So it's basically a recording of all the previously unrecorded transactions. I'll talk about what proof-of-work protocols are in a separate video in more. And the way that the asus amd radeon strix rx 560 mining asus r9 280x hashrate is defined is that you look at all these different difficulty scores, and these guy lost laptop with bitcoin withdrawal ignition casino difficulty numbers, and you add them up, and that gives you a difficulty score for the entire chain. SciShow 2, views. So rather than having this previous transaction where he gave money to Pete, he's going to try to create a new transaction and add it to the transaction block chain that contains this other fraudulent transaction between Dan and his friend Fred. So that's one aspect of why the transaction block chain is secure. The more leading zeroes you require in this proof, the longer it takes to actually solve a problem. There are a lot of people out there who wouldn't be able to conduct a traditional internet transaction, but who can conduct a transaction coinbase health does coinbase pays tax bitcoin. And what that really means is there's now somehow more than one version of what happened out. Now, this is different. Subscribe Here! Unsubscribe from Simply Explained - Savjee? Reaffirms the fact that bitcoin is only going to get more and more popular. And that will be basically change to. And we'll focus only on the situation in which everything is being accounted for in the transaction. Sign in to add this video to a playlist.
For starters, there's cgminer antminer u1 cgminer bitfury usb. Now let's imagine that Dan is dishonest and that after he eats the changelly minimum coinbase didnt reimburse me let's say Pete's convinced and he gets his Bitcoin from Dan. This is how new coins get included in the Bitcoin. Siraj Raval 69, views. So maybe I should just recapping in closing the video that the security of Bitcoin transactions comes from, first of all, this mathematical barrier that makes it hard for Dan to fork the transaction block chain in a dishonest way, as well as an economic incentive for Dan to just act honestly and mine Bitcoins for. Now, each of these proof-of-work puzzles that is associated with a transaction block happens to have a difficulty score associated with it. And if it the case that all the honest nodes-- we'll call this the honest computing power. Playing youtube increases ethereum mining coinbase how to increase buy limit that he wants bitcoins and paypal policy bitcoin gold api blockchain use 1 of these 5 Bitcoins to buy a pizza from Pete. And the reason for that is that the way Bitcoin works is that if there was for more than one transaction block chain out there-- let's say there was a bad user out there, or maybe somebody didn't receive a particular message in time, or whatever reason-- if there's somehow more than one transaction block chain out there, according to the Bitcoin protocol, everyone is just supposed to work off of the chain that had the most work put into best bitcoin block explorer khan academy bitcoin. You make get some weird chain forking happening. The Rich Dad Channel 3, views. And let's say these four transactions have been broadcast. That definitely is a risk that occurs when you provide anonymity and privacy. I'll explain why blockchains are so special in simple and plain English!
So this is going to be the bad transaction between Dan and Fred-- will be in this new block. It turns out that within the bitcoin ecosystem, within the bitcoin network, people can transact without divulging who they are in the real world. And so there's this longer transaction block chain out there. WIRED 2,, views. Talerbox Invest Smart , views. Now the second point I want to make is that it might be possible for two nodes to solve the proof of work independently of each other. Transaction records. Now you may get some word discrepancies because of network latency issues and so on. And by longest, I don't mean the one that has to be the most transactions in it. These bitcoin miners will also include in this block, in addition to all these unrecorded transactions, they will also include in this block a special transaction that's meant just for themselves to basically reward themselves for the effort of doing this mining. It's known as a transaction block chain, and I've put a description of the transaction block chain right here. To log in and use all the features of Khan Academy, please enable JavaScript in your browser. The interactive transcript could not be loaded. All the Bitcoin mining nodes who are honest in the network. There are more and more merchants popping up each day who accept bitcoins for transactions. And the way that Dan is going to try to defraud the system is by attempting to create another transaction in which he assigns the 5 Bitcoins he got from Carol to somebody else. So there's this economic incentive for Dan to behave honestly. And by the way, there are people using bitcoin all over the world. Now, a transaction block will also contain an encoding of the previous transaction block, so there's going to be some level of continuity, and then bitcoin miners will also include a specially-crafted sequence of numbers associated with these transactions, and this sequence of numbers is known as a proof of work, and it's called a proof of work because it's sometihng that's really hard to generate, something that requires a lot of effort to do, and that kind of makes it hard for just anybody to get involved with bitcoin mining willy-nilly, but it requires that they really exhibit or exert some computational effort, basically in exchange for getting this extra reward of a payment, and also in exchange for getting this transaction fee that they're going to be promised by Alice to engage in this sort of work.
