1 00:00:00,040 --> 00:00:03,360 Speaker 1: The coin Bureau Podcast is a production of I Heart Radio. 2 00:00:03,840 --> 00:00:06,440 Speaker 1: You could do it just using the CPU, the central 3 00:00:06,480 --> 00:00:08,760 Speaker 1: processing unit of your computer, so you could just do 4 00:00:08,800 --> 00:00:11,960 Speaker 1: it on the laptop. But gradually, as more people began 5 00:00:12,000 --> 00:00:14,720 Speaker 1: to hear of Bitcoiner's word got out, more miners joined 6 00:00:14,760 --> 00:00:28,639 Speaker 1: the network, and so the difficulty began to increase. And 7 00:00:28,720 --> 00:00:32,840 Speaker 1: we're back to do episode two, Part two of our 8 00:00:33,040 --> 00:00:36,760 Speaker 1: blockchain special. Yes, my name is guy, my name is 9 00:00:36,880 --> 00:00:40,239 Speaker 1: mad Mike Mooch, and this is the coin Bureau Podcast. 10 00:00:40,520 --> 00:00:45,000 Speaker 1: So let's start off talking about nodes and minors, because 11 00:00:45,040 --> 00:00:47,120 Speaker 1: these were both terms that came up quite a lot 12 00:00:47,200 --> 00:00:50,520 Speaker 1: yesterday and we didn't dive too deeply into what they do, 13 00:00:51,320 --> 00:00:53,680 Speaker 1: so now is the time to do that. So first 14 00:00:53,760 --> 00:00:57,000 Speaker 1: let's draw some distinction. So let's let's talk about nodes. 15 00:00:57,080 --> 00:01:01,120 Speaker 1: First of all. So nodes are and as you correctly, 16 00:01:01,160 --> 00:01:05,400 Speaker 1: as you correctly said, Mikey, nodes are computers participating on 17 00:01:05,640 --> 00:01:10,840 Speaker 1: the blockchain network. So nodes do three things. Okay, they 18 00:01:10,959 --> 00:01:16,880 Speaker 1: store a record of all transactions made, store, they validate transactions, validate, 19 00:01:17,440 --> 00:01:22,080 Speaker 1: and they enforce the rules of the network. They enforced 20 00:01:22,120 --> 00:01:28,119 Speaker 1: that ship exactly exactly. Um, so anyone can run a node. 21 00:01:28,280 --> 00:01:31,400 Speaker 1: It isn't a particularly expensive process. You do need a 22 00:01:31,440 --> 00:01:33,720 Speaker 1: little bit of hardware to do it. You can do 23 00:01:33,760 --> 00:01:35,640 Speaker 1: it with a raspberry pie. Have you heard of a 24 00:01:35,760 --> 00:01:48,800 Speaker 1: raspberry pie? Um? No, I had such hope you got 25 00:01:48,840 --> 00:01:51,600 Speaker 1: me there, You've got me good? Okay. Yeah, a raspberry 26 00:01:51,640 --> 00:01:54,400 Speaker 1: pie is basically a very small and very basic computer. 27 00:01:55,720 --> 00:01:58,080 Speaker 1: And yeah, you can. You can use a raspberry pie 28 00:01:58,080 --> 00:02:00,800 Speaker 1: to run that's p I by the way, obviously you 29 00:02:00,800 --> 00:02:03,040 Speaker 1: can use a raspberry pie to run the bitcoin software 30 00:02:03,080 --> 00:02:05,040 Speaker 1: on and you just need to keep it running all 31 00:02:05,040 --> 00:02:09,600 Speaker 1: the time. And apparently that uses in in electricity terms, 32 00:02:09,639 --> 00:02:13,640 Speaker 1: about as much as charging your phone. So a raspberry 33 00:02:13,680 --> 00:02:15,840 Speaker 1: Pie is not particularly expensive. I think you can get 34 00:02:15,880 --> 00:02:20,959 Speaker 1: one for maybe two hundred dollars maybe less. So, yeah, 35 00:02:21,000 --> 00:02:23,160 Speaker 1: in order to in order to run a node, it's 36 00:02:23,240 --> 00:02:25,560 Speaker 1: not you don't need to expend you don't need to 37 00:02:25,560 --> 