[Music]
everybody US dollar bills emblazoned on
each one of them is the motto In God We
Trust but there’s nothing biblical that
sets the value of the US dollar US
Dollars were also known as Federal
Reserve notes that’s what it says across
the top of them the Federal Reserve
System was created by Alexander Hamilton
currently starting a hit musical there
are twelve members of the Federal Open
Market Committee the FOMC and they set
the monetary supply in America and
perhaps it would be appropriate to say
in FOMC we trust but it doesn’t have the
same ring to it we used to tell the
passage of time by looking at the
movement of the Sun and the stars and
now we use atomic clocks I would like
you to ponder with me the future of
having an alternative currency that
instead of being regulated by 12 men and
women or any country or any institution
one regulated by the laws of math
science and of algorithms the currency
is called Bitcoin and Bitcoin all the
transactions that are done using it are
recorded in this global open distributed
database often called a ledger known as
blockchain about ten years ago a bunch
of hackers were trying to
figure out how to send cash over the
internet how to create a digital form of
cash now we could already do payments at
that time we had PayPal and pay via
credit card but cash is something
different than payments if I have a
briefcase with a million dollars in cash
in it and I give it to you you have a
million dollars if I write a check for a
million dollars and I give it to you you
don’t have a million dollars there’s a
third party in between the bank they can
think that that might be fraudulent I
could stop the check all sorts of things
can happen so a first of all names –
Russian Nakamoto took all the theories
that were out of time and wrote a paper
about what he termed to be Bitcoin and
the blockchain structure that underlie
debt and fundamental to it was that it’s
peer-to-peer it allows one person to
transact directly with the other person
without any intermediary in between it
was encrypted so that the value of
Bitcoin that you have on that blockchain
is yours no one else can spend it
because you’re the only one who has the
digital key to unlock the value and it
has the same anonymity as cash I’m gonna
tell you how the coin and blockchain
actually work is I’m a software engineer
so here’s the start of a lesson in
cryptography we’re gonna start talking
about digital fingerprints this is the
first line of the Gettysburg Address
I’ve just changed that line digital
fingerprints helped to know when the
underlying content has changed here’s
the two versions side by side the top
versions unchanged wild version has been
changed if I generate a digital
fingerprint it looks something like this
the second version of the digital
fingerprint looks like that they they
are completely different if you have the
content that is perturbed in any way
modified even the small
what’s the Mount the fingerprint changes
completely what I did was added a space
before the last period so I have a
friend his name is Parker he’s a
musician and I can buy his CDs if I give
him $20 he will give me a CD of his if
one Bitcoin were worth $2,000 for easy
math I could record in this ledger that
I gave him point zero one Bitcoin which
is 20 bucks and he call that a fair deal
I get a CD we can then remove our names
from it by having numbers and letters
that signify us but are different and
that provides anonymity because
transactions are all grouped together
amongst people across the world the
transactions form blocks ten minutes
worth of transactions across the world
go into one block with one new block
being created each every 10 minutes or
so the block has a number say 1 2 3 4 5
it links back to the prior block say 1 2
3 4 4 you have the grouping of
transactions here you can see the CD
that I bought a pepperoni pizza in the
car they’re kept safe by having a
digital fingerprint what the technology
that I just shown you so that no one can
modify it without the fingerprint being
altered what the Bitcoin protocol did
that was very unique and very beautiful
was and sort of challenged in there that
it isn’t the the raw fingerprint of the
underlying data but that the fingerprint
must meet a certain standard it must
have a certain number of zeros in the
beginning now that’s hard because it
wouldn’t naturally have that that those
zeros in front in order to make it have
those zeros
someone has to guess a secret code
that when added to the end of the
transaction list the end of the block of
text makes that fingerprint have a
certain number of zeros it’s really hard
to guess let me W guessing and checking
there’s no algorithm to find it it
requires just lots and lots of guessing
to to the 32nd power M 711 billion
really really large number there are
millions of nodes millions of computers
that are doing billions and trillions of
calculations and checks guesses and
checks per second trying to find this it
also makes it impossible for a hacker to
change a value and because they wouldn’t
have the computational power to
regenerate the code needed to make all
the rest of the math work now why are
