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I am probably in the minority here on HN but I don't completely grok bitcoin (granted I have not put in much effort to understand it). I have asked many of my t

by educar 10y ago

I am probably in the minority here on HN but I don't completely grok bitcoin (granted I have not put in much effort to understand it). I have asked many of my techie friends and none of them understand it either - I follow the Einstein (?) principle. If you cannot explain it, you probably don't understand it. On top of this, there is now Ethereum and DAO which are also completely incomprehensible to me. But the reason for this comment is that I totally blown away that there are people out there who understand it and are willing to fund this to record levels. The context for this comment is that I ask myself this question about products and startups all the time. Who uses them? Why are they gaining traction and nobody I know even knows about them let alone use them... To conclude, I find all this bitcoin talk very motivational - not everybody needs to understand what you are building. You just need a passionate following of people who do.

curiousgal 10y ago
>there are people out there who understand it Not to mention that the creator of Ethereum is 22 years old.
- cloudjacker 10y ago
  22? when was his birthday?
  - curiousgal 10y ago
    31 January 1994
- madeofpalk 10y ago
  What has his age got to do with it?
  - curiousgal 10y ago
    He proposed it in late 2013 so around 19-20 years old.
- spectrum1234 10y ago
  Yes, and he's also a genius. So what?
draw_down 10y ago
Bitcoin doesn't seem that indecipherable to me, just a dumb idea. It's a network that uses proof-of-work to transfer value. (I say it's dumb because decentralized currency is a bad idea, viz. all the dumb things you read about happening in bitcoin-world)
- cloudjacker 10y ago
  Just curious, what is dumb about it? The transfers work very well. What dumb things do you hear about happening in the bitcoin world, 900 billion dollar bank heists? wait that was distinctly not on bitcoin's network Just wondering what you were referring to, since the value transfer works without anyone caring about the drama
  - TylerE 10y ago
    The amount of resources to process a whopping, what is it, 2 transactions a second? (And don't say "but lightning network!". Come back to me when something ACTUALLY happens.
    - cloudjacker 10y ago
      Are you referring to the high hashrate? that isn't a requirement for the "2 transactions per second". It is basically unrelated. It would work if everyone turned off their computers and the hashrate dropped to one except then I would turn on my computers and earn all the bitcoin instead, which nobody else wants to happen when they can be earning more bitcoin than I I think it is pretty clever and the network works very well. Your criticism is about its future scalability? Transferring bitcoin right now, has worked just as well as it worked back in 2012. You send it from one address, to another address, and it gets there in the same time period. You could ignore all the drama for the last four years and your transaction would still work. Just as much as you ignore all the board meetings that VISA has, that SWIFT has, that the engineers at FEDwire have. The scaling issue is a fun thought experiment, but it really doesn't matter for you actually using bitcoin. Which promise are you criticising? How bitcoin is supposed to compete against the US dollar? I've got the cast and crew of the Panama Papers over in cryptocurrency now, and it works really well, while people are still questioning what bitcoin even does. 2012 is over, shit still works.
supergreg 10y ago
Bitcoin is a distributed p2p database where nodes can agree over the updates, which is incidentally used as a ledger for a digital currency. Bitcoin is nice, but the real geniality of it is the blockchain.
- cloudjacker 10y ago
  > but the real geniality of it is the blockchain and the blockchain only works because nodes only agree over the updates as they rewarded in bitcoin for doing so. if they cease agreeing then they cease getting useable bitcoin. hodor there really aren't two sides to the blockchain without bitcoin debate. nobody in the history of computational science has ever found a way to get computers to verifiably agree. an incentivized network is the only solution right now. its great that people want to attempt this without the fungible digital currency reward, but no other consensus method has been found since the beginning of time
JoshTriplett 10y ago
At the highest level, Bitcoin is relatively easy to understand. There's a lot of additional detail in the communications algorithm and the programmable extensibility embedded in transactions (for instance, how multi-party/escrow/conditional transactions work). But the concept of a proof-of-work-based blockchain can be explained rather briefly. As a miner, you have access to a pile of transactions that people want to resolve. Take enough of those transactions to fill up a block, based on some rules you want to follow (e.g. prioritize transactions that pay a transaction fee, which you claim; prioritize transactions that have been waiting longer). Add a transaction that gives you the current consensus mining fee out of "thin air"; that's the only place new coins get injected into the system. Include a hash of the previous block; that's what makes it a block chain. Then, via brute force computation, come up with some additional data appended to the transactions such that the double-sha256 hash of the data block (the sha256 of a sha256 hash of the block) is smaller than a certain upper bound (determined by the current consensus "difficulty"). Since you can assume the hash is evenly distributed across all possible values, to compute a hash smaller than a certain value requires brute-forcing enough hashes for one to land in that range. This is equivalent to "find a hash that starts with a certain number of 0 bits", but "less than a certain value" allows increasing the difficulty without doubling it. Once you have a new block, tell other miners about it. Assuming you've followed the "consensus" rules for difficulty, mining fee, transaction fees, and similar, then the other miners will accept your block, and immediately start trying to mine a new block starting from yours rather than starting from the previous block. So, at that point, the consensus block chain includes your block, which means all the transactions you included took place. The rest of the complexity comes in with questions like "how do you advertise a transaction you want to the miners", "how do miners communicate with each other", "how does the consensus change over time", and "how can existing clients handle new kinds of transactions that they don't natively understand".
