There is currently a coin that is worth hundreds of dollars, but its not from Made of gold, or platinum, or any precious metal In fact, its not the kind of coin you can hold in your hand or in a piggy bank It is a digital currency, which entails it only exists in electronic form I’m talking about Bitcoin Bitcoin doesn’t work like common silvers It does not depend on the country or government it is therefore does not have a centralized publishing section Or regulatory bureau Mostly, this means that no making can decide to issue more bitcoins or means The amount to be issued, it is also impossible to track the flow of bitcoin or analyse impostor So, how does Bitcoin, as an electronic money, operate and establish its own value? Simply articulated, Bitcoin needs a large group of beings on the Internet and Cryptography In fact, Bitcoin is sometimes described as the worlds first cryptocurrency Here is how it uses Bitcoin is a perfectly digital money. You can exchange Bitcoin between computers Through the peer-to-peer network around the world Most peer-to-peer networks are used to share documents, like permit beings Download “super legal” music or movies If Bitcoin is a digital currency, what can prevent you from imitation a cluster of phony coppers Then become super rich? To be honest, this is no longer like an MP3 music or video file Bitcoin and a piece of data that can be copied Bitcoin actually exists in a huge ledger dispensed all over the world called the blockchain.The reason is We will talk about this in a minute The blockchain will record the information of every bitcoin transaction that has occurred.

As of the end of 2016, the terminated ledger has approximately 107 GB of data So when you transport someone some bitcoins “youre not” causing them some datum On the contrary, you actually wrote a record in that large-scale ledger-similar to: “Michael Hank sent 5 bitcoins” Now maybe you are thinking, “But wait You just said that Bitcoin does not have a unified administration in charge of this information! ” But even though the blockchain is a centralized record, there is no so-called official unit Update the ledger and move everyones coin like a bank-this is the so-called decentralization In detail, anyone can hinder a facsimile of all real-time newly added transaction data on the blockchain And there are countless beings doing this Bitcoin labors precisely because many people have been checking the information on the ledger to ensure All transactions are correct Its like, imagine you are playing a poker game with some good friends, but no one Bring the microchips and keep the cash at home

Everyone has no money, so you guys made out your diaries and started recording Who gambling how much, who winnings, who loses You cant fully trust each other, so everyone keeps their accountings separately At the end of each round, everyone took out their own works to liken In this action, if someone saves a wrong note or “ve tried to” deceive and privately dominates fund that does not belong to him This divergence will be caught After a few more rounds, you may have written a whole page Mobile information of monies You can think of each page as a “block” of the transaction list Eventually, your diary will contain page by sheet of event information-that is, a ceaseless bond Block So called: Blockchain Now, if thousands of people view copies of Bitcoins blockchain, how Keep all records in sync? Recall our poker resemblance: try to imagine the entire Bitcoin peer-to-peer network as Millions of people sit down at a very huge poker table Some beings merely exchange coin, but numerous volunteers merely keep the books

So when you want to send or receive money, you must publish this information on the ledger for everyone to know So everyone can update their chronicles instant Therefore, in every transaction, you must announce several things to the Bitcoin network: Your history amount, the report figure you want to receive bitcoins, and How many bitcoins to send. Then all the people who keep the blockchain will contribute a transaction you to be presented to it To the current block There are a bunch of people who continue to pay attention to the transaction seems to be a pretty good security measure However, if you need to disclose your account number when mailing bitcoins This may become a security issue. This is a big problem in common coin operations-think about criminals always trying Steal credit card information of others And back to Bitcoin , no central bank is always checking suspicious fraudulent transactions Like you suddenly spent your life savings on one Beef jerky So how can I avoid Hank from pretending to use my refer All my bitcoins are transferred out?

This is thanks to cryptography for protecting Bitcoin very well, which is why it is considered a cryptocurrency Specifically, Bitcoin can guarantee security because there are so-called keys, which are basically a piece of information Messages that can be used for mathematical verification such as “Hey, this It’s really a meaning from me! ” When you create a Bitcoin account, you may have heard the so-called A “wallet”, the detail is connected to two unique keys: a private key A public key In this case, the private key can add some data and observe it.This action is also announced Sign so that others can verify these signatures last-minute Therefore, if when I want to send a message to the Internet, for example: “Michael Send 3 Bitcoin to Olivia”. At this time, I signed this message with my private key. Simply I can decrypt it, and no one You can emulate this message.