00:02:27,359 Speaker 1: spend a lot of money on hardware, and you don't 38 00:02:27,400 --> 00:02:30,919 Speaker 1: need you don't have a lot of running costs. So 39 00:02:31,040 --> 00:02:33,800 Speaker 1: that's really important because you want as much as many 40 00:02:33,840 --> 00:02:36,760 Speaker 1: nodes on the network as possible. And this is something 41 00:02:36,760 --> 00:02:40,600 Speaker 1: we'll we'll talk about more in detail later on. So 42 00:02:40,840 --> 00:02:44,200 Speaker 1: when a transaction is made, when someone sends BTC that 43 00:02:44,320 --> 00:02:47,160 Speaker 1: the native coin of the Bitcoin network, to someone else. 44 00:02:47,240 --> 00:02:50,079 Speaker 1: It's broadcast out to all the nodes on the network. 45 00:02:51,000 --> 00:02:54,280 Speaker 1: Each node validates the transaction as it receives it, i e. 46 00:02:54,760 --> 00:02:58,120 Speaker 1: It checks that the sender actually has the BTC that 47 00:02:58,120 --> 00:03:01,640 Speaker 1: they're trying to send. Because the nodes are able to 48 00:03:01,720 --> 00:03:04,800 Speaker 1: store all this information, they can easily check it. They 49 00:03:04,800 --> 00:03:06,919 Speaker 1: can easily see so if you were trying if you're 50 00:03:07,040 --> 00:03:11,120 Speaker 1: trying trying to send me a hundred bitcoin, so then 51 00:03:11,240 --> 00:03:14,880 Speaker 1: the nodes would be able to refer. We would be 52 00:03:14,919 --> 00:03:16,919 Speaker 1: able to see pretty quickly that you didn't have a 53 00:03:17,000 --> 00:03:23,799 Speaker 1: hundred bitcoin to send me, okay. Nodes are able to 54 00:03:23,880 --> 00:03:26,280 Speaker 1: do this because they store a copy of the Bitcoin 55 00:03:26,320 --> 00:03:28,680 Speaker 1: blockchain and they can use it for reference. So any 56 00:03:28,720 --> 00:03:32,120 Speaker 1: fraudulent transactions are spotted and they're rejected by the network, 57 00:03:32,160 --> 00:03:38,279 Speaker 1: the nodes say no thanks exactly. So once a transaction 58 00:03:38,440 --> 00:03:41,200 Speaker 1: has been validated, it's it goes into a state, and 59 00:03:41,520 --> 00:03:44,000 Speaker 1: it goes into a pending state, and it needs to 60 00:03:44,040 --> 00:03:47,400 Speaker 1: be then confirmed and added to the blockchain. Now we 61 00:03:47,440 --> 00:03:51,080 Speaker 1: talked about last time, we talked about transactions being batched 62 00:03:51,160 --> 00:03:53,880 Speaker 1: together into blocks, and these blocks then being added to 63 00:03:54,000 --> 00:03:56,040 Speaker 1: the chain. So it's time to really drill down into 64 00:03:56,120 --> 00:03:59,520 Speaker 1: how this is done. So first of all, it's important 65 00:03:59,520 --> 00:04:01,280 Speaker 1: to point out this work. This is the kind of 66 00:04:01,320 --> 00:04:03,400 Speaker 1: heavy lifting of the network, if you like. And this 67 00:04:03,480 --> 00:04:08,200 Speaker 1: work is done by the miners um and they also 68 00:04:08,320 --> 00:04:11,880 Speaker 1: so miners also do three things. They keep the blockchain secure, 69 00:04:12,920 --> 00:04:18,760 Speaker 1: they confirm transactions, and and they ensure that new bitcoins 70 00:04:18,760 --> 00:04:22,320 Speaker 1: are distributed fairly. So mining, as we shall see, is 71 00:04:22,560 --> 00:04:25,839 Speaker 1: is a much more involved, in expensive process. Running a 72 00:04:25,920 --> 00:04:29,040 Speaker 1: node is cheap and easy. Being a minor, on the 73 00:04:29,040 --> 00:04:32,960 Speaker 