- Arnavion 10y ago
  To be fair, you covered only the blockchain construction part of Bitcoin. There's also the transaction part - keys, addresses, scripts, etc. Of course these also have an equally simple high-level explanation.
DennisP 10y ago
They're both like databases replicated onto thousands of nodes. All the fancy crypto and mining is just a way of making the replication secure, so every node has the exact same data even though it's on a public network and nobody knows who's running the nodes. On Bitcoin, there's one table with two columns: username and balance. You have read access to this table and you can call a stored procedure that transfers some of your balance to another user. On Ethereum, you have developer rights. It has the same username/balance table as Bitcoin, but you can also create your own tables and write your own stored procedures, which can be called by other users. Of course this is a drastic simplification of both systems, and misleading in some ways, but it's the best quick explanation I've come up with. I'm getting obsessed with Ethereum because it's amazing to me that, for example, I can write two pages of backend code plus an html/javascript front end, and I've got a crowdfunding system which I can deploy for free, run indefinitely with zero downtime, and have it moving money around without getting anyone's permission at all. (Or it could be an auction, casino, currency or derivatives exchange, vault, etc.)
- misiti3780 10y ago
  good explanation! can you provide an example of your crowd funding app?
  - anonbanker 10y ago
    https://www.ethereum.org/crowdsale https://www.ethereum.org/crowdsale
- dandare 10y ago
  > deploy for free, run indefinitely with zero downtime So who actually pays for the runtime - is it the work the miners do? If not, what is the mining work used for exactly?
  - dkns 10y ago
    That's how I always understood it. Miners machines do all the operations and for this they are rewarded with bitcoins.
cloudjacker 10y ago
> If you cannot explain it, you probably don't understand it. Right, as you and your friends have demonstrated. There are people that understand it. 7 years in and you have decided not to. That's all it comes down to.
oska 10y ago
> I am probably in the minority here on HN No, HN is generally bad for discussion of bitcoin. > I have asked many of my techie friends An introductory whitepaper [1] was written by bitcoin's creator in 2008. That's probably still the best place to start. [1] https://bitcoin.org/en/bitcoin-paper https://bitcoin.org/en/bitcoin-paper
- retube 10y ago
  A lot of people quote this as the best place to start, but I'd like to respectfully disagree. I don't have a concise alternative, but I found that paper pretty much incomprehensible, and even now with a decent handle on bitcoin it's still pretty opaque.
dev1n 10y ago
I took some time and read this blog post [1]. It allowed me to explain everything to my friends who asked. [1]: http://www.michaelnielsen.org/ddi/how-the-bitcoin-protocol-actually-works/ http://www.michaelnielsen.org/ddi/how-the-bitcoin-protocol-a...
sopooneo 10y ago
"there are people out there who understand it and are willing to fund" These groups may only slightly overlap.
sopooneo 10y ago
"there are people out there who understand it and are willing to fund" These groups may only slightly overlap.
cashmonkey85 10y ago
The innovative is that bitcoin is an autonomous computer network. It uses game theory and cryptography to ensure that no one entity can control and network and that the network always performs its operations independently and neutrally. This is an incredible innovation. Etherium is not this and just empty hype. There is a lot of misinformation out there. Bitcoin is not just a data structure.
- zaphar 10y ago
  Etherium is not this That claim needs backing up. From what I can tell Ethereum also uses game theory and cryptography to ensure that no one entity can control the network.
woodman 10y ago
> Why are they gaining traction and nobody I know even knows about them... This reminds me of the old "How did X get elected? I don't even know one person who would vote for X!" It speaks much more about the individual than the public. I feel the same way when I hear about the latest SaaS/Social-whatever.
ChemicalWarfare 10y ago
'To understand' something can mean all kinds of different things. You don't really need to understand how smtp/pop work to use email or how https works to be [reasonably] sure your credit card number you're sending over the wire to an online vendor won't be stolen in flight. Same with Bitcoin. You acquire it, you use a piece of software called 'the wallet' to store it and you either share your 'Bitcoin address' with someone to send Bitcoin your way or they give you their address for you to send the btc to. That's really it in a nutshell :)
known 10y ago
Bitcoin is trying to undo https://en.wikipedia.org/wiki/Chiemgauer https://en.wikipedia.org/wiki/Chiemgauer https://www.lewrockwell.com/2013/12/gary-north/bitcoins-vs-greenbacks/ https://www.lewrockwell.com/2013/12/gary-north/bitcoins-vs-g...
DINKDINK 10y ago
My explanation that doesn't cover all the use cases: How do you authorize/prove ownership in a digital domain: Public-key Cryptography. How do you order entries in a public, permissionless database: By forcing computers to expend an unforgeable amount of work to timestamps entries.
facepalm 10y ago
The basic technology is not that hard to understand. The implications are less obvious.