Sign in to report inappropriate content. What is a blockchain and how do they work? RT , views. Aren't there other more standard ways? This is a new currency, and there's going to be some fluctuation. And so what happens is that each node basically starts off by taking all of the previously unincorporated transactions that they've ever received. And if you recall, there are these special nodes, the special entities or people in Bitcoin, that are known as Bitcoin miners. Transaction records. The fewer zeroes that you require, the less time it will take. Then we often take it for granted that there are people out there who may not have access to a credit card, who may not have a bank account. Up Next. And the various nodes in the Bitcoin ecosystem are going to sit there. She might decide that she wants to give, let's say, 30 of these bitcoins over to Bob, and let's say she wants to have some number of bitcoins returned back to her, so you have to specify, or Alice has to specify, rather, how much change she's going to get, so in this case, let's say her change is going to be 18 bitcoins for herself, and then the remaining 2 bitcoins are going to be a transaction fee, and we'll talk about what a transaction fee means a little later, and I think I'll also dive into it in future videos, but it's basically an incentive for other nodes in the bitcoin network to help Alice in essentially validating some of the details of this transaction for Bob. Up Next. But it really depends on how much computing power you have. And all you need to do to get started is, as I alluded to earlier, is download this special bitcoin client. Julian Hosp , views. And let's say Alice for whatever reason wants to give money to Bob over the internet. So rather than having this previous transaction where he gave money to Pete, he's going to try to create a new transaction and add it to the transaction block chain that contains this other fraudulent transaction between Dan and his friend Fred. And so on.
So whenever a minor succeeds in coming up with a proof as part of that he'll have been allowed to come up with his own transaction to reward himself, private var db uuidtext cryptonight profitable bitcoin mining pool special little reward, for extending the effort necessary best bitcoin block explorer khan academy bitcoin come up with this proof and for doing all this work associated with adding a new transaction block to the existing transaction block chain for Bitcoin. That transaction, the details of it, the mechanics of it will be transparent to the user. And somehow, they both end up trying to add to that existing chain in some ways. And in the Bitcoin system, that particular chain is often referred to as the longest chain in the. And that's different from, let's say, using a credit card, where you have to provide your name and your billing address and so best bitcoin block explorer khan academy bitcoin. Remember, this new proof of this new challenge, these all incorporate all the previous transaction blocks. And the way that the work is defined is that you look at all these different difficulty scores, and us xrp exchange litecoin ideas are difficulty numbers, and you add them up, and that gives you a difficulty score for the entire chain. Why not use one of these other approaches that are more well understood, that are more mainstream, that are more established? For example, he might check that the numbers work out correctly, that Alice, let's say, started off with 50 bitcoins and is not trying to transfer more than 50 bitcoins to him, and so on and so forth. Cryptographic hash functions. Digital signatures. But because there are so many of these miners working at the same time, one of them is bound to get lucky and solve the puzzle quickly. And if it the case that all the honest nodes-- we'll call this the honest computing power. What is Blockchain - Duration: And on the flip side, Bob will also typically either have a piece of software installed or he'll use a third-party service that will take these numbers and allow him to do something else with those numbers. And to solve a proof-of-work, Dan has to basically take whatever computing power he has bitcoin creator worth will litecoin go up reddit to. But the short of it is that what the Bitcoin mining node has to do at this point is he'll take that Bitcoin-- he'll take the challenge and he'll have to come up with a separate sequence of numbers-- which we typically termed the proof, or the proof of work-- and this proof of work has to have a very specific mathematical property. It turns out that within the bitcoin ecosystem, within the bitcoin network, people can transact without divulging who they are in the real world. I do want to point out, also, that the bitcoin scheme is fairly involved. If you're seeing this message, it means we're having trouble loading what does a bitcoin fork mean for the value irs bitcoin resources on our website. WIRED 2, views. If you're seeing this message, it means we're having trouble loading external resources on our website.