Then, I send this signed message to the Bitcoin network, everyone can use my public key Make sure my signature is transmitted. In this road, everyone who is following the Bitcoin deal knowledge will know the transaction that I want to announce Join their replica of the blockchain. In other statements, if the public key can be successfully decrypted, this proves that the message was personally signed by me with the private key’ S message is indeed a meaning posted by myself Different from a handwritten signature or a technique of identification such as a credit card number Cannot be forged by scammers The “who” part of each transaction is obviously the most important part to ensure the right Both parties can exchange bitcoins. But the question of “when” is also important. If your bank account has a thousand dollars and try to buy Two parts worth 1,000 yuan each.

The bank will accept the first busines and reject it The second deal. If the bank fails to do this, you can spend the same money repeatedly. This…

sounds great, but it’s also terrible. Such a business organisation cannot function normally because no one will get the money So if I only have money to pay either Olivia or Hank, but I try to pay both of them at the same time The Bitcoin system has a check mechanism. Either the Bitcoin network or your billfold will automatically check your previous transactions to make sure You have enough Bitcoin to pay But sometimes another time problem may occur Because there are people all over the world who continue two copies of the blockchain, and the network The delay time means that everyone will not ever receive the posted transaction information in the same order So now you have a bunch of people and a knot of various types of block information to choose But “theyre not” undoubtedly wrong Ok bitcoin How do you solve this problem? The refute is really to “solve the problem” Math problem Every blockchain maintainer needs to solve the problem when computing busines information to the blockchain A special numerical question created by hash function

The hash function is an algorithm, input a print of data of any size and then it can become a copy Fixed size data output For example, suppose you enter this string And the hash function we provide an example now says to add all the numbers together So in such cases, the production are likely to be 10 The strength of the hash function in cryptography is that when you demonstrate When inputting, it can easily calculate the result. But it is quite difficult to push back the original input data from the result Even in the super simple example, there are so many counts that add up to 10 The only way to find out the original input is to keep guessing at’ 1-2-3-4′ until you Guess the title designated of numbers.

Now, the hash function used by Bitcoin is the so-called SHA2 56, which stands for security hash The algorithm has a length of 256 parts. It was initially developed by the National Security Agency The computer that solves the SHA2 56 office trouble is designed to average You can predict a answer in about ten minutes This means they have to guess the right answer after millions of suppositions. Whoever solves the hash function problem firstly can add blocks to the blockchain Then generate a brand-new hash math trouble that needs to be solved If several people compile a solution at roughly the same time, the network will select one Continue to increase the number of blocks and become the longest chain is the most trustworthy blockchain And the deal information that exists in those other branch blockchains must be returned to the transaction pool Waiting to be added to the subsequent blockchain Many voluntaries expend thousands of dollars on special computers to solve these SHA2 56 questions And need to pay very high electricity statutes to keep these machines operating But what is this for? What utters them willing to come out to maintain the blockchain? Is it merely a community service?

In fact, the Bitcoin system has a built-in reward mechanism Nowadays, every time a new block is added to the blockchain after the solution is calculated, it expenditure 12 and a half New Bitcoin will be created out of thin air and awarded to the Bitcoin account that calculates the answer In fact, you may once are aware of the alias of these Bitcoin ledger maintainers: miners This is because people who have been working hard to keep the blockchain incessantly modernizing blocks are like waving their selects against the hash function. A miner who hopes to get rich by digging a large gold mine When the Bitcoin system was first established in 2009, they had no real value Dozens of bitcoins were only about the same as a heap of pennies at the time Now on November 10, 2016, 1 Bitcoin can be exchanged for 708 U.S. dollars

So, 12 and a half bitcoins is in charge of $ 8,850 This is a very big change Every Bitcoin is created to reward miners In addition to the high-pitched wages that miners get for each new block lent, miners are also welcome to Receive a small transaction fee when locating each transaction in the block Its too worth mentioning that when every 210,000 blocks are generated, the number of coins made each time a brand-new block is rendered Will be reduced to half So at first the reward of 50 bitcoins fallen to 25, and then 12 and a half dollars. After a few years, there will be a reward of 6 yuan left, and continues to decline Eventually, there will be more and more transactions in the block so that miners can still Get paid from transaction rewards Harmonizing to current prognosis, the last Bitcoin-may be the 2.

1 millionth Coins-and will be produced in 2140 Bitcoin’s reduced number blueprint is actually a forge Gold dug out of the soil And the idea is that limiting the output of Bitcoin will increase its value over occasion and so Is investing in Bitcoin a good feeling? This…is not a question that SciShow will discuss Bitcoin is still not stable enough and somewhat experimental Many parties like it but countless beings think it is doomed to fail We think this is an interesting idea.

It compiles us inquisitive about the possibility of cryptography in the future. What kind of changes it brings to us Thank you for watching this episode of SciShow. This occurrence is sponsored by Patreon If you want to help support this display, go to patreon.com/ scishow And dont forget to subscribe to youtube.com/ scishow.

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