1: other hand, is anything but. And just before we go on, 74 00:04:32,960 --> 00:04:36,120 Speaker 1: I should also say that miners are also nodes, but 75 00:04:36,279 --> 00:04:38,640 Speaker 1: not all nodes are miners. Okay, so you can have 76 00:04:38,680 --> 00:04:41,320 Speaker 1: a Raspberry pie, which is a node, does some of 77 00:04:41,320 --> 00:04:43,400 Speaker 1: the stuff, doesn't mind. You're not going to get rich 78 00:04:43,440 --> 00:04:46,560 Speaker 1: off that, exactly, You're not gonna you're not gonna mind 79 00:04:46,600 --> 00:04:48,719 Speaker 1: any coin from that. You might get some do you 80 00:04:48,720 --> 00:04:52,320 Speaker 1: do you get a little bit of node transactions some sense? No, 81 00:04:52,839 --> 00:04:55,760 Speaker 1: it's it's it's an interesting point that the idea of 82 00:04:55,800 --> 00:04:59,239 Speaker 1: running a node actually because really the only the only 83 00:04:59,279 --> 00:05:02,160 Speaker 1: real incentive for it, I guess, is that you're contributing 84 00:05:02,320 --> 00:05:06,000 Speaker 1: to the decentralization and the security of the network by 85 00:05:06,040 --> 00:05:09,520 Speaker 1: doing so. Now you could say that the incentive in 86 00:05:09,560 --> 00:05:13,280 Speaker 1: that comes if you hold bitcoin, if you hold BTC, 87 00:05:13,880 --> 00:05:16,120 Speaker 1: then you do have an economic incentive to be a 88 00:05:16,160 --> 00:05:18,560 Speaker 1: node because doing so makes a network safer and it 89 00:05:18,600 --> 00:05:22,440 Speaker 1: will help keep your BTC, it will help it keep 90 00:05:22,440 --> 00:05:26,240 Speaker 1: its value. So that's I guess the only real economic 91 00:05:26,279 --> 00:05:29,560 Speaker 1: incentive to run a node is that you're happy to 92 00:05:30,600 --> 00:05:35,320 Speaker 1: contribute to the security and the ongoing success of the network. So, 93 00:05:35,480 --> 00:05:38,760 Speaker 1: but all all miners are also nodes. So the majority 94 00:05:38,800 --> 00:05:42,000 Speaker 1: of nodes out they're probably safety safe. Bet to say, 95 00:05:42,000 --> 00:05:47,040 Speaker 1: are miners, No, there are only miners are generally in 96 00:05:47,080 --> 00:05:51,839 Speaker 1: the minority that I just turned that punt around seamlessly, 97 00:05:51,839 --> 00:05:56,479 Speaker 1: didn't I. Yeah, there are not nearly as many. Break 98 00:05:56,520 --> 00:05:59,680 Speaker 1: it down for me, there are not nearly as many 99 00:06:00,000 --> 00:06:02,599 Speaker 1: miners as there are nodes. And we'll find out why. 100 00:06:03,040 --> 00:06:09,880 Speaker 1: Curse the moment. Okay, So, periodically validated transactions that transactions 101 00:06:09,880 --> 00:06:12,159 Speaker 1: have been validated by the nodes are batched together into 102 00:06:12,240 --> 00:06:15,000 Speaker 1: a block and here is where the miners get to work. 103 00:06:15,520 --> 00:06:19,320 Speaker 1: So what the miners need to do is agree on 104 00:06:19,400 --> 00:06:22,279 Speaker 1: the state of the network. In other words, they need 105 00:06:22,320 --> 00:06:25,880 Speaker 1: to reach consensus. Now, we talked about consensus very briefly. 