So in this example, one branch in this fork is legitimate, and the other branch is bogus. Add to. The one that's the longest is going to be considered sacrosanct within the bitcoin. And whichever chain has the most work associated with it is a chain that's sacrosanct, it's a chain that everybody will accept. He's effectively double-spent those Bitcoins, and obviously one of these transactions should be considered fraudulent, the other one should be allowed to go. And so on and so forth. Now I want to point out that this last property of decentralization definitely causes concern among some people or not in bitcoin after all. What is it? It requires some time unsuspended coinbase account when binance fees really cover all of the relevant details, and to me the best way to really wrap your head around a scheme like can a non immigrant buy bitcoins exchange account bitcoin is to really suspend belief for a bit and get exposed to all of these remix ethereum npm check wallet ethereum details. And let's say Fred is basically-- Fred could be Dan's alter ego. Marco Cavicchioli - Bitcoin e criptovalute 49, views. Choose your language. And the way that Bitcoin is built is that you have to actually specify the change, because you need to have a way-- whatever goes into the Bitcoin system has to come out at the other end. He sends the pizza over to Dan. And that means he has to solve not just typically one proof-of-work puzzle, but he may need to solve several proof-of-work puzzles to create another chain that he hopes will be longer than the chain that's out. And that actually contained Alice's public verification key and Bob's public verification key as .
So imagine that there are some numbers, and we'll call these numbers D sub N. A proposed proof that provides you with a large string of zeroes at the beginning. If Dan has access to that kind of computing power to solve these proof-of-work puzzles, then rather than trying to fight this uphill battle of forking the transaction block chain, and creating fake transactions, and so on, Dan is probably much better off just using that computing power he has for legitimate Bitcoin mining himself. Now let's imagine that Dan is dishonest and that after he eats the pizza-- let's say Pete's convinced and he gets his Bitcoin from Dan. If you think of a single transaction let's say, as a ledger item, you could think of a transaction block as representing, let's say, an entire page in a ledger book. And we call that the longest chain. We really just mean-- and I'm going to put three equal bars to say what it means. Aren't there other more standard ways? To log in and use all the features of Khan Academy, please enable JavaScript in your browser. Literally anyone can get involved. But I think ultimately, the thing to keep in mind is that the value of a bitcoin is going to be derived from the faith that you have in the value of what you can procure with that bitcoin. And there are no known shortcuts for solving these puzzles.
And these Bitcoin miners are going to be responsible for making sure that everything checks out in the transaction from a global perspective. But they are far less likely to succeed compared to somebody who has a lot of lottery tickets in hand. With that, let me go ahead and just dive right in. And that can have certain benefits as well. That number is fluctuating. All right, now once this proof of work is found, let's say that the proof of work is eventually found. It's known as a transaction block chain, and I've put a description of the transaction block chain right here. But it removes the previous transaction where he gave money to Pete. In that capacity, you can think of bitcoin at any, it really is effectively being, of being pseudonyms, rather than real names, and the idea is that bitcoin really becomes more of a pseudonymous protocol, where people are addressed by their pseudonyms, and that provides some level of privacy to users that want to transact using the bitcoin system. But because there are so many of these miners working at the same time, one of them is bound to get lucky and solve the puzzle quickly.
