Blockchain, bitcoin, ethereum, smart contracts, piru coin.
How many people today really understand
anything about this crypto world?
Only a very few. This is why
your Uncle Monty has created a special series
of 20 or so videos to decrypt
this often completely incomprehensible world
which is full of crooks, full of extraordinary opportunities …
Finding your way around isn’t easy, even if
you work in the field, there are loads of things that,
objectively speaking are difficult to understand
and you need someone on the inside to explain them.
In this first video, we’ll dispel 5 myths
about blockchains, which we hear and read about
every day on the media all over the world,
and we’ll do so with the help of a guest who
I’ll introduce after the intro.
Giacomo Zucco is an expert on this world,
an entrepreneur, consultant, communicator, he knows
his stuff and the first topic I’d like him to talk about is:
to what degree the world of blockchain technology
really is an epoch-making change
or is it something old that has been
with us for years? First myth to dispel,
concerns the actual expression “blockchain”.
People think the term blockchain signifies something
definite, concrete, precise,
and at the same time that it’s extremely
innovative, extremely disruptive, and changes everything.
The fact is that the term
blockchain has two meanings.
The strict, precise, definite, technical meaning
used by Satoshi Nakamoto
when he created it, in his introduction
to bitcoin technology in the bitcoin protocol.
In this meaning, a blockchain is a system
enabling all bitcoin operators
to converge on a single, coherent strand
of bitcoin transactions. So it’s a relative chronology.
Obviously, this is a very specific meaning,
it concerns a system of game theory
first and foremost rather than technology. In this sense,
substantially it is disruptive, because
blockchain in this meaning enables bitcoin to exist
without a central counterpart and bitcoin,
as a protocol, can change everything.
In finance, in trade,
in society itself, if it works. So, yes, it is disruptive.
It’s innovative because it didn’t exist before 2008,
yet at the same time it is very restricted,
it is largely used to do one thing. Substantially, its purpose is
to enable bitcoin to exist, and it can only work
in association with bitcoin or the cryptocurrencies
similar to bitcoin. Then there’s the other meaning of blockchain,
the one everyone uses everywhere today,
in centres of innovation,
in start-ups. Blockchain, like anything
with a degree of replication, a certain level of distribution
of data on multiple computers, a situation that in fact already existed
in the distributed databases of the 1970s, since the inception
of internet. Or something where there is a two-key
cryptographic digital signature,
for example, with certified email,
or on secure internet connections.
We have been using dual-key encryption since the 1990s
for digital signatures. In this second meaning,
which is very widely used,
blockchain technology can be used
for various purposes, but it no longer has a precise,
specific significance, above all, it is not at all innovative.
If blockchain means replicating data on a
distributed database, we’ve had blockchains for 40 years. If it means
digital signature, we’ve had blockchains for 30 years.
The second characteristic of the blockchain you always hear about
is that it’s super-fast.
The superman of protocols. Let’s do a blockchain, Giacomo,
is it really like that? In terms of
the precise, technical meaning of the word blockchain,
the specific meaning,
blockchain is not an efficient method
for economic transactions. It does not envisage
a central component, and this has some advantages,
for example, the fact that economic transactions
can’t be censored, and therefore prohibited,
regulated and, in some cases,
spied on. For example,
say you want to make a donation to WikiLeaks,
credit cards won’t let you, but with bitcoin you can,
because no one can stop the bitcoin network,
thanks in part to blockchain technology. So there are
advantages to a technology of this type, but they do not
include speed, technical efficiency,
or cost savings.
In fact, the blockchain, relating for example to bitcoin, which is
the main production blockchain, is extremely slow,
extremely expensive, extremely inefficient.
In practice, it may seem cheaper and faster,
for example, to arrange a payment to China or
to India, you could wait weeks
for the amount to be credited, and you could pay
very high percentages. Or even arranging money transfers
from here to the Philippines, the percentages you pay are high
and so are the wait times. But not for technical reasons,
it isn’t because the technology used by Western Union
is inefficient. That technology is very efficient, very fast
and inexpensive. It’s the social and economic players
and the regulators that make these operations so expensive
and slow. Bitcoin, which, technologically speaking,
is based on blockchains, so is slow, inefficient and expensive,
even though so far it can’t be used to arrange
with the blockchain tecnology for transactions
that are very fast and very small, in practice compared with an
international payment, it seems faster and cheaper, because it
leapfrogs all these levels of regulation, of red tape,
since it can’t be stopped by anyone
and can’t be regulated by anyone, it actually goes straight
to its destination, without barriers
being put up to impede it.