by educar 10y ago

curiousgal 10y ago

>there are people out there who understand it Not to mention that the creator of Ethereum is 22 years old.

cloudjacker 10y ago
22? when was his birthday?
- curiousgal 10y ago
  31 January 1994
madeofpalk 10y ago
What has his age got to do with it?
- curiousgal 10y ago
  He proposed it in late 2013 so around 19-20 years old.
spectrum1234 10y ago
Yes, and he's also a genius. So what?

draw_down 10y ago

Bitcoin doesn't seem that indecipherable to me, just a dumb idea. It's a network that uses proof-of-work to transfer value. (I say it's dumb because decentralized currency is a bad idea, viz. all the dumb things you read about happening in bitcoin-world)

cloudjacker 10y ago
Just curious, what is dumb about it? The transfers work very well. What dumb things do you hear about happening in the bitcoin world, 900 billion dollar bank heists? wait that was distinctly not on bitcoin's network Just wondering what you were referring to, since the value transfer works without anyone caring about the drama
- TylerE 10y ago
  The amount of resources to process a whopping, what is it, 2 transactions a second? (And don't say "but lightning network!". Come back to me when something ACTUALLY happens.
  - cloudjacker 10y ago
    Are you referring to the high hashrate? that isn't a requirement for the "2 transactions per second". It is basically unrelated. It would work if everyone turned off their computers and the hashrate dropped to one except then I would turn on my computers and earn all the bitcoin instead, which nobody else wants to happen when they can be earning more bitcoin than I I think it is pretty clever and the network works very well. Your criticism is about its future scalability? Transferring bitcoin right now, has worked just as well as it worked back in 2012. You send it from one address, to another address, and it gets there in the same time period. You could ignore all the drama for the last four years and your transaction would still work. Just as much as you ignore all the board meetings that VISA has, that SWIFT has, that the engineers at FEDwire have. The scaling issue is a fun thought experiment, but it really doesn't matter for you actually using bitcoin. Which promise are you criticising? How bitcoin is supposed to compete against the US dollar? I've got the cast and crew of the Panama Papers over in cryptocurrency now, and it works really well, while people are still questioning what bitcoin even does. 2012 is over, shit still works.