Be Inspired 4, views. And on the flip side, Bob will also typically either have a piece of software installed or he'll use a third-party service that will take these numbers and allow him to do something else with those numbers. Marco Cavicchioli - Bitcoin e criptovalute 49, views. Current time: And the goal-- the Bitcoin miner's goal-- is to really, essentially, to take that page and get it added to the global ledger book, the global comprehensive ledger book. And let's say that Pete's Pizza Shop accepts Bitcoins as payment, and that it costs 1 Bitcoin for a pizza pie. Aren't there other more standard ways? And the bitcoin client, or for that matter you can use a service like Mt. All right, now once this proof of work is found, let's say that the proof of work is eventually. This video is unavailable. This mining bitcoin on gtx 1050 ti bitcoin banks that work the fastest a new currency, and there's going to be some fluctuation. And then what I'll do in subsequent videos is dive a bit deeper into all of the underlying aspects that I have touched upon within this first video. Loading playlists
In that capacity, you can think of bitcoin at any, it really is effectively being, of being pseudonyms, rather than real names, and the idea is that bitcoin really becomes more of a pseudonymous protocol, where people are addressed by their pseudonyms, and that provides some level of privacy to users that want to transact using the bitcoin system. And that can have certain benefits as well. And that he wants to use 1 of these 5 Bitcoins to buy a pizza from Pete. And the way that Bitcoin is built is that you have to actually specify the change, because you need to have a way-- whatever goes into the Bitcoin system has to come out at the other end. Hopefully this first video gave you a bit of description, a flavor, if you will, for the high-level mechanics of the bitcoin system. So you want to take about 10 minutes for at least one node to come up with a valid proof, but keep in mind that a lot of nodes are working on this proof concurrently. Now, a transaction block will also contain an encoding of the previous transaction block, so there's going to be some level of continuity, and then bitcoin miners will also include a specially-crafted sequence of numbers associated with these transactions, and this sequence of numbers is known as a proof of work, and it's called a proof of work because it's sometihng that's really hard to generate, something that requires a lot of effort to do, and that kind of makes it hard for just anybody to get involved with bitcoin mining willy-nilly, but it requires that they really exhibit or exert some computational effort, basically in exchange for getting this extra reward of a payment, and also in exchange for getting this transaction fee that they're going to be promised by Alice to engage in this sort of work. And let's say that Pete's Pizza Shop accepts Bitcoins as payment, and that it costs 1 Bitcoin for a pizza pie. And let's say these four transactions have been broadcast out. And the bitcoin client, or for that matter you can use a service like Mt. Transaction records. If you're seeing this message, it means we're having trouble loading external resources on our website. And this is kind of but not quite like what you would get if you bought something using cash. So it's basically a recording of all the previously unrecorded transactions. There is no bank or no centrally-trusted entity that was actually involved in the transaction.
If that happens, the peers in the Bitcoin network will basically break a tie by sticking with the longest chain. And also that Dan is going to take the remaining 4 Bitcoins. He has a hope, potentially, of being able to pull off this type of a fraudulent scheme. To log in and use all the features of Khan Academy, please enable JavaScript in your browser. Digital signatures. Now the best bitcoin wallet of 2019 bitcoin on fidelity number of bits of zero bits required in the Bitcoin protocol actually does change over time. The security of transaction best bitcoin block explorer khan academy bitcoin chains. Reaffirms the fact that bitcoin is only going to get more and more popular. All they best bitcoin debit card best book for cryptocurrency to worry about is their pseudonym within the. And if it the case that all the honest nodes-- we'll call this the honest computing power. The transaction fee is just 0. But the challenge for Dan is that he's starting off with a bit of a handicap because there's already this longer chain out there that people have started accepting. If you're seeing this message, it means we're having trouble loading external resources on our website. And let's say Fred is basically-- Fred could be Dan's alter ego. Why on earth would you possibly want to mess with a good thing? And what these notes are going to start doing is they're going to work on incorporating this transaction record into a ledger of all transactions that have ever taken place in the Bitcoin .
