8 ms·

This is extraordinarily well done and begs to be shared widely. Once blockchain tech is understood by the masses, the sky (moon?) is truly the limit. As this v

by mthoms 10y ago

This is extraordinarily well done and begs to be shared widely. Once blockchain tech is understood by the masses, the sky (moon?) is truly the limit. As this video demonstrates, it's not actually that complicated. It could be made better (perhaps) by clearly establishing at the begining what problem the blockchain attempts to solve. Otherwise, this is a phenominal "blockchain for idiots" introduction that even your grandmother would understand. That's not easy.

eecks 10y ago
Two things stood out for me: How is a signature picked? (he says four 0s at the start). He also says Bob can't give Alice 4 dollars out of thin air right after giving Anders 100 dollars out of thin air.
- POiNTx 10y ago
  This is my understanding of it. How is a signature picked: This is arbitrary but should be a fixed sequence that you define before hand. It could start with 'abcd' as long as you decide on that sequence. In the example (and for bitcoin also) it is decided that the hashes should start with a specific number of zero's. He also says Bob can't give Alice 4 dollars out of thin air right after giving Anders 100 dollars out of thin air: Anders gets 100 dollars out of thin air because he mined (calculated the hash with the specific starting sequence). This is the reward Anders gets. Looking for a specific hash such as a hash starting with a certain number of 0's is very computational intensive work. That's why he gets the reward. Hashing is fast for a computer to calculate one way (go from a piece of data -> a hash) but very difficult and as such slow for a computer to calculate it in reverse (go from a hash to the original piece of data for which the hash was generated).
- Taek 10y ago
  These come down to the specific rules of the Bitcoin blockchain. Today in Bitcoin, if you mine a block, you get 12.5 bitcoins out of thin air. The network allows you to have this money as a reward for finding the block. That is the only way to get money out of thin air. And because blocks are hard to create, money is hard to create. All other money comes from people sending it to eachother. For the signature question, we need to differentiate between two types of signatures. The first is the block signature, which is defined by having a bunch of leading zeroes. The second is an ECDSA signature, which is your more traditional cryptographic signature with a public key and a private key. When coins are mined out of nowhere, they get assigned to a public key. I'm oversimplifying a little bit, but this is sufficient to understand. To spend coins from that public key, you need to sign a transaction saying something like "I send X coins to person A". This message is signed with the secret key that corresponds to the public key that owns the coins. The really important part about the blockchain is that it prevents you from spending the same coins twice. So, if you only have 12.5 bitcoins, you can't sent 12.5 to Alice and then send the same 12.5 to Bob. You can create signed messages that claim both. Without a blockchain, it's impossible to tell which one is valid, because it's impossible to know which one came first. But that's the magic of the blockchain. It's a history of transactions. If you try to spend the same money twice in the blockchain, we can very easily see that you've spend it twice. We also know which one is the valid original one, because it will be first in the blockchain. So we know to accept the transaction that's first in the blockchain, and to ignore the second one. (note, in Bitcoin, it's actually illegal to have two conflicting transactions in the same blockchain. The second transaction will never be included into a block at all). And, as described early in the video, this history is very hard to re-write. If you decide one day later in Bitcoin that you want to actually undo your spend to Bob and instead spend that money back to yourself, you will have to outcompete all of the mining that happened over the past 24 hours to re-write the blockchain. Given that 'all of the mining' is hundreds of millions of dollars of hardware working non-stop, you will not be able to re-write the blockchain.
  - samlewis 10y ago
