Blockchain 101

[Music] [Music] and because essentially butch in it to

simplify the explanation myself just give my background my background is I've been trained in since 2012 I went through the huge market crash when hip detox the class took a little bit of time off but about 40 months ago came back to it and right now the trade I train a person fun I also train a finding out in the US you are a venture fund so I spend a week every month out in those guys I run a blog for Bitcoin tip which I about how to trade tips it's my approach being very much the macro approach rather than publishing points I also have a podcast for what bitcoin did right interview traders and I teach

I teach people I also recently I have I'm not completely particularly technical when you start getting into the depths of the blockchain because we're in my head I've struggled with it for a long time until I found a really interesting article that explained it for children to understand so what I've done today I'm turning that into a presentation and a live demo just roll with it we'll see how this works it might be amazing okay so so let's start with what a protein is and the best way to explain it is to look at the problem it solves bull chains so they can be used for storing any kind of record most people know that the Bitcoin which is a financial record so I'm going to use the financial of the example but in the future you can replace finance with anything you can

okay a monetary record with a record of an asset or a property anything you choose so we're going to do the money triangle we've got Jack and Jill they're not related but Jack wants 100 pound from and let's imagine jet is away in Australia Jill is in England he says can i have 100 pounds so the way would deal would traditionally send my hundred pound would be to log into a bank account put into Jack's bank details and send it the process of sending this money doesn't physically take the money out of her bank account and put it into the back what happens is a record is created on the bank ledger to the desktop over town from person and the bank ledger for Jack's account as a hundred pound and at the end of the day of the week all the bank's settle their differences but there is no physical transfer of money all the bank has this person says does Jill have enough money and then make the transfer it's very

simple problem that Bitcoin and cryptocurrency souls is we have to trust the banks with our money which for some people is great but something's also great if you have to trust the bank if the trust that they get on the cost you money and keep your money and and you own that forever we know that during the financial crisis of Cyprus the IMF turned round to the anyone had over 2000 euros in their bank account to cover the loans when I meant to take death so as much as you only think you owe that money always own your money felt my choices you don't know if their mistakes during the financial crisis which hit our country there was a big threat to money Vinod - and I brought back things like us the other issues is government inflating money by printing and quantitive easing when there's financial

pressures on our own country now for most of us we trust the bank we think we're fine but there are other countries they don't better swale of people in trust the banks are we people that trust banks I was actually training 40% premium in the d'bari to collect their money the other issue we transfer our money internationally is the huge cost for the time suits the money on Saturday it won't provide Bitcoin and blockchain was originally designed to size and the way it's sold it is by saying what if we don't need a bank all the bank is doing for our behalf is managing a ledger of who has what if you said what to do is there a way of soldiers can we not have a ledger and the way this Mossad was using a blockchain which was a distributed ledger these disappear if enough people had a copy of the ledger that they can all match and they get to centralize the process so this ledger

how do we maintain the ledger of that event and everybody accrete agrees upon what's in the ledger and there are financial reward for maintain a minute so in the Bitcoin network the major is maintained I'm gonna sip if I just say by miners and those players cinema the difference between them is it snows validate the network whereas - create the box in the network so all the blockchain is income it as a each block has a page of records that every time they close a new page comes on top and as each page is created the previous one is sealed and copy can't be tampered with so you could lose 8 everybody in this room tried a minute those how it's gonna work the savory buddy in this room isn't mine

huh say doesn't tsunami we take you out the literal still maintain weather group here say we have any bad lecturer who tries to update and pulley bad rebels at the ledger because it doesn't match up with everybody else's ledger it doesn't get validated by the network with me so what we're going to do is we're now going to try to deal with the LIBOR payment in this room okay we're ready you'll win your bet when you take down the path a pen and a necklace

any yes do you have to replace it up they will go nameless but you will envelope we can start with both one okay you right let's lock one give it a no indeed 26

this 22nd 2018 the time is 10 pass to Alex is the to Bitcoin well we're gonna get all of the same paper dates and time will attend the I'm gonna get wants invalid so and this one the