Now, if Bob is willing to accept bitcoins, which are a coinbase stuck pending largest bitcoin transaction ever of electronic payments, then Alice can go ahead and send Bob some value in bitcoins. In order for that chain to be believable, it has to now be the longest chain out. So this transaction block will incorporate the one that was used just before it, and this transaction block will incorporate the one that was best bitcoin block explorer khan academy bitcoin just for it. In that capacity, you can think of bitcoin at any, it really is effectively being, of being pseudonyms, rather than real names, and the idea is that bitcoin really becomes more of a pseudonymous protocol, where people are addressed by their pseudonyms, deposit ripple to gatehub monero rx 570 hashrate that provides some level of privacy to users that want to transact using the bitcoin. Because by longest here, we don't mean that this change is long in any physical sense. So in this example, one branch in this fork is legitimate, and the other branch is bogus. It could be a friend of Dan's. It's just like you would for a dollar, a euro or yen. Earlier this week, the academy uploaded seven instructional videos about bitcoin onto its Finance and Capital Markets section. Transaction block chains. Now, Bob, when he receives information about buying bitcoin with kraken fees bitcoin hashrate vs bitcoin cash transaction, he receives it over the peer-to-peer network. If you recall, a person issuing a transaction in Bitcoin can allocate or set aside a certain amount of money-- maybe it can be a Bitcoin or a fractional Bitcoin-- for the node who succeeds in coming up with the actual proof of working, and effectively the node that succeeds in being able to add that transaction to the overall bitcoin transaction block chain. The Rich Dad Channel 3, views. There's no bank or centralized entity that can really control what's happening in the bitcoin ecosystem. Now, it's important to keep in mind that if Dan just tried to spend these same coins again without trying to cover his tracks or anything of that nature, then will ripple reach 100 bitcoin cash future aug 25 out there would know that Dan is up to no good.
So let's suppose that there is someone out there named Dan, and that Dan wants to order a pizza-- maybe a cheese pizza, from Pete's Pizza Shop. How the blockchain will radically transform the economy Bettina Warburg - Duration: And the actual difficulty of finding these proof numbers, as you can tell, is dependent on exactly how many leading zeroes are required. Up Next. He sees that there is a long chain after that contains a transaction. It could even take maybe a year, or even two years. And the way that Alice is actually going to conduct this transaction in practice is either by installing a special piece of software, which we call a bitcoin client, or she can work with a third-party service that can handle these mechanics for her. For example, banks might validate currencies. And also that Dan is going to take the remaining 4 Bitcoins. The money supply. Marco Cavicchioli - Bitcoin e criptovalute 49, views. And so what Dan's Bitcoin client will do is it will create a transaction record that includes information about how Dan got these Bitcoins. To all the nodes on the Bitcoin peer-to-peer network. But the short of it is that anyone who has a bitcoin client or who has an account with an exchange like Mt. Let's say Alice started off with 50 bitcoins of her own. The Rich Dad Channel 3,, views.
There are more and more merchants electrum bitcoin gold wallet do i need a phone number for coinbase up each day who accept bitcoins for transactions. Future miners are supposed to only work off the chain that has the most work put into it. The next video is starting stop. To log in and use all the features of Khan Academy, please enable JavaScript in your browser. Now another question you might have is why do people even bother with bitcoins in the first place. Now to engage in this sort of work, what these nodes will basically do is they'll first take all the transactions that have been broadcast. And he has to try to add to that transaction block chain a different transaction. And so that node that does the work succeeds, gets a reward, another transaction fee. Best bitcoin block explorer khan academy bitcoin property of bitcoin is that it's open. Gox can engage in bitcoin transactions. Selling on coinbase troubleshooting coinbase electrum how long confirm for Dan to be able to pull this off, he has to start off with the transaction block chain that existed previously. And then it specifies that Dan wants to give one of these Bitcoins to Pete-- and we'll label Pete by a P. Or let's say providing an electronic check, where you need to tie that electronic check, typically your bank account details. Digital signatures. But the idea is that after maybe a couple of rounds when there are ties, they'll quickly resolve themselves as long as most of the nodes are being honest and really stick to the implementation of the protocol. You'll get the transaction fee for all the transactions that appeared in the current block. And in the Bitcoin system, that particular chain is often referred to as the longest chain in the. It's pretty high. Murat Su 24, views.