106 00:06:25,960 --> 00:06:28,159 Speaker 1: Last time. We we brushed over it a bit because 107 00:06:28,200 --> 00:06:32,279 Speaker 1: this is where it starts to get quite complicated and technical. Um, 108 00:06:32,320 --> 00:06:35,480 Speaker 1: but yeah, again, you can think of consensus basically as 109 00:06:35,520 --> 00:06:39,520 Speaker 1: being agreement, and in Bitcoin's case, consensus means a majority 110 00:06:39,560 --> 00:06:43,239 Speaker 1: of miners or more agreeing on the state of the network, 111 00:06:43,440 --> 00:06:48,560 Speaker 1: agreeing that the Ledger of trans or more, yeah, agreeing 112 00:06:48,560 --> 00:06:50,880 Speaker 1: that the Ledger of transactions is up to date, and 113 00:06:50,920 --> 00:06:53,320 Speaker 1: adding the new block to the change. So how is 114 00:06:53,360 --> 00:06:56,479 Speaker 1: this done? Now? Before we before I draw down into this, 115 00:06:56,720 --> 00:06:58,880 Speaker 1: I'm just going to give you a simple analogy that 116 00:06:58,920 --> 00:07:00,760 Speaker 1: I've used before. I used seen a video that I 117 00:07:00,760 --> 00:07:04,240 Speaker 1: did on YouTube where we talked about different ways of 118 00:07:04,839 --> 00:07:07,520 Speaker 1: achieving consensus. It was called proof of work versus proof 119 00:07:07,520 --> 00:07:10,360 Speaker 1: of steak. Now we've touched on proof of work very 120 00:07:10,480 --> 00:07:12,840 Speaker 1: very briefly. Proof of state will talk about at the end. 121 00:07:13,680 --> 00:07:16,200 Speaker 1: But let's break this down a bit. So imagine a 122 00:07:16,240 --> 00:07:19,720 Speaker 1: group of friends and they have a decision to make. 123 00:07:19,840 --> 00:07:22,240 Speaker 1: Do they go for a meal or do they go 124 00:07:22,320 --> 00:07:25,480 Speaker 1: to a cinema? Now they have to find a way 125 00:07:25,520 --> 00:07:29,680 Speaker 1: to reach a decision, in other words, consensus. So The 126 00:07:29,880 --> 00:07:32,280 Speaker 1: simplest way to do this would probably just be to 127 00:07:32,320 --> 00:07:36,280 Speaker 1: have a vote and the majority would win. So if 128 00:07:36,280 --> 00:07:38,600 Speaker 1: more than half the group voted for the cinema, then 129 00:07:38,680 --> 00:07:40,880 Speaker 1: that's where they go, and vice versa for the restaurant. 130 00:07:41,840 --> 00:07:44,800 Speaker 1: But let's imagine there's one member of the group who 131 00:07:44,920 --> 00:07:48,520 Speaker 1: is absolutely determined to go to the restaurant. Maybe they 132 00:07:48,560 --> 00:07:52,720 Speaker 1: haven't just eaten a you, Maybe they just haven't eaten 133 00:07:52,760 --> 00:07:56,040 Speaker 1: an enormous taco like we, and they're starving hungry. They 134 00:07:56,040 --> 00:07:57,920 Speaker 1: want to go to their restaurant. They really don't want 135 00:07:57,920 --> 00:08:00,880 Speaker 1: to go to the cinema, but they can that the 136 00:08:00,920 --> 00:08:03,920 Speaker 1: group is leaning towards the cinema, that they can see 137 00:08:03,920 --> 00:08:05,840 Speaker 1: that they're probably going to be on the losing side 138 00:08:05,880 --> 00:08:10,080 Speaker 1: of a majority vote, So they could perhaps try and 139 00:08:10,120 --> 00:08:13,240 Speaker 1: swing the vote in their favor by recruiting some additional friends. 