is abandoned over time as the majority of mining power will choose one branch to build on (it makes no economic sense for a miner to build on a minority/losing branch). Even if a player with large compute power did go through with trying out your example, they would have very likely lost much more than they would have hoped to gain as they wasted valuable time and electrical resources mining the block or blocks they don't want included in the longest blockchain.
What it comes down to is this: if you are receiving a large transaction, don't consider it "finalized" until many subsequent blocks have been built on top of the block that contains the transaction of interest, to ensure that you are not being double spent. For example, if i'm receiving 100 bitcoin, I wouldn't trust it after seeing it in only 1 block (I'm not going to immediately send them whatever they paid for just yet) - I can however be confident it is finalized after waiting 6-10 blocks have been built on top of it - someone trying to double spend that transaction to me at that point would not only need to redo that block, but they would also need to solve all the subsequent blocks as well, which would at that point have cost them much more than 100 bitcoin in electrical power to pull off. Miners make money by playing by the rules and building on the longest chain, not by wasting resources on blocks that don't get included in the longest blockchain.
@SAL by fraudulent block, do you mean the transactions are not verified or something else?
My question was in the absence of any central processing system or omnicient miners supposing there was a period of time which an adversary attempting to cheat would have more computing power during that time send someone else 100 bitcoins and then attempt to make a block hiding that transaction (or stating that no such transaction occured I'm not sure if the blocks represent transactions or time but it shouldn't matter) and using their superior computing power at a particular time, quickly output a block hiding their transaction and find the key for that block making their (false) block temporarily the longest and then the other miners come back, see that this person has the longest block and works on this (false ) block
+64standardtrickyness if it is indeed a fraudulent block/chain (with an invalid transaction), it simply will not be accepted by the network as they check it in real time (nothing to worry about). However, if it is a competing chain with double spent coins ( coins being spent to 2 different addresses), then all you have to do is sit back and wait for a few more blocks to see which branch the majority of miners are building on (that becomes the true blockchain, since it will gather the most proof of work). That is why it is good practice to wait for 3-6 blocks to be built on any particular block that has a transaction of interest to you. It doesn't matter if a miner gets "lucky" for a few blocks, it is not something that can be kept up continuously.
but that doesn't fundamentally solve the issue of getting lucky (or putting in power during some downtime) at some point and being able to output the most mining power by one block (by outputting one fradulent block on top of the output previously with most computing power) wouldn't all miners then start working on this fradulent branch hence perpetualting the wrong branch?
+64standardtrickyness To determine which branch is the valid/true blockchain, it is the one with the most mining power put into it. Imagine that you are a miner and you see a completing branch that has less mining power behind it - it would not make sense to go mine on it because the rest of the network won't acknowledge it as valid. Alice in this situation is doomed to lose as the rest of the miners have more mining power than Alice.
But then how will bank charge transaction tax ?
Exchange rate will difficult to control if not Impossible .
Then if someone government (major power colluding )have super computer which can peta flop computing having larger block can controll all transactions ?
Also if you are generating money without any physical work how it will be valued ?
How to prevent hawala , money laundering , tax evasion?
The idea with Bitcoin is to completely bypass any bank or government control. Exchange rate and value is determined by the free market. If mining is compromised, then the users will upgrade to fix it. You don't need a physical object to value, the Bitcoin blockchain can be run and examined by anyone. You can't stop black market transactions from happening - which now means governments will have to do actual detective work to go after criminals.
The transaction will only be included in the blockchain if it is valid, and it is only valid if the transaction from Bob was digitally signed by Bob's private key. I hope that makes sense. Invalid transactions are ignored by the network, and are not included in the blockchain.
I watched this video twice, 14 months apart. It was very confusing to me at the time but now it helped me understand blockchain and cryptocurrencies much better. Difference is crystal clear. I am sad to see 2.3M views for this tresure.
You can bye a bitcoin miner box that consumes 2 kilowatt of power for about 3000€ and spoons the cream of the milk. Bye bitcoins and loose your money. Or bye one Maschine after the other and a bit more money will get out of it then you have to invest in power bill an hardware. It has already been done. This is a criminal bitcoin commercial.
I love the content and the graphics of all of the 3B1B videos, but something about his voice and the background music lulls me to sleep within a few minutes. It takes several iterations to make it through a video. I appreciate the effort, I just don't know why I can't stay awake.
I truly can't explain the amount of respect I have for you! I am maintaining a list of incredible persons who helped me in some point of my life for free and you are on the top of that list. I will surely contribute some amount, once I start earning. God bless you! Keep making awesome videos! Love from India.
What if Alice was a state actor with the state-of-the-art not yet even commercialized algorithmic hashing technology? Maybe not today, but eventually third world dictators are going to have a collection of well-educated computer engineers and software cryptographic engineers who might be capable of designing systems to outpace the current collective of miners.
I really appreciate the way how you take a topic that is so complex and break it down as much as possible to make it comprehensible to anyone who has no prior knowledge about the topic...Really appreciate it...
I'd love a comment or reply to this comment I am aout to make, because it seems highly relevant to the issue of understanding safety of cryptocurrency's: How about AI? AI could crack any secret code. Any hacker could create a program to hack any attempt at another person's security. In other words, NO crypto currency would or could EVER be safe, as long as AI exists, which it does, and it's not going away either. So. . . . . for that reason alone, this seems entirely implausable, period. In fact, the banks could TOALLY just switch over to this and use AI to manage anyone's currency who does not have access or can use AI to make themselves safe.. . . Seems like they(banks and families in power) could also buy the best hackers alive.
I’m going to assume that you mean a bot instead of AI. If you understand the mathematics behind SHA256, then you would understand why you can’t just “create AI” that cracks a secret code. These aren’t just 4 digit pins on your garage or passwords that people are using to secure the data, having 2^256 possible values is to have more possible values than the number of atoms in the observable universe. It doesn’t matter if you have a bot that can compute millions of codes a second, you cannot feasibly brute force a “secret code” that has 115 quattuorvigintillion possible values (and yes, that is a real number!)
What makes you think AI can crack any code? maybe you are thinking about quantum computing? but even then, it is well known that there are several types of encryption methods that are immune to quantum computing hacking.
is it just me or does this system sound loopholey, a trust system based on computational power, money that can b created by stacking cpus, it just doesnt sound mature enough to replace the present financial fiat money system, i hope they improve the protocol, normally innovation curves go from old outdated system to new hype system, and swing back to a stable compromise, maybe full decentralization is not the answer, im not stating a fact, i just got a feeling about this man a feeling of immature tech that could be running headfirst into a reality check
The world is too big for a single individual or organization to stack enough CPUs. Some estimates put worldwide computing at around 10^21 flops. Even the most powerful supercomputer, Summit, can only manage 10^17 flops. You would need to run ten thousand Summits to have a reasonable chance of forging blocks. It's just not feasible.
20:44 But what if after a while, Alice has more transactions to Bob than the other miners, and then he would accept Alice even if she is trying to fool from Bob? What would happen after all to Bob's transactions?
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.
+Mehul Gupta It might seem like that at first glance, but actually, the supply rate of bitcoin is fixed regardless of how many miners join or leave the network - the *difficulty* of mining is adjusted periodically to ensure a new block roughly every 10 mins. In this regard, bitcoin is unlike gold, because with more gold mining, there is more supply - not so with bitcoin.
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?
13,500,000 GRAM Plan to sell.
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Please, pay your attention that Cointelegraph is not responsible for the information on this ICO as there was no official statement so far. There is no official site either.
Telegram recently announced it would launch an ICO for its blockchain platform.
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