The third misunderstanding about blockchains is encryption.
Is this blockchain encrypted,
is it secure or not? The third myth to dispel about
blockchain is that it’s a completely
private, encrypted, secret system. In a word, blockchain uses
encryption, blockchain underpins the cryptocurrencies,
so it’s something that encrypts data. This is the myth behind
the blockchain applications developed to protect
private data, the blockchain applications for privacy,
for the GDPR. We’ll use blockchains
to keep our private data private.
The fact is that this is
a completely superficial interpretation.
Blockchain technology, by its very nature,
is the complete opposite; in other words,
in order to work the way it works,
and it has to work to make sure that bitcoin
doesn’t have a single flaw, a single weak point,
to be able to work, the blockchain needs
all the bitcoin data to be replicated in clear-text
always, on all the network nodes.
So when you arrange a bitcoin transaction on the blockchain,
that bitcoin transaction is replicated
and seen by all the nodes, in clear-text,
even if your name and surname aren’t there,
because bitcoin doesn’t have red tape, names, surnames,
registrations, but the metadata of your transaction
is not protected, it is actually shared
in clear-text among all nodes, forever. So to have
some degree of privacy, once again we’re using
bitcoin systems without blockchains, such as Lightning Network
or others, so that we can exchange
bitcoin, temporarily without using blockchains,
because blockchains are not private,
they’re not encrypted. Blockchains use cryptography,
but in the sense that
certain cryptographic functions enable
blocks to be connected. But these functions
are absolutely not used
to hide data. In fact, they’re used to reveal
and check data. Number four, another myth:
every time I hear a pitch for a crypto start-up,
yeah, the blockchain is presented as if it were a great big
back-up system. But perhaps this isn’t entirely true.
Another myth to dispel, closely linked
to the previous one, is that blockchains can be used
as an effective means to save data, to protect
data, to store data. That is, the blockchain is
a sort of system to store documents,
or economic transactions. The fact is that blockchain technology
is useless for storing documents, transactions, information.
First, as we said before, it’s very expensive.
For the blockchain to work properly,
as a decentralised system,
its space is sacred, extremely expensive,
so there is very little space for information
and the cost of that space is very high. The fact is that
that, on a blockchain, the bitcoin network manages to support,
about ten transactions a second, which is a very low rate.
You can manage thousands, millions of transactions per second
on networks without blockchains, like Lightning Network.
But blockchains hold very little data,
putting data on blockchains is extremely inefficient,
and extremly expensive. The last myth to dispel
in this video is this distinction
bitcoin, blockchain. Does one exist without the other?
Are they married, betrothed? Giacomo, tell us.
The last myth about blockchains
which we mentioned at the beginning of our chat,
is that they can be used somehow over and beyond
bitcoin, without bitcoin.
In practice, the opposite is true.
Blockchain technology is meaningful in the strict sense
with a technical meaning,
mainly to arrange bitcoin transactions
chronologically in time, and the blockchain
works thanks to bitcoin, because without paying
miners in bitcoin, the miners couldn’t demonstrate their work.
And without a demonstration, there wouldn’t be a cost to diverge
on a faulty story of transactions. Therefore,
the blockchain works only if we have bitcoin
and only to have bitcoin. There are some exceptions,
for example, you can use blockchains in a sort of
“parasitic” way, to save, not documents,
but cryptographic traces of the existence of documents
at a certain point in time, at practically zero cost.
So blockchains can have
“notarial” functions, But in themselves, blockchains
are used for bitcoin and function thanks to bitcoin.
Indeed, not only would a blockchain without bitcoin
have very little sense in the great majority of cases,
there are actually many applications
of bitcoin without blockchain technology.
Lightning Network, or the sidechains,
or a number of trusted hardware systems.
In short, the cryptocurrency world
is exploring many technologies in order to have cryptographic assets
like bitcoin, but without the constraint of blockchains.
Or at least, with this constraint in the background
but used only as a final guarantee
and not used recurrently and constantly.
We had five myths about blockchains to dispel
before finding out more about this world.
Crypto-special, stay tuned for the next episode.
I feel like Pippo Baudo, I didn’t know how to put it,
we’ve got twenty episodes, you’ll have to keep up with them.
But even if you want to see one, then another,
we’ll try and take a logical approach.
So that by the end, you will have understood something
about this often difficult world, so that we can all start to look
a little bit like a C.