So first of all, as part of constructing these transactions blocks, and really as part of incorporating them into a transaction block chain, Bitcoin miners are actually allowed-- one little special treat-- they are allowed to include in that transaction block-- a special node for themselves. And so that node that does the work succeeds, gets a reward, another transaction fee. And keep in mind that because this chain is out there, other nodes may have started to build on top of this chain. SciShow 2,, views. And he has to try to add to that transaction block chain a different transaction. Now there are a couple of points I want to make here. Current time: Now, if Bob is willing to accept bitcoins, which are a form of electronic payments, then Alice can go ahead and send Bob some value in bitcoins. And this is kind of but not quite like what you would get if you bought something using cash. Economics and finance Finance and capital markets Money, banking and central banks Bitcoin. Current time:
So you want to take about 10 minutes for at least one node to come up with a valid proof, but keep in mind that a lot of nodes are working on this proof concurrently. Video transcript The bitcoin paper wallet coinbase paper wallets are unsafe really essential or salient piece for understanding the mechanics of how Bitcoins work is what we call the transaction block chain. And that would leave out the other transaction to Pete and hope that everybody else will start to accept or believe this newer chain. And in Bitcoin lingo, this idea is known as a fork in the chain. If you recall, a person issuing a transaction in Bitcoin can allocate or set aside a certain amount of money-- maybe it can be a Bitcoin or a fractional Bitcoin-- for the node who succeeds in coming up with the actual proof of working, and effectively the node that succeeds in being able to add that transaction to the overall bitcoin transaction block chain. You might remember that Bitcoin miners who solve proof-of-work puzzles get both a reward for succeeding-- they get some number of Bitcoins-- and they also get a transaction fee for all the transactions in the block that they validated. There are ways to do it. And they're going to basically try to figure out how to form a transaction block out of these transactions. Now, this transaction record is going to be broadcast out to the entire Bitcoin world.
Gox can engage in bitcoin transactions. And these Bitcoin miners are all collectively trying to take all these recent transactions that haven't yet been recorded, and that includes not only the transaction between Dan and Pete, but there may be other transactions floating out there that took place on the same time. Video transcript Voiceover: You'll see how verification occurs for those transactions, and you'll also learn what it means for someone to really engage in a process known as "bitcoin mining", and that may be a term that you've heard if you've had any interest in bitcoin recently. In that capacity, you can think of bitcoin at any, it really is effectively being, of being pseudonyms, rather than real names, and the idea is that bitcoin really becomes more of a pseudonymous protocol, where people are addressed by their pseudonyms, and that provides some level of privacy to users that want to transact using the bitcoin system. Transaction block chains. And so he has to create a chain. And the reason it's important for someone to understand how hard the entire chain is constructed is because this is overall score for this chain-- this difficulty score for the chain is what's used by Pete or by other people who are receiving Bitcoins to figure out whether or not they trust that transaction. Now, this transaction record is going to be broadcast out to the entire Bitcoin world. La Blockchain pour les nuls. And by the way, there are people using bitcoin all over the world. Then we often take it for granted that there are people out there who may not have access to a credit card, who may not have a bank account. But I do want to point out what this transaction is typically called is called a coin-based transaction, or a generation transaction.
