Technology Explained

Decrypting Bitcoin – The Blockchain Technology Explained

What is Bitcoin it seems to be gaining momentum they buy their new online currency for the world now it’s got all the way down in $91 a lot of volatility Bitcoin and other cryptocurrencies have earned quite a bit of attention over the past few years Bitcoin at mount GOx broke into four digits many call them the future of.

Money but a majority of people don’t really know much about them that’s the Bitcoin trading as low as a hundred and nine dollars before its death spiral came to a climax what are crypto currencies how did they.

Work we will be being paid in Bitcoin like we can be paid in Europe how do you get them where can you use them and what makes them safer.

A faster and often cheaper to use than cash or credit architecture that vid coin represents is of enormous computer science interest my name is Randy Clements.

And I’ll be your host answering these questions and many more walking you through an in-depth overview of this paradigm shift and money you’ll see how it’s already benefiting millions of users across the globe and you’ll learn how you can be one of them join me as I decrypted coin from its enigmatic.

Beginnings in late 2008 to a look at its promising future I’ll also explore the breakthrough technology underneath it the blockchain and how it.

Can change more than just our relationship with money it can transform our societies our governments our businesses and possibly our every interaction but first some chocolate what you just.

Witnessed was a Bitcoin transaction here.

Favorite chocolate shop just a few taps on our phone screens and.

The funds were transferred nearly instantly without any bank or credit card company taking a cut a little over a year ago I didn’t know a single thing about Bitcoin I’d heard.

Of it but that was where my familiarity with it ended then.

In April 2015 I moved across the country.

From Southern California to New Hampshire to be part of the Free.

State Project a group of over 20,000 pro Liberty activists moving to New Hampshire to create a truly free society with minimal government it was here that I first saw Bitcoin being used and I quickly got a deep interest in understanding how it worked I had tons of questions but as I learned more I began to see that Bitcoin was more than just a convenient way to send money to anyone anywhere it also reduces.

The cost and friction of international commerce and presents a viable alternative to the world’s troubled currency markets the idea for Bitcoin and its underlying.

Blockchain technology were published in October 2008 by an anonymous user or group of users under the pseudonym Satoshi Nakamoto just a few short months after Nakamoto proposed the Bitcoin.

Network he officially launched it releasing an open-source Bitcoin software client and mining the first block of bitcoins called the Genesis block On January 3rd 2009 by the very next year Bitcoin grew to be the world’s top performing currency a feat it would repeat in 2011 12 13 and 15 today there’s more than 10 billion dollars worth of.

Bitcoin in circulation and millions of Bitcoin transactions occur each day digital electronic money transfers have been around for decades but what sets Bitcoin apart is that it is completely decentralized no single person or institution controls the Bitcoin network and its structure money supply.

And transaction record cannot be manipulated by any bank government organization or rogue bad actor we’re going.

To get into the technical side of how it all works in just a.

Minute but first I think it’s important to cover a few more of the.

Reasons why people are using Bitcoin and what excites me most about it bitcoins benefits are being realized.

On a macro global scale the estimated 4 billion people on earth who currently don’t.

Have reliable access to banks can now plug into the global financial network with nothing more than a cell phone that can send text messages with Bitcoin you are your own bank there is no third party.

Holding your funds no monthly account charges no overdrafts no convenience fees tacked on simply for spending or transferring your funds fees for Bitcoin transactions typically range from free to just a few cents and any amount can be sent to anyone anywhere in just a matter of seconds and the best part is that your bank is always.

Open these load and no fee transactions are already disrupting several markets some of the largest relief will be for remittance payments that’s money sent home by people working in other countries this.

Is a huge economy with an estimated five hundred.

And eighty billion dollars flowing to families in developing countries that’s more than three times the size of any official government Development Assistance by the way banks and companies like Western Union take an average of 9% of that though it can reach as high as a whopping 16% for something Bitcoin does.

Essentially for free and Bitcoin is becoming.

More widely accepted on the local micro level as well there are numerous large online retailers and a growing number of savvy brick-and-mortar businesses across the world that are jumping on the bandwagon tools like Bitcoin debit cards now.

Let people spend their crypto coins anywhere the credit cards are accepted and several third-party tools have popped up that helped Bitcoin users actually save money on their Amazon orders or.

Like Starbucks and Target Bitcoin mixes the digital.

Ease of credit card payments with the privacy of a cash sale with credit cards you hand over your sensitive private data and account number every single time you buy something credit card and bank data centers are constantly warding off cyber attackers at great cost though they’ve been less than successful in 2015 hackers made off with 80.

Million names Social Security numbers and other sensitive data for medical insurance giant anthem BlueCross in 2014 a breach at JP Morgan Chase compromised.

The data of 7 million small businesses and.

76 million households 70 million records from Target in 2013 56 million from Home Depot in 2014 77 million records from Sony’s PlayStation.

Network in 2011 the list goes on and on and on with a decentralized network like Bitcoin there is no single point to attack no stored private data to steal.

And you don’t have to trust any third party to store your funds or information you are your own bank there are plenty more reasons why people are.

Using Bitcoin and we’ll cover a few more in this video but now I’d like to shift focus and take a look at how Bitcoin works now we’re.

Technical for a minute because it’s very important to.

Talk about how this all functions but rest assured just as you don’t need to understand the Federal Reserve or economics to spend a dollar please know that you don’t have to understand any of this to use Bitcoin we’re explaining it if only because it’s fascinating and it all.

Happens systematically behind the scenes let’s take a look under the hood using my Bitcoin wallet I.

Scan the QR code that dancing lion chocolates presented to me this began the first stage of.

The transaction which you can think of like a pre-authorization charge on a credit card my wallet broadcast a message to the Bitcoin network thousands of independent computers called nodes that are located.

Across the world rather than having one central party control a private ledger each node on the Bitcoin network maintains its own copy of the blockchain a distributed public ledger which some have called the biggest thing.

The internet transactions in the physical world and.

The digital world rely on Ledger’s for accurate record-keeping think of Ledger’s as the behind-the-scenes balance sheets that help keep track of the world’s assets and that doesn’t just mean.

Your money your car registration your house.

Deed the terms of your cell phone contract these are all store and ledgers at its essence the blockchain keeps track of every Bitcoin transaction that’s ever taken place and it enables what is called distributed consensus each node on the network can mathematically verify that.

The ledger is accurate and has not been altered and each node can see that the copy of the blockchain they are using matches the blockchain data that other independent nodes are.

Using there is no central party controlling the ledger it only gets updated by the consensus of nodes around the world this is.

Why Economist magazine dubbed the blockchain the trust machine to pre-authorize transaction.

My wallet sends a message to the Bitcoin network with three things my wallet address the amount of Bitcoin to be sent and the recipients address the blockchain ledger is.

Then checked to verify that I am the owner of the account and that I have these funds available verifying.

That there are enough funds in any account is easy enough again the blockchain is a public ledger so anyone can view how much Bitcoin is in any address at any time so everyone knows exactly how much money everyone else has not quite Bitcoin addresses are long strings of numbers and letters no names or personal data are revealed in these transactions which helps ensure relative privacy even with the complete transparency that a blockchain provides but to verify that I.

Am in fact the owner of these funds and to prevent others from using them by simply typing.

In my address as their own Nakamoto built in a private key function that serves as a digital signature think of this like signing a.