all these other nodes working so hard to
calculate this code because there’s a
bounty associated with it just like the
Federal Reserve can create new money the
Bitcoin protocol issues new Bitcoin from
from Fiat for finding that secret code
currently the reward is 12 and a half
Bitcoin the protocol is beautiful in the
way that it is self-regulating the
faster computational power gets the
easier it is to solve this problem and
so the problem gets harder and the
reward gets cut in half after a certain
amount of time the way that the problem
gets harder is the number of zeros
increase I showed you in Lana slide five
zeros you know go to six then go to
seven it’ll keep on having you know
people getting harder until the limit is
reached of 21 billion Bitcoin the price
of Bitcoin has been rising dramatically
people asked me what the value of
Bitcoin is how it can be assessed given
that there is no nothing backing in one
of the best explanations for that that I
have found is by looking at the number
of users of Bitcoin there are were ten
million users in November 2016 18
million user
November of 2017 the more users you have
the more interconnection you you have
and the more valuable and network gets
it’s very similar to a social network
and their interconnections and the value
posed by that there is a law called
Metcalfe’s law that states the value of
a network is equal to the square of the
number of its users and that helps
explain the exponential growth that you
are currently seeing in the price of
Bitcoin underlying Bitcoin is that
global distributed secure database
called blockchain that has potentially
more value because it applies to more
things than just Bitcoin on top of it it
has spawned other forms of what are
known as crypto currencies aetherium and
ripple being two of them there are many
more all of them are peer-to-peer some
of them have features such as smart
contracts that say that criteria need to
be met before dispersing funds the
blockchain can also host more than just
dollar values it can really say that a
person owns any kind of piece of data
and it can show the transfer of that
from one person to the next you can
think of things like property Lots and
who owns a house and title companies and
notarizing documents shareholder
certificates with that certificate
numbers and those go from person to
person
there are huge applications that this
global database pose the future and I
invite you to think of all the
possibilities that can be created by
having a system based on the laws of
science math and algorithms thank you
you
everybody US dollar bills emblazoned on
each one of them is the motto In God We
Trust but there’s nothing biblical that
sets the value of the US dollar US
Dollars were also known as Federal
Reserve notes that’s what it says across
the top of them the Federal Reserve
System was created by Alexander Hamilton
currently starting a hit musical there
are twelve members of the Federal Open
Market Committee the FOMC and they set
the monetary supply in America and
perhaps it would be appropriate to say
in FOMC we trust but it doesn’t have the
same ring to it we used to tell the
passage of time by looking at the
movement of the Sun and the stars and
now we use atomic clocks I would like
you to ponder with me the future of
having an alternative currency that
instead of being regulated by 12 men and
women or any country or any institution
one regulated by the laws of math
science and of algorithms the currency
is called Bitcoin and Bitcoin all the
transactions that are done using it are
recorded in this global open distributed
database often called a ledger known as
blockchain about ten years ago a bunch
of hackers were trying to
figure out how to send cash over the
internet how to create a digital form of
cash now we could already do payments at
that time we had PayPal and pay via
credit card but cash is something
different than payments if I have a
briefcase with a million dollars in cash
in it and I give it to you you have a
million dollars if I write a check for a
million dollars and I give it to you you
don’t have a million dollars there’s a
third party in between the bank they can
think that that might be fraudulent I
could stop the check all sorts of things
can happen so a first of all names –
Russian Nakamoto took all the theories
that were out of time and wrote a paper
about what he termed to be Bitcoin and
the blockchain structure that underlie
debt and fundamental to it was that it’s
peer-to-peer it allows one person to
transact directly with the other person
without any intermediary in between it
was encrypted so that the value of
Bitcoin that you have on that blockchain
is yours no one else can spend it
because you’re the only one who has the
digital key to unlock the value and it
has the same anonymity as cash I’m gonna
tell you how the coin and blockchain
actually work is I’m a software engineer
so here’s the start of a lesson in
cryptography we’re gonna start talking
about digital fingerprints this is the
first line of the Gettysburg Address
I’ve just changed that line digital
fingerprints helped to know when the
underlying content has changed here’s
