I don't need those. When people say I'm not so interested in bitcoin,
I'm more interested in its underlying technology, the blockchain, what they're basically saying
is that they don't understand blockchain. But not only have they misunderstood blockchain,
they have also failed to understand what the underlying technologies of Bitcoin are. So
the narrative blockchain, not Bitcoin, is backwards. Bitcoin is what matters,
not blockchain. What is blockchain, how does it work? And how does
it serve bitcoin? The short backstory is that Satosha Nakamoto invented blockchain in two
thousand and eight when she or they created bitcoin. In one sentence, this
is what blockchain is. Blockchain is a tamper proof data structure used to store
information in a decentralized manner. I'll briefly go over a few things here.
Listen, The information stored in the blocks in the Bitcoin blockchain is bitcoin transactions.
In other words, bitcoin is a ledger. Each new block is just
like a new page with new entries new transactions in a ledger. For example,
Alice sent one bitcoin to Bob. Bob sent zero point five bitcoins to
Charlie. Charlie sent zero point two bitcoins to Alice. About one thousand,
eight hundred of these transactions or ledger entries fit in a standard one megabyte bitcoin
block, and about four thousand, five hundred if they are set with transactions.
Every ten minutes a new block with new transactions a new page with ledger
entries is added to the bitcoin blockchain. Easy enough, the blocks contain transactions.
Moving on. The second thing to note here is that bitcoin uses blockchain
to achieve decentralization. When we talk about decentralization we mean two things, and
I'll exemplify using bitcoin here. First, Bitcoin is politically decentralized, meaning that
there is no one who controls the Bitcoin network. There's no central authority.
This is crucial. Second, Bitcoin is architecturally decentralized, meaning that the software
isn't run from a central server somewhere like PayPal or Facebook. Instead, the
Bitcoin software is run from computers all over the world in a peer to peer
network. The users run the network and they are geographically distributed all over the
world. So how does blockchain work. Imagine that Alice sends Bob a file
over the internet. Bob will receive a copy of that file and not the
original. This is how we wanted to work with most digital files when we
send them over the internet, but not money. If Alice sends Bob money
over the Internet and he gets a copy of her money, and she still
keeps the original money, that she can spend that same money again, that's
less than ideal. This is the so called double spend problem that Bitcoin solves
in a very unique way. And in order to solve the double spend problem,
we need to create a digital scarcity. This is what Bitcoin has achieved
and this is truly unique. Traditionally, we have solved the double spend problem
by using a bank as an intermediary for the exchange. If Alice wants to
send money to Bob, the bank debits Alice's account and credits Bob's account,
and they trust the bank to make the exchange for them. Bitcoin uses a
different approach. Bitcoin solves the double spend problem without having a bank in the
middle. Instead, Bitcoin is appear to peer network where people send money directly
to each other. Here's how. Since there's no bank in the middle or
any other central authority to keep track of the transactions with a central ledger,
everyone in the bitcoin network has a copy of the blockchain. When Alice sends
money to Bob. The transaction is broadcasted to the network so that everyone hears
about it and can update their copy of the ledger. So instead of having
a bank to keep track of the transactions, everyone keeps track of everyone transactions.
Okay, so now you know what blockchain is and how it works and
how bitcoin makes use of it. And here's the second part. All coins
don't need blockchain. Blockchain has become this magical busword, which is to say,
it has become a meaningless word that people throw money at, much like
a dot com website in the nineties. Today we know that having a website
isn't what's going to make a company successful. In the nineties, we didn't
know that. We thought that having a dot com address or investing in a
company that had a dot Com address was the key to becoming a millionaire.
Today it's the same with blockchain, only worse a lot worse. Actually,
thinking that blockchain will make you rich and solve all your problems is worse than
having a website and thinking it will make you rich and solve all your problems,
Because having a website is actually a good tool for your business. Having
a blockchain is not. Blockchain is the world's most inefficient and expensive type of
data storage, but the blockchain hype has attracted a lot of scam artists that
promote their own centralized good for nothing in shit coins. A company using blockchain
for their product or service defies the very reason of using blockchain, which is
to achieve decentralization to replace intermediaries and centralized authorities. A project that has a
founder that can influence or control the project in any way is politically centralized.
Listen, it doesn't matter if the product or service they provide is somewhat architecturally
decentralized. If the project is politically centralized, then their product is also centralized.
A company using blockchain is a contradiction. It's nonsensical. Bitcoin, on
the other hand, is truly decentralized and requires blockchain to be decentralized. So,
finally, and this is my conclusion, using blockchain comes with huge tradeoffs.
Blockchain is the world's most inefficient and expensive form of data storage, but
these tradeoffs are worth making if the aim is to decentralize money. Decentralized money
as an alternative to centralized banking is a huge deal. Bitcoin's value proposition comes
from it being decentralized, open and neutral, and censorship persistence. Hard money,
no altcoin. Not one can make that claim for their currency or service.
Bitcoin is the answer, not blockchain, and Bitcoin's properties obviously aren't solely
thanks to blockchain. Just because someone creates their own blockchain does not mean they'll
be able to replicate Bitcoin's properties or create any other valuable properties for that matter.
In fact, they won't if they use blockchain. Blockchain is Bitcoin specific.
Blockchain has no purpose outside of Bitcoin other than to make the founders of
shitcoins very rich. Today, there's nothing to suggest that blockchain even can be
applied in any other context that than decentralizing digital currency, or that any other
network than Bitcoin will ever need it. But that's really up to future innovation
and the market to decide. If you enjoy what you're learning on this channel,
please like and subscribe and join me on Facebook at Ione Appleberg explains Bitcoin.
There's also a podcast. You'll find it where you find podcasts, and
you'll also find me on Twitter at Ione Appleberg. That's it for today,
guys. I'm happy if you share the contents and I'll talk to you soon