    So, all the miners race to mine the block but only the winner gets the 12.5 btc reward? Does that mean if you're a Joe Bloggs Bitcoin enthusiast, you'll never be able to get any reward if you only ever mine on your low key laptop setup?
    - jacobwg 10y ago
      Yes, and that's why there are mining pools, where Joe Bloggs connects his computer to a pool of other similarly underpowered computers to perform the complex calculations required to mine a block in a distributed fashion. Then when a block is mined, the pool owner acquires the 12.5 btc reward and distributes it to all the pool participants based on how much computation power/time each participant contributed to the overall pool, keeping a small bit for themselves for the overhead of managing the pool. Obviously you have to trust your pool operator. Also at this point in the BTC world, the difficulty has become so high that Joe Bloggs will never acquire any meaningful amount of BTC, even in a pool. There are specialized arrays of GPUs that can perform calculations at rates much higher than any standard PC or laptop. The same principles apply to any other bitcoin-like blockchain currency though.
      - nileshtrivedi 10y ago
        Not unlike setting up a gold mine to "create" money.
    - Taek 10y ago
      Laptops are useless for mining, yes. You'd need to spend something like $1000 on electricity for every $1 of Bitcoins earned on a laptop. Not to mention machine wear and failure. If you want to mine Bitcoins, you need a bunch of advantages. Special hardware, cheap space, low electricity cost, bulk manufacturing deals. Otherwise you probably aren't going to be breaking even, let alone profiting.
    - TD-Linux 10y ago
      Mining is not a race - in fact, the mining being progress-free is a really important part of PoW. If you have a low power setup, you have a very small chance of winning the reward, but it's proportional to your power over the total network power. There's unfortunately some things that make it a bit of a race - network latency and block verification time. That's why there's so much work spent on shrinking these (the FIBRE network, libsecp256k1)
grey-area 10y ago
This is extraordinarily well done and begs to be shared widely. Agreed, this is a wonderful demonstration of the interesting principles behind the idea of a blockchain (or a distributed merkle tree). Definitely worth playing with for anyone interested in this, and the video is a nice overview as well. As far as the moon being the limit, unfortunately we still inhabit the corrupted sublunary sphere, and blockchain technology (at least as implemented in Bitcoin) has some limitations which make it unsuitable as a currency or log of transactions between untrusted parties. On your last point, I'm not really sure people know what problems blockchain solves, because there are no problems which directly map to this solution, and there are plenty of problems it half-solves. Problems it purports to solve but fails at: Anonymity - good enough to protect criminals, not good enough to protect citizens against a state Trustless consensus - 51% attack makes this unreliable, esp. with semi-anonymous actors Trustless transactions - POW as in bitcoin makes this impractical due to energy use and delays People want centralised trust in many cases for verified identity, transaction rollback, legal constraints on transactions, so in an important sense it is solving the wrong problems (pseudo-anonymity, fungible cash, sort-of trustless consensus) while leaving important problems untouched. Still, the video and website are an excellent demonstration of the ideas behind a blockchain or Bitcoin.
- colordrops 10y ago
  I'm not sure what you mean in your explanation that it fails at trustless transactions. Also, you are ignoring the main driving force for the development of bitcoin, that being the removal of the middleman/governments from the transaction.
  - grey-area 10y ago
    Bitcoin has failed to keep govs out of transactions between individuals because governments impose their will by force.
    - colordrops 10y ago
      If you are not trying to exchange currency, they can't really impose anything by force. You are taking about a failure of the exchange system, not bitcoin.
JohnKacz 10y ago
> It could be made better (perhaps) by clearly establishing at the begining what problem the blockchain attempts to solve. What would you say that is? Real question.