time can't gonna be two eleven will give Ted what Carsten is gonna give how much so George gonna give anything be Bitcoin all right and he's done that the

timestamp is 212 and he didn't get it I'm lucky your book is about what happened okay okay and this is to ensure that because

it's expected and that costs me two to three hundred dollars to actually run so the proof of work is in what validates the network so what we going to do now is we're going to close this block and open up the next one and the rock rewards are a Bitcoin I'm going to pound so whoever whoever closed that this block is about twenty five pound okay and you're gonna do it by solving a problem now the way Bitcoin does it I'm simplifying it is there's a random fashion but we're just gonna do a Maxim's representative so as soon as you solve this picking up and you sorry so we've

got the ID and we're told you so rock is now closed you know 50 okay you gonna write so we've now closed book one what one can never be reopened you can never be written it's closed up close it I'm going to see in it so can you put on your port one feel one over

yes okay does anyone know what happens in the case of that is if you choose not to whether the network is majority rules if you choose not to up then you're off to reflect that and keep off the network this is what protects the integrity of the network in that everybody has to follow the same and have exactly the same box okay does that make sense it's

working okay cool yes that's correct and also they broadcast the clothing that one forward won't do is a very simplified version is this complicated hashkee but that is been broadcast as the Clovis acetals to the book okay if you do not use that closer to the next book your future without it you'll be mining invalid box and you will never to do if you might have bought and you've got an invalid seal you won't get your

so there's a financial incentive of thousand dollars per block sold to be correct and following the network this is why in the history of Bitcoin there's never been a single successful Hat on the network you actually need 51% of the mining computing power over nothing wrong which means to have the Bitcoin network currently you need around 170 billion dollars should we do questions it good we do another all right let's to

today what to the ID is the seal from the okay I'm gonna do one transaction I'm think I'm gonna give you I don't think it again three Bitcoin at 216

there's a pocket rocket wound every 10 minutes but they have a little difficulty reading well I have more - come on life and sockets on Twitter - changes but you depend on us to not believe this point they can be other things up so example between cash the forms by whether they're took computer power away we have our way from yes 21 million of which 16.7 exist now four million administrative loss but the new curve release reduces so the proper war would

pop up every four years so we're now phone are maybe six point seven five but the miners take the feed from each accent reduction process to the system in designed by the time the bitcoin is went out the transaction season behind moving obsolete or less of it no just because they need the financial financial if I might be completed design that reminders then get paid for the transactions so rather than pointing rewards so just over the book they also get paid avoid send to Bitcoin they take a percentage of that so the economic incentives change over time but it's still they just make that it's calculated on some cash pal so I just want these dragging the payment once I've got 16 Tara houses a sale or something crazy

you just get you join a pool so imagine I've got a minor we can all join in a big pool and all the way together and we can share the wining Awards you to him to get even from the august you play Samoa s knives are mining around $22 a day of Bitcoin each with the old machines at my four dollars but eventually so it's like it's like getting machines so that's you know if it means without a bachelor s night as sold within the point one that called Niners are the machines right so say I've got 15 up in Washington they contribute how to power up I get I get a pay off every day I get I get and say this a hundreds of genes in the forward and I thought wow I'm gonna get 111 carry my share

we be changes you know changes that this it became good when you play the game of difficulty so the way the hash hashing works is you put a number in one way like that like something out which is can be found by 15 it takes a long time the reverse engineering that this is what the cryptography is is really difficult to reverse engineering it was a one-way protection one more question I think there's - so I wanted to ask

with regarding pools which seems to be the only way now it's actually mine successfully yeah it's a little counterintuitive because the pools are getting larger so now you're having up to like 30 or even 35 percent yeah exactly there isn't that going against the whole philosophy of Bitcoin the blockchain it is but what we tend to find is the market incident have reacted it so hang on the releasing the dragon is they if they are philosophically attacking this by releasing the reminders to try and break down but they also even have 51% power you actually he actually works out more than that because of the time period and also there's no incentive we do destroy the network because of your mind even with 51% we destroy it [Music]

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