supergreg 10y ago

Bitcoin is a distributed p2p database where nodes can agree over the updates, which is incidentally used as a ledger for a digital currency. Bitcoin is nice, but the real geniality of it is the blockchain.

cloudjacker 10y ago
> but the real geniality of it is the blockchain and the blockchain only works because nodes only agree over the updates as they rewarded in bitcoin for doing so. if they cease agreeing then they cease getting useable bitcoin. hodor there really aren't two sides to the blockchain without bitcoin debate. nobody in the history of computational science has ever found a way to get computers to verifiably agree. an incentivized network is the only solution right now. its great that people want to attempt this without the fungible digital currency reward, but no other consensus method has been found since the beginning of time

JoshTriplett 10y ago

At the highest level, Bitcoin is relatively easy to understand. There's a lot of additional detail in the communications algorithm and the programmable extensibility embedded in transactions (for instance, how multi-party/escrow/conditional transactions work). But the concept of a proof-of-work-based blockchain can be explained rather briefly. As a miner, you have access to a pile of transactions that people want to resolve. Take enough of those transactions to fill up a block, based on some rules you want to follow (e.g. prioritize transactions that pay a transaction fee, which you claim; prioritize transactions that have been waiting longer). Add a transaction that gives you the current consensus mining fee out of "thin air"; that's the only place new coins get injected into the system. Include a hash of the previous block; that's what makes it a block chain. Then, via brute force computation, come up with some additional data appended to the transactions such that the double-sha256 hash of the data block (the sha256 of a sha256 hash of the block) is smaller than a certain upper bound (determined by the current consensus "difficulty"). Since you can assume the hash is evenly distributed across all possible values, to compute a hash smaller than a certain value requires brute-forcing enough hashes for one to land in that range. This is equivalent to "find a hash that starts with a certain number of 0 bits", but "less than a certain value" allows increasing the difficulty without doubling it. Once you have a new block, tell other miners about it. Assuming you've followed the "consensus" rules for difficulty, mining fee, transaction fees, and similar, then the other miners will accept your block, and immediately start trying to mine a new block starting from yours rather than starting from the previous block. So, at that point, the consensus block chain includes your block, which means all the transactions you included took place. The rest of the complexity comes in with questions like "how do you advertise a transaction you want to the miners", "how do miners communicate with each other", "how does the consensus change over time", and "how can existing clients handle new kinds of transactions that they don't natively understand".

Arnavion 10y ago
To be fair, you covered only the blockchain construction part of Bitcoin. There's also the transaction part - keys, addresses, scripts, etc. Of course these also have an equally simple high-level explanation.

DennisP 10y ago

They're both like databases replicated onto thousands of nodes. All the fancy crypto and mining is just a way of making the replication secure, so every node has the exact same data even though it's on a public network and nobody knows who's running the nodes. On Bitcoin, there's one table with two columns: username and balance. You have read access to this table and you can call a stored procedure that transfers some of your balance to another user. On Ethereum, you have developer rights. It has the same username/balance table as Bitcoin, but you can also create your own tables and write your own stored procedures, which can be called by other users. Of course this is a drastic simplification of both systems, and misleading in some ways, but it's the best quick explanation I've come up with. I'm getting obsessed with Ethereum because it's amazing to me that, for example, I can write two pages of backend code plus an html/javascript front end, and I've got a crowdfunding system which I can deploy for free, run indefinitely with zero downtime, and have it moving money around without getting anyone's permission at all. (Or it could be an auction, casino, currency or derivatives exchange, vault, etc.)