How many people today really understand
anything about this crypto world?
Only a very few. This is why
your Uncle Monty has created a special series
of 20 or so videos to decrypt
this often completely incomprehensible world
which is full of crooks, full of extraordinary opportunities …
Finding your way around isn’t easy, even if
you work in the field, there are loads of things that,
objectively speaking are difficult to understand
and you need someone on the inside to explain them.
In this first video, we’ll dispel 5 myths
about blockchains, which we hear and read about
every day on the media all over the world,
and we’ll do so with the help of a guest who
I’ll introduce after the intro.
Giacomo Zucco is an expert on this world,
an entrepreneur, consultant, communicator, he knows
his stuff and the first topic I’d like him to talk about is:
to what degree the world of blockchain technology
really is an epoch-making change
or is it something old that has been
with us for years? First myth to dispel,
concerns the actual expression “blockchain”.
People think the term blockchain signifies something
definite, concrete, precise,
and at the same time that it’s extremely
innovative, extremely disruptive, and changes everything.
The fact is that the term
blockchain has two meanings.
The strict, precise, definite, technical meaning
used by Satoshi Nakamoto
when he created it, in his introduction
to bitcoin technology in the bitcoin protocol.
In this meaning, a blockchain is a system
enabling all bitcoin operators
to converge on a single, coherent strand
of bitcoin transactions. So it’s a relative chronology.
Obviously, this is a very specific meaning,
it concerns a system of game theory
first and foremost rather than technology. In this sense,
substantially it is disruptive, because
blockchain in this meaning enables bitcoin to exist
without a central counterpart and bitcoin,
as a protocol, can change everything.
In finance, in trade,
in society itself, if it works. So, yes, it is disruptive.
It’s innovative because it didn’t exist before 2008,
yet at the same time it is very restricted,
it is largely used to do one thing. Substantially, its purpose is
to enable bitcoin to exist, and it can only work
in association with bitcoin or the cryptocurrencies
similar to bitcoin. Then there’s the other meaning of blockchain,
the one everyone uses everywhere today,
in centres of innovation,
in start-ups. Blockchain, like anything
with a degree of replication, a certain level of distribution
of data on multiple computers, a situation that in fact already existed
in the distributed databases of the 1970s, since the inception
of internet. Or something where there is a two-key
cryptographic digital signature,
for example, with certified email,
or on secure internet connections.
We have been using dual-key encryption since the 1990s
for digital signatures. In this second meaning,
which is very widely used,
blockchain technology can be used
for various purposes, but it no longer has a precise,
specific significance, above all, it is not at all innovative.
If blockchain means replicating data on a
distributed database, we’ve had blockchains for 40 years. If it means
digital signature, we’ve had blockchains for 30 years.
The second characteristic of the blockchain you always hear about
is that it’s super-fast.
The superman of protocols. Let’s do a blockchain, Giacomo,
is it really like that? In terms of
the precise, technical meaning of the word blockchain,
the specific meaning,
blockchain is not an efficient method
for economic transactions. It does not envisage
a central component, and this has some advantages,
for example, the fact that economic transactions
can’t be censored, and therefore prohibited,
regulated and, in some cases,
spied on. For example,
say you want to make a donation to WikiLeaks,
credit cards won’t let you, but with bitcoin you can,
because no one can stop the bitcoin network,
thanks in part to blockchain technology. So there are
advantages to a technology of this type, but they do not
include speed, technical efficiency,
or cost savings.
In fact, the blockchain, relating for example to bitcoin, which is
the main production blockchain, is extremely slow,
extremely expensive, extremely inefficient.
In practice, it may seem cheaper and faster,
for example, to arrange a payment to China or
to India, you could wait weeks
for the amount to be credited, and you could pay
very high percentages. Or even arranging money transfers
from here to the Philippines, the percentages you pay are high
and so are the wait times. But not for technical reasons,
it isn’t because the technology used by Western Union
is inefficient. That technology is very efficient, very fast
and inexpensive. It’s the social and economic players
and the regulators that make these operations so expensive
and slow. Bitcoin, which, technologically speaking,
is based on blockchains, so is slow, inefficient and expensive,
even though so far it can’t be used to arrange
with the blockchain tecnology for transactions
that are very fast and very small, in practice compared with an
international payment, it seems faster and cheaper, because it
leapfrogs all these levels of regulation, of red tape,
since it can’t be stopped by anyone
and can’t be regulated by anyone, it actually goes straight
to its destination, without barriers
being put up to impede it.