140 00:08:13,320 --> 00:08:15,480 Speaker 1: Perhaps there's a group of a group of their mates 141 00:08:15,520 --> 00:08:17,080 Speaker 1: just around the corner, so they go and get some 142 00:08:17,160 --> 00:08:19,679 Speaker 1: bring some friends in, say, look, vote for the restaurant 143 00:08:19,720 --> 00:08:22,320 Speaker 1: and I'll I'll pay for your drinks or something like that, 144 00:08:22,440 --> 00:08:25,120 Speaker 1: or I'll get your starter or whatever. So as the 145 00:08:25,200 --> 00:08:27,560 Speaker 1: rules of the vote were for a simple majority, they 146 00:08:27,560 --> 00:08:31,080 Speaker 1: would technically be right. Other people could object that these 147 00:08:31,080 --> 00:08:33,360 Speaker 1: new people are being brought in, but instill within the 148 00:08:33,440 --> 00:08:36,000 Speaker 1: rules of that group, as in a majority has to 149 00:08:36,080 --> 00:08:38,920 Speaker 1: vote for one thing or another, they wouldn't technically be 150 00:08:38,960 --> 00:08:42,480 Speaker 1: breaking the rules, and that in that sense, now you 151 00:08:42,559 --> 00:08:45,200 Speaker 1: could argue that the vote should just be confined to 152 00:08:45,280 --> 00:08:48,400 Speaker 1: the smaller original group um and in that case, in 153 00:08:48,440 --> 00:08:50,080 Speaker 1: the case of this group of friends, that would be 154 00:08:50,160 --> 00:08:54,600 Speaker 1: that would be perfectly acceptable. But it does, however, limit 155 00:08:54,720 --> 00:08:56,559 Speaker 1: the size of the group. And do you remember last 156 00:08:56,600 --> 00:08:59,040 Speaker 1: time we talked about how important it was for a 157 00:08:59,080 --> 00:09:02,560 Speaker 1: blockchain that there are as many nodes, there are as 158 00:09:02,600 --> 00:09:06,240 Speaker 1: many people on the network as possible to contribute to 159 00:09:06,320 --> 00:09:10,120 Speaker 1: the decentralization. You want as many participants as possible. Um 160 00:09:10,160 --> 00:09:12,880 Speaker 1: and because this makes it harder for one entity to 161 00:09:12,960 --> 00:09:19,480 Speaker 1: assume any machine exactly Exactly what you don't want though 162 00:09:19,559 --> 00:09:23,840 Speaker 1: on a blockchain is additional participants joining the network that 163 00:09:23,880 --> 00:09:27,800 Speaker 1: are under someone else's control or influenced by them. So 164 00:09:27,960 --> 00:09:29,880 Speaker 1: going back to that analogy of a group of friends, 165 00:09:29,920 --> 00:09:31,520 Speaker 1: that's the last thing you want. You don't want these 166 00:09:31,520 --> 00:09:35,480 Speaker 1: other people coming in because they they are they are 167 00:09:35,559 --> 00:09:37,760 Speaker 1: sort of being controlled, or they're under the influence of 168 00:09:37,800 --> 00:09:40,400 Speaker 1: this of this friend who has brought them in and 169 00:09:40,440 --> 00:09:43,120 Speaker 1: on a blockchain, that would be that would be exactly 170 00:09:43,120 --> 00:09:46,360 Speaker 1: the opposite of what we want. So in order for 171 00:09:46,440 --> 00:09:50,240 Speaker 1: these extra, these extra participants on network to get involved, 172 00:09:50,280 --> 00:09:52,920 Speaker 1: they must they must have some skin in the game. 173 00:09:53,720 --> 00:09:56,200 Speaker 1: Is this all making sense? So? Yeah, there has to 174 00:09:56,320 --> 00:10:00,400 Speaker 1: they have to contribute something because otherwise, is it's just 175 00:10:00,440 --> 00:10:04,679 Speaker 1: too easy to gang initiation? Yeah, yeah, you could think 176 00:10:04,679 --> 00:10:08,880 Speaker 1: of it like that. Um, so they must expend some 177 00:10:08,920 --> 00:10:13,000 Speaker 1: sort of effort in return. So the solution, that's Toshi Nakamota, 178 00:10:13,080 --> 00:10:16,280 Speaker 1: the creator of bitcoin hit upon four bitcoin, to solve 179 00:10:16,400 --> 00:10:21,080 Speaker 1: this problem. This idea of nodes of participants on the 180 00:10:21,120 --> 00:10:23,000 