- bshanks 10y ago
  The purpose of the blockchain is to be a shared append-only data structure. There are a number of nodes who have copies of what is supposed to be exactly the same data (but see below). The nodes are all constantly telling each other what they believe to be the most up-to-date version of the data. The purpose of the blockchain is to support a consensus-finding algorithm by which the nodes may start out disagreeing on the contents of the most recent few blocks in the log, but eventually converge to a consensus, at least for relatively old blocks. This convergence occurs even if some of the nodes are evil or faulty or out-of-touch, provided that these bad nodes control less than 50% of the total computing power of all of the nodes.
nileshtrivedi 10y ago
It doesn't explain either how the money is created in the first place or how actual resolution happens when coming across a block which differs from others' copies. Do I need to ping all the peers?
- CydeWeys 10y ago
  Unfortunately it didn't explain this correctly, and this is the most important part of Bitcoin, as well as its biggest innovation. The longest chain always wins. And since valid block hashes are very hard to find, the longest chain is the one that has the most mining effort behind it. This is why mining is essential to securing the blockchain. In order to make a fake chain of any appreciable length, you would need to have >50% of the total hashing power of the blockchain. And if you have that much power, then whatever you say is the right chain is the right chain, because you can mine more blocks than anyone else and so yours is right by virtue of being longest. The video incorrectly implies that there is some sort of voting mechanism going on wherein the version of the chain with the most copies is correct, but this is incorrect, and would be horribly broken. The P2P network exists only to communicate transactions and blocks; it does not factor in to which version of a chain is considered valid (the longest one always wins). If the P2P network were used for this, then it would be trivial to take over Bitcoin using a Sybil attack, by e.g. hiring a botnet to run millions of fake nodes with your preferred version of the chain. With mining and validity determination by longest length, that doesn't even put a dent in Bitcoin, as even a million general purpose commodity computers can't get anywhere close to matching a small percentage of the overall hashing power of the miners.
  - Natanael_L 10y ago
    Actually length doesn't decide, but rather total accumulated hashing power. This is because Bitcoin changes the difficulty per block over time to keep the time between blocks close to 10 minutes. This means that two chains can be equally long but have different amounts of accumulated difficulty. It even means that long blockchains can have low amounts of accumulated difficulty. But for short periods of time, less than ~2 weeks as it is for Bitcoin, the difficulty will not yet have changed and thus length = total difficulty for SHORT forks.
SkyMarshal 10y ago
>Once blockchain tech is understood by the masses, the sky (moon?) is truly the limit. Not really. Security via economic incentives is still shaky. Bitcoin community is split, and Ethereum is still working out the kinks and has a high-risk move to PoS coming up soon. The tech is not remotely mature yet, and blockchain being better understood by the masses will have zero effect on that.
- _coldfire 10y ago
  >Bitcoin community is split Yet not even the advent of quantum computing with todays algorithms could undo a few hours of the Bitcoin blockchain. A bit too much credence is given to people arguing on the internet rather than the raw state of things. The sheer computing power of bitcoin is a marvel of the modern world. For all its problems I would say it has a long way to go yet unless the world solves the reality of a borderless economy.
  - SkyMarshal 10y ago
    True, Bitcoin's historical ledger is pretty durable. The community split is more about its future. And I'm not referring to people arguing on internet forums, but about the split between Bitcoin's core developers and its biggest miner. One day such discord may actually be a good thing, but right now it is hindering basic fixes from being implemented.