Economics and finance Finance and capital markets Money, banking and central banks Bitcoin. And that sequence of numbers is effectively going to function like a pseudonym for Alice. And somehow, they both end up trying to add to that existing chain in some ways. Digital signatures. Why on earth would you possibly want to mess with a good thing? The longer it takes to actually come up with a proof that works with respect to a given challenge. If you recall from any of the proof-of-work videos, to succeed in a proof-of-work is kind of like winning the lottery. And then once the newly-broadcast chain gets kind of verified and meets the right properties, the nodes on the network are just going to go ahead and start using it, and they're going to start appending new transaction blocks to that chain. And so on. Video transcript But what I wanted to do in this video is talk about what a bitcoin is in more general terms and what differentiating characteristics they have compared to other approaches. By electronic payment system, I mean it's just a vehicle, a conduit, by which two parties can transact over the internet. The money supply. And in the Bitcoin system, that particular chain is often referred to as the longest chain in the system. Choose your language. But it removes the previous transaction where he gave money to Pete. Because it's unlikely for any one individual to have access to just that much computing power. Sign in to add this to Watch Later. And I'm going to talk about that concept in a subsequent video. And it's designed to not, on average, the average time taken across the whole system should be about 10 minutes. And he has to try to add to that transaction block chain a different transaction.
I do want to point out, also, that the bitcoin scheme is fairly involved. Cryptographic hash functions. Now, another property of bitcoin how to determine what country is buying bitcoin why is coinbase credit card limit so low worth mentioning is that it's decentralized. It could be a friend of Dan's. Now, what's remarkable here is that the whole process is decentralized. In that capacity, a transaction block would basically correspond to her page in a ledger where you have multiple transactions that are listed in that page of the ledger. Transaction block chains. Maybe he's very wealthy or he has a lot of resources. That also how is bitcoin measure biggest users of bitcoins that no one entity can see your assets. Now this could actually become quite large because the node will not only get the transaction fee before one transaction. Earlier this week, the academy uploaded seven instructional videos about bitcoin onto its Finance and Capital Markets section. Tom Ferry 7, views.
It's going to give the aggregate over all these different transactions. Now, another property of bitcoin that's worth mentioning is that it's decentralized. It gets calibrated. And we'll basically look at the total amount of effort that was required to generate that chain with regard to that proof of work. And that would leave out the other transaction to Pete and hope that cryptocurrency exchange by rated how loud is the antminer s9 else will start to accept or believe this newer chain. And that will be basically change to. But the short of it is that anyone who has a bitcoin client or who has an account with an exchange like Mt. Nobody needs to know this is Alice transacting. So if you recall our ledger analogy, a single Bitcoin transaction essentially corresponds to a proposed entry in a ledger. Really, what they're starting to do is starting to work off of a new, updated transaction block chain. Video transcript But what I wanted to do in this video is talk about what a bitcoin is in more general terms and what differentiating characteristics they have compared to other approaches. So imagine that there are some numbers, and we'll call these numbers D sub N.
So there could be many reasons why Alice is trying to pay Bob over the internet in some capacity. The money supply. In order for that chain to be believable, it has to now be the longest chain out there. This feature is not available right now. You'll see how verification occurs for those transactions, and you'll also learn what it means for someone to really engage in a process known as "bitcoin mining", and that may be a term that you've heard if you've had any interest in bitcoin recently. Current time: I'll explain why blockchains are so special in simple and plain English! And we'll get a [? The interactive transcript could not be loaded. All the Bitcoin mining nodes who are honest in the network. Now the amount of that reward will change over time. And so in particular, Pete is going to receive a copy of this transaction. Or for that matter, no one entity can reverse a transaction, which is definitely desirable for certain merchants. For example, that means that no one entity can directly control the money supply of bitcoins. Now, the details of this transaction once it takes place, are going to be broadcast out, so Alice is going to take these transaction details and effectively just broadcast them out to all the nodes in the peer-to-peer network that represent bitcoin nodes. And when I say honest computing power, I mean the total computing power for all the nodes who are honest. And this transaction record is public. Because they can see from the existing longest transaction block chain-- namely this existing chain from the beginning-- they can see that, hey, Dan already spent these coins before, he shouldn't be allowed to spend these coins again.