the two versions side by side the top
versions unchanged wild version has been
changed if I generate a digital
fingerprint it looks something like this
the second version of the digital
fingerprint looks like that they they
are completely different if you have the
content that is perturbed in any way
modified even the small
what’s the Mount the fingerprint changes
completely what I did was added a space
before the last period so I have a
friend his name is Parker he’s a
musician and I can buy his CDs if I give
him $20 he will give me a CD of his if
one Bitcoin were worth $2,000 for easy
math I could record in this ledger that
I gave him point zero one Bitcoin which
is 20 bucks and he call that a fair deal
I get a CD we can then remove our names
from it by having numbers and letters
that signify us but are different and
that provides anonymity because
transactions are all grouped together
amongst people across the world the
transactions form blocks ten minutes
worth of transactions across the world
go into one block with one new block
being created each every 10 minutes or
so the block has a number say 1 2 3 4 5
it links back to the prior block say 1 2
3 4 4 you have the grouping of
transactions here you can see the CD
that I bought a pepperoni pizza in the
car they’re kept safe by having a
digital fingerprint what the technology
that I just shown you so that no one can
modify it without the fingerprint being
altered what the Bitcoin protocol did
that was very unique and very beautiful
was and sort of challenged in there that
it isn’t the the raw fingerprint of the
underlying data but that the fingerprint
must meet a certain standard it must
have a certain number of zeros in the
beginning now that’s hard because it
wouldn’t naturally have that that those
zeros in front in order to make it have
those zeros
someone has to guess a secret code
that when added to the end of the
transaction list the end of the block of
text makes that fingerprint have a
certain number of zeros it’s really hard
to guess let me W guessing and checking
there’s no algorithm to find it it
requires just lots and lots of guessing
to to the 32nd power M 711 billion
really really large number there are
millions of nodes millions of computers
that are doing billions and trillions of
calculations and checks guesses and
checks per second trying to find this it
also makes it impossible for a hacker to
change a value and because they wouldn’t
have the computational power to
regenerate the code needed to make all
the rest of the math work now why are
all these other nodes working so hard to
calculate this code because there’s a
bounty associated with it just like the
Federal Reserve can create new money the
Bitcoin protocol issues new Bitcoin from
from Fiat for finding that secret code
currently the reward is 12 and a half
Bitcoin the protocol is beautiful in the
way that it is self-regulating the
faster computational power gets the
easier it is to solve this problem and
so the problem gets harder and the
reward gets cut in half after a certain
amount of time the way that the problem
gets harder is the number of zeros
increase I showed you in Lana slide five
zeros you know go to six then go to
seven it’ll keep on having you know
people getting harder until the limit is
reached of 21 billion Bitcoin the price
of Bitcoin has been rising dramatically
people asked me what the value of
Bitcoin is how it can be assessed given
that there is no nothing backing in one
of the best explanations for that that I
have found is by looking at the number
of users of Bitcoin there are were ten
million users in November 2016 18
million user
November of 2017 the more users you have
the more interconnection you you have
and the more valuable and network gets
it’s very similar to a social network
and their interconnections and the value
posed by that there is a law called
Metcalfe’s law that states the value of
a network is equal to the square of the
number of its users and that helps
explain the exponential growth that you
are currently seeing in the price of
Bitcoin underlying Bitcoin is that
global distributed secure database
called blockchain that has potentially
more value because it applies to more
things than just Bitcoin on top of it it
has spawned other forms of what are
known as crypto currencies aetherium and
ripple being two of them there are many
more all of them are peer-to-peer some
of them have features such as smart
contracts that say that criteria need to
be met before dispersing funds the
blockchain can also host more than just
dollar values it can really say that a
person owns any kind of piece of data
and it can show the transfer of that
from one person to the next you can
think of things like property Lots and
who owns a house and title companies and
notarizing documents shareholder
certificates with that certificate
numbers and those go from person to
person
there are huge applications that this
global database pose the future and I
invite you to think of all the
possibilities that can be created by
having a system based on the laws of
science math and algorithms thank you
you
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