by mthoms 10y ago

eecks 10y ago

Two things stood out for me: How is a signature picked? (he says four 0s at the start). He also says Bob can't give Alice 4 dollars out of thin air right after giving Anders 100 dollars out of thin air.

POiNTx 10y ago
This is my understanding of it. How is a signature picked: This is arbitrary but should be a fixed sequence that you define before hand. It could start with 'abcd' as long as you decide on that sequence. In the example (and for bitcoin also) it is decided that the hashes should start with a specific number of zero's. He also says Bob can't give Alice 4 dollars out of thin air right after giving Anders 100 dollars out of thin air: Anders gets 100 dollars out of thin air because he mined (calculated the hash with the specific starting sequence). This is the reward Anders gets. Looking for a specific hash such as a hash starting with a certain number of 0's is very computational intensive work. That's why he gets the reward. Hashing is fast for a computer to calculate one way (go from a piece of data -> a hash) but very difficult and as such slow for a computer to calculate it in reverse (go from a hash to the original piece of data for which the hash was generated).
Taek 10y ago
These come down to the specific rules of the Bitcoin blockchain. Today in Bitcoin, if you mine a block, you get 12.5 bitcoins out of thin air. The network allows you to have this money as a reward for finding the block. That is the only way to get money out of thin air. And because blocks are hard to create, money is hard to create. All other money comes from people sending it to eachother. For the signature question, we need to differentiate between two types of signatures. The first is the block signature, which is defined by having a bunch of leading zeroes. The second is an ECDSA signature, which is your more traditional cryptographic signature with a public key and a private key. When coins are mined out of nowhere, they get assigned to a public key. I'm oversimplifying a little bit, but this is sufficient to understand. To spend coins from that public key, you need to sign a transaction saying something like "I send X coins to person A". This message is signed with the secret key that corresponds to the public key that owns the coins. The really important part about the blockchain is that it prevents you from spending the same coins twice. So, if you only have 12.5 bitcoins, you can't sent 12.5 to Alice and then send the same 12.5 to Bob. You can create signed messages that claim both. Without a blockchain, it's impossible to tell which one is valid, because it's impossible to know which one came first. But that's the magic of the blockchain. It's a history of transactions. If you try to spend the same money twice in the blockchain, we can very easily see that you've spend it twice. We also know which one is the valid original one, because it will be first in the blockchain. So we know to accept the transaction that's first in the blockchain, and to ignore the second one. (note, in Bitcoin, it's actually illegal to have two conflicting transactions in the same blockchain. The second transaction will never be included into a block at all). And, as described early in the video, this history is very hard to re-write. If you decide one day later in Bitcoin that you want to actually undo your spend to Bob and instead spend that money back to yourself, you will have to outcompete all of the mining that happened over the past 24 hours to re-write the blockchain. Given that 'all of the mining' is hundreds of millions of dollars of hardware working non-stop, you will not be able to re-write the blockchain.
- samlewis 10y ago
  So, all the miners race to mine the block but only the winner gets the 12.5 btc reward? Does that mean if you're a Joe Bloggs Bitcoin enthusiast, you'll never be able to get any reward if you only ever mine on your low key laptop setup?
  - jacobwg 10y ago
    Yes, and that's why there are mining pools, where Joe Bloggs connects his computer to a pool of other similarly underpowered computers to perform the complex calculations required to mine a block in a distributed fashion. Then when a block is mined, the pool owner acquires the 12.5 btc reward and distributes it to all the pool participants based on how much computation power/time each participant contributed to the overall pool, keeping a small bit for themselves for the overhead of managing the pool. Obviously you have to trust your pool operator. Also at this point in the BTC world, the difficulty has become so high that Joe Bloggs will never acquire any meaningful amount of BTC, even in a pool. There are specialized arrays of GPUs that can perform calculations at rates much higher than any standard PC or laptop. The same principles apply to any other bitcoin-like blockchain currency though.
    - nileshtrivedi 10y ago
      Not unlike setting up a gold mine to "create" money.
  - Taek 10y ago
    Laptops are useless for mining, yes. You'd need to spend something like $1000 on electricity for every $1 of Bitcoins earned on a laptop. Not to mention machine wear and failure. If you want to mine Bitcoins, you need a bunch of advantages. Special hardware, cheap space, low electricity cost, bulk manufacturing deals. Otherwise you probably aren't going to be breaking even, let alone profiting.
  - TD-Linux 10y ago
    Mining is not a race - in fact, the mining being progress-free is a really important part of PoW. If you have a low power setup, you have a very small chance of winning the reward, but it's proportional to your power over the total network power. There's unfortunately some things that make it a bit of a race - network latency and block verification time. That's why there's so much work spent on shrinking these (the FIBRE network, libsecp256k1)

grey-area 10y ago

This is extraordinarily well done and begs to be shared widely. Agreed, this is a wonderful demonstration of the interesting principles behind the idea of a blockchain (or a distributed merkle tree). Definitely worth playing with for anyone interested in this, and the video is a nice overview as well. As far as the moon being the limit, unfortunately we still inhabit the corrupted sublunary sphere, and blockchain technology (at least as implemented in Bitcoin) has some limitations which make it unsuitable as a currency or log of transactions between untrusted parties. On your last point, I'm not really sure people know what problems blockchain solves, because there are no problems which directly map to this solution, and there are plenty of problems it half-solves. Problems it purports to solve but fails at: Anonymity - good enough to protect criminals, not good enough to protect citizens against a state Trustless consensus - 51% attack makes this unreliable, esp. with semi-anonymous actors Trustless transactions - POW as in bitcoin makes this impractical due to energy use and delays People want centralised trust in many cases for verified identity, transaction rollback, legal constraints on transactions, so in an important sense it is solving the wrong problems (pseudo-anonymity, fungible cash, sort-of trustless consensus) while leaving important problems untouched. Still, the video and website are an excellent demonstration of the ideas behind a blockchain or Bitcoin.

colordrops 10y ago
I'm not sure what you mean in your explanation that it fails at trustless transactions. Also, you are ignoring the main driving force for the development of bitcoin, that being the removal of the middleman/governments from the transaction.
- grey-area 10y ago
  Bitcoin has failed to keep govs out of transactions between individuals because governments impose their will by force.
  - colordrops 10y ago
    If you are not trying to exchange currency, they can't really impose anything by force. You are taking about a failure of the exchange system, not bitcoin.