The third misunderstanding about blockchains is encryption.
Is this blockchain encrypted,
is it secure or not? The third myth to dispel about
blockchain is that it’s a completely
private, encrypted, secret system. In a word, blockchain uses
encryption, blockchain underpins the cryptocurrencies,
so it’s something that encrypts data. This is the myth behind
the blockchain applications developed to protect
private data, the blockchain applications for privacy,
for the GDPR. We’ll use blockchains
to keep our private data private.
The fact is that this is
a completely superficial interpretation.
Blockchain technology, by its very nature,
is the complete opposite; in other words,
in order to work the way it works,
and it has to work to make sure that bitcoin
doesn’t have a single flaw, a single weak point,
to be able to work, the blockchain needs
all the bitcoin data to be replicated in clear-text
always, on all the network nodes.
So when you arrange a bitcoin transaction on the blockchain,
that bitcoin transaction is replicated
and seen by all the nodes, in clear-text,
even if your name and surname aren’t there,
because bitcoin doesn’t have red tape, names, surnames,
registrations, but the metadata of your transaction
is not protected, it is actually shared
in clear-text among all nodes, forever. So to have
some degree of privacy, once again we’re using
bitcoin systems without blockchains, such as Lightning Network
or others, so that we can exchange
bitcoin, temporarily without using blockchains,
because blockchains are not private,
they’re not encrypted. Blockchains use cryptography,
but in the sense that
certain cryptographic functions enable
blocks to be connected. But these functions
are absolutely not used
to hide data. In fact, they’re used to reveal
and check data. Number four, another myth:
every time I hear a pitch for a crypto start-up,
yeah, the blockchain is presented as if it were a great big
back-up system. But perhaps this isn’t entirely true.
Another myth to dispel, closely linked
to the previous one, is that blockchains can be used
as an effective means to save data, to protect
data, to store data. That is, the blockchain is
a sort of system to store documents,
or economic transactions. The fact is that blockchain technology
is useless for storing documents, transactions, information.
First, as we said before, it’s very expensive.
For the blockchain to work properly,
as a decentralised system,
its space is sacred, extremely expensive,
so there is very little space for information
and the cost of that space is very high. The fact is that
that, on a blockchain, the bitcoin network manages to support,
about ten transactions a second, which is a very low rate.
You can manage thousands, millions of transactions per second
on networks without blockchains, like Lightning Network.
But blockchains hold very little data,
putting data on blockchains is extremely inefficient,
and extremly expensive. The last myth to dispel
in this video is this distinction
bitcoin, blockchain. Does one exist without the other?
Are they married, betrothed? Giacomo, tell us.
The last myth about blockchains
which we mentioned at the beginning of our chat,
is that they can be used somehow over and beyond
bitcoin, without bitcoin.
In practice, the opposite is true.
Blockchain technology is meaningful in the strict sense
with a technical meaning,
mainly to arrange bitcoin transactions
chronologically in time, and the blockchain
works thanks to bitcoin, because without paying
miners in bitcoin, the miners couldn’t demonstrate their work.
And without a demonstration, there wouldn’t be a cost to diverge
on a faulty story of transactions. Therefore,
the blockchain works only if we have bitcoin
and only to have bitcoin. There are some exceptions,
for example, you can use blockchains in a sort of
“parasitic” way, to save, not documents,
but cryptographic traces of the existence of documents
at a certain point in time, at practically zero cost.
So blockchains can have
“notarial” functions, But in themselves, blockchains
are used for bitcoin and function thanks to bitcoin.
Indeed, not only would a blockchain without bitcoin
have very little sense in the great majority of cases,
there are actually many applications
of bitcoin without blockchain technology.
Lightning Network, or the sidechains,
or a number of trusted hardware systems.
In short, the cryptocurrency world
is exploring many technologies in order to have cryptographic assets
like bitcoin, but without the constraint of blockchains.
Or at least, with this constraint in the background
but used only as a final guarantee
and not used recurrently and constantly.
We had five myths about blockchains to dispel
before finding out more about this world.
Crypto-special, stay tuned for the next episode.
I feel like Pippo Baudo, I didn’t know how to put it,
we’ve got twenty episodes, you’ll have to keep up with them.
But even if you want to see one, then another,
we’ll try and take a logical approach.
So that by the end, you will have understood something
about this often difficult world, so that we can all start to look
a little bit like a C.
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