misiti3780 10y ago
good explanation! can you provide an example of your crowd funding app?
- anonbanker 10y ago
  https://www.ethereum.org/crowdsale https://www.ethereum.org/crowdsale
dandare 10y ago
> deploy for free, run indefinitely with zero downtime So who actually pays for the runtime - is it the work the miners do? If not, what is the mining work used for exactly?
- dkns 10y ago
  That's how I always understood it. Miners machines do all the operations and for this they are rewarded with bitcoins.

cloudjacker 10y ago

> If you cannot explain it, you probably don't understand it. Right, as you and your friends have demonstrated. There are people that understand it. 7 years in and you have decided not to. That's all it comes down to.

oska 10y ago

> I am probably in the minority here on HN No, HN is generally bad for discussion of bitcoin. > I have asked many of my techie friends An introductory whitepaper [1] was written by bitcoin's creator in 2008. That's probably still the best place to start. [1] https://bitcoin.org/en/bitcoin-paper https://bitcoin.org/en/bitcoin-paper

retube 10y ago
A lot of people quote this as the best place to start, but I'd like to respectfully disagree. I don't have a concise alternative, but I found that paper pretty much incomprehensible, and even now with a decent handle on bitcoin it's still pretty opaque.

dev1n 10y ago

I took some time and read this blog post [1]. It allowed me to explain everything to my friends who asked. [1]: http://www.michaelnielsen.org/ddi/how-the-bitcoin-protocol-actually-works/ http://www.michaelnielsen.org/ddi/how-the-bitcoin-protocol-a...

sopooneo 10y ago

"there are people out there who understand it and are willing to fund" These groups may only slightly overlap.

sopooneo 10y ago

"there are people out there who understand it and are willing to fund" These groups may only slightly overlap.

cashmonkey85 10y ago

The innovative is that bitcoin is an autonomous computer network. It uses game theory and cryptography to ensure that no one entity can control and network and that the network always performs its operations independently and neutrally. This is an incredible innovation. Etherium is not this and just empty hype. There is a lot of misinformation out there. Bitcoin is not just a data structure.

zaphar 10y ago
Etherium is not this That claim needs backing up. From what I can tell Ethereum also uses game theory and cryptography to ensure that no one entity can control the network.

woodman 10y ago

> Why are they gaining traction and nobody I know even knows about them... This reminds me of the old "How did X get elected? I don't even know one person who would vote for X!" It speaks much more about the individual than the public. I feel the same way when I hear about the latest SaaS/Social-whatever.

ChemicalWarfare 10y ago

'To understand' something can mean all kinds of different things. You don't really need to understand how smtp/pop work to use email or how https works to be [reasonably] sure your credit card number you're sending over the wire to an online vendor won't be stolen in flight. Same with Bitcoin. You acquire it, you use a piece of software called 'the wallet' to store it and you either share your 'Bitcoin address' with someone to send Bitcoin your way or they give you their address for you to send the btc to. That's really it in a nutshell :)

known 10y ago

Bitcoin is trying to undo https://en.wikipedia.org/wiki/Chiemgauer https://en.wikipedia.org/wiki/Chiemgauer https://www.lewrockwell.com/2013/12/gary-north/bitcoins-vs-greenbacks/ https://www.lewrockwell.com/2013/12/gary-north/bitcoins-vs-g...

DINKDINK 10y ago

My explanation that doesn't cover all the use cases: How do you authorize/prove ownership in a digital domain: Public-key Cryptography. How do you order entries in a public, permissionless database: By forcing computers to expend an unforgeable amount of work to timestamps entries.

facepalm 10y ago

The basic technology is not that hard to understand. The implications are less obvious.