JohnKacz 10y ago

> It could be made better (perhaps) by clearly establishing at the begining what problem the blockchain attempts to solve. What would you say that is? Real question.

bshanks 10y ago
The purpose of the blockchain is to be a shared append-only data structure. There are a number of nodes who have copies of what is supposed to be exactly the same data (but see below). The nodes are all constantly telling each other what they believe to be the most up-to-date version of the data. The purpose of the blockchain is to support a consensus-finding algorithm by which the nodes may start out disagreeing on the contents of the most recent few blocks in the log, but eventually converge to a consensus, at least for relatively old blocks. This convergence occurs even if some of the nodes are evil or faulty or out-of-touch, provided that these bad nodes control less than 50% of the total computing power of all of the nodes.

nileshtrivedi 10y ago

It doesn't explain either how the money is created in the first place or how actual resolution happens when coming across a block which differs from others' copies. Do I need to ping all the peers?

CydeWeys 10y ago
Unfortunately it didn't explain this correctly, and this is the most important part of Bitcoin, as well as its biggest innovation. The longest chain always wins. And since valid block hashes are very hard to find, the longest chain is the one that has the most mining effort behind it. This is why mining is essential to securing the blockchain. In order to make a fake chain of any appreciable length, you would need to have >50% of the total hashing power of the blockchain. And if you have that much power, then whatever you say is the right chain is the right chain, because you can mine more blocks than anyone else and so yours is right by virtue of being longest. The video incorrectly implies that there is some sort of voting mechanism going on wherein the version of the chain with the most copies is correct, but this is incorrect, and would be horribly broken. The P2P network exists only to communicate transactions and blocks; it does not factor in to which version of a chain is considered valid (the longest one always wins). If the P2P network were used for this, then it would be trivial to take over Bitcoin using a Sybil attack, by e.g. hiring a botnet to run millions of fake nodes with your preferred version of the chain. With mining and validity determination by longest length, that doesn't even put a dent in Bitcoin, as even a million general purpose commodity computers can't get anywhere close to matching a small percentage of the overall hashing power of the miners.
- Natanael_L 10y ago
  Actually length doesn't decide, but rather total accumulated hashing power. This is because Bitcoin changes the difficulty per block over time to keep the time between blocks close to 10 minutes. This means that two chains can be equally long but have different amounts of accumulated difficulty. It even means that long blockchains can have low amounts of accumulated difficulty. But for short periods of time, less than ~2 weeks as it is for Bitcoin, the difficulty will not yet have changed and thus length = total difficulty for SHORT forks.

SkyMarshal 10y ago

>Once blockchain tech is understood by the masses, the sky (moon?) is truly the limit. Not really. Security via economic incentives is still shaky. Bitcoin community is split, and Ethereum is still working out the kinks and has a high-risk move to PoS coming up soon. The tech is not remotely mature yet, and blockchain being better understood by the masses will have zero effect on that.

_coldfire 10y ago
>Bitcoin community is split Yet not even the advent of quantum computing with todays algorithms could undo a few hours of the Bitcoin blockchain. A bit too much credence is given to people arguing on the internet rather than the raw state of things. The sheer computing power of bitcoin is a marvel of the modern world. For all its problems I would say it has a long way to go yet unless the world solves the reality of a borderless economy.
- SkyMarshal 10y ago
  True, Bitcoin's historical ledger is pretty durable. The community split is more about its future. And I'm not referring to people arguing on internet forums, but about the split between Bitcoin's core developers and its biggest miner. One day such discord may actually be a good thing, but right now it is hindering basic fixes from being implemented.