First of all, I do want to point out that bitcoin has been described, really, as a decentralized currency because there's no real central bank or entity that's involved in generating or transacting bitcoins, and, in fact, what happens in the content of a bitcoin is all the transactions really require what's known as a peer-to-peer network, a network of just individual hosts that essentially collectively agree on different aspects of how the protocol is implemented and used. She might decide that she wants to give, let's say, 30 of these bitcoins over to Bob, and let's say she wants to have some number of bitcoins returned back to her, so you have to specify, or Alice has to specify, rather, how much change she's going to get, so in this case, let's say her change is going to be 18 bitcoins for herself, and then the remaining 2 bitcoins are going to be a transaction fee, and we'll talk about what a transaction fee means a little later, and I think I'll also dive into it in future videos, but it's basically an incentive for other nodes in the bitcoin network to help Alice in essentially validating some of the details of this transaction for Bob. And what these notes are going to start doing is they're going to work on incorporating this transaction record into a ledger of all transactions that have ever taken place in the Bitcoin system. There are also bitcoin exchanges, places where you can go and exchange bitcoins for more mainstream currencies. And let's say that Pete's Pizza Shop accepts Bitcoins as payment, and that it costs 1 Bitcoin for a pizza pie. But that's exactly Dan has to do. And keep in mind that because this chain is out there, other nodes may have started to build on top of this chain. And there are no known shortcuts for solving these puzzles. And so that node that does the work succeeds, gets a reward, another transaction fee. Now, if you might recall from previous videos, that for a Bitcoin miner to add a transaction block to a transaction block chain, they have to solve what's known as a proof-of-work puzzle. And Dan wants to create his own fake chain. So let's suppose that there is someone out there named Dan, and that Dan wants to order a pizza-- maybe a cheese pizza, from Pete's Pizza Shop. Transaction records. In that capacity, a transaction block would basically correspond to her page in a ledger where you have multiple transactions that are listed in that page of the ledger. And what that means is that when you do a transact-- or when Alice transacts with Bob over the internet, that transaction doesn't have to go through a third party. Now, one of the first questions you might have-- and I kind of alluded to this earlier-- is why would Bob even want to accept bitcoins in the first place? And the actual difficulty of finding these proof numbers, as you can tell, is dependent on exactly how many leading zeroes are required. Economics and finance Finance and capital markets Money, banking and central banks Bitcoin. Watch Queue Queue. So you can imagine if there is-- the network will have a series of transaction blocks that were previously accepted.
Some merchants might not be able to conduct business online because of fraud concerns. And I think it's critical when you're trying to understand something as complex and wrap your head around something as sophisticated as bitcoin, it's important to get exposed to all the parts first so that you can ultimately get a flavor for how they fit. Maybe he's very wealthy or he has a lot of resources. And here I should point out that there is also another aspect to the security of Bitcoin. Another property of bitcoin is that it's open. Because they can buy ethereum from coinbase is it profitable to mine bitcoin from the existing longest transaction block chain-- namely this existing chain from the beginning-- they can see that, hey, Dan already spent these coins before, he shouldn't be allowed to spend these coins. How Cryptocurrencies Work - Duration: Now there are a couple create wallet ethereum cpu mining litecoin windows points I want to make. Up Next. And what Alice has to do to initiate that transaction was to construct a transaction-- a record of sorts-- that contained information about the transaction and that was signed with Alice's signing key.
And why that's not only mathematically hard to do, but why there's actually an incentive-- actually an economic incentive in the Bitcoin system for different people to behave honestly. This video is unavailable. Sign in to add this video to a playlist. First of all, I do want to point out that bitcoin has been described, really, as a decentralized currency because there's no real central bank or entity that's involved in generating or transacting bitcoins, and, in fact, what happens in the content of a bitcoin is all the transactions really require what's known as a peer-to-peer network, a network of just individual hosts that essentially collectively agree on different aspects of how the protocol is implemented and used. Hubert Hays Narbonne 98, views. The money supply. And they're going to basically hash these transactions in pairs in basically a tree-like structure. It requires some time to really cover all of the relevant details, and to me the best way to really wrap your head around a scheme like bitcoin is to really suspend belief for a bit and get exposed to all of these relevant details. Unsubscribe from Simply Explained - Savjee? The Rich Dad Channel 3,, views.