Speaker 1: network having to have some sort of skin in the 181 00:10:23,040 --> 00:10:26,360 Speaker 1: game was a problem that already existed. And this is 182 00:10:26,440 --> 00:10:30,320 Speaker 1: proof of work that we talked about briefly last time. Okay, 183 00:10:30,679 --> 00:10:35,000 Speaker 1: so proof of work. How does it work? This is now? 184 00:10:35,080 --> 00:10:37,679 Speaker 1: This is this is some really juicy technical stuff here. 185 00:10:37,760 --> 00:10:39,680 Speaker 1: I'm going to explain it as simply as I can. 186 00:10:40,360 --> 00:10:44,120 Speaker 1: You've got your concentration face on. I'm going to just 187 00:10:44,280 --> 00:10:47,240 Speaker 1: periodically check that you've still got your eyes open. Okay, 188 00:10:48,480 --> 00:10:51,400 Speaker 1: So and just note all the following work that we're 189 00:10:51,400 --> 00:10:56,480 Speaker 1: talking about is done by the minors. So when the 190 00:10:56,600 --> 00:10:59,640 Speaker 1: data in each block is hashed, all this transaction data 191 00:10:59,800 --> 00:11:03,040 Speaker 1: is hashed, and that is it's run through what is 192 00:11:03,080 --> 00:11:07,120 Speaker 1: called a secure hash algorithm s h A because that 193 00:11:07,280 --> 00:11:10,280 Speaker 1: encrypted basically, yeah, kind of like that, kind of like that, 194 00:11:11,280 --> 00:11:14,000 Speaker 1: and the s h A or the SHARF if you like, 195 00:11:14,280 --> 00:11:20,000 Speaker 1: spits this data shark. The SHAR spits this data out 196 00:11:20,280 --> 00:11:23,520 Speaker 1: as a long string of letters and numbers known as 197 00:11:23,640 --> 00:11:27,600 Speaker 1: a hash value or or just a hash. Still with me, okay, 198 00:11:28,320 --> 00:11:32,280 Speaker 1: Now bitcoins secure hash algorithm spits out a two and 199 00:11:32,360 --> 00:11:36,600 Speaker 1: fifty six bit number which is represented by sixty four characters, 200 00:11:37,240 --> 00:11:40,280 Speaker 1: and as a result, Bitcoin's hash algorithm is known as 201 00:11:40,480 --> 00:11:45,000 Speaker 1: shark to five six. Okay, so there's we're already getting 202 00:11:45,080 --> 00:11:48,079 Speaker 1: quite technical, but she shar to five six is the algorithm. 203 00:11:48,160 --> 00:11:52,080 Speaker 1: Is the hashing algorithm that Bitcoin uses. Now, hashing data 204 00:11:52,200 --> 00:11:55,920 Speaker 1: in this way is actually quite common. Sometimes it's used 205 00:11:55,960 --> 00:11:58,920 Speaker 1: to encrypt data, as in make it unreadable to anyone 206 00:11:58,960 --> 00:12:02,000 Speaker 1: who doesn't have the original nor input if you like um. 207 00:12:02,480 --> 00:12:05,679 Speaker 1: And it can also be used for storing data because 208 00:12:05,960 --> 00:12:09,400 Speaker 1: large quantities of data can be compressed into a hash 209 00:12:09,520 --> 00:12:11,680 Speaker 1: value of a fixed length, and this can then you 210 00:12:11,720 --> 00:12:14,120 Speaker 1: can then search for that on a database via the 211 00:12:14,120 --> 00:12:20,160 Speaker 1: actual hash value. Okay, so here's the thing though secure 212 00:12:20,200 --> 00:12:24,400 Speaker 1: hash algorithms, these shars are hypersensitive to changes in the 213 00:12:24,440 --> 00:12:29,520 Speaker 1: input data. Okay, so I'm going to give you an example. Mikey, 214 00:12:29,600 --> 00:12:35,839 Speaker 1: what is your what is your favorite book? Freakonomics? Fre Economics. Okay, 215 00:12:36,040 --> 00:12:38,199 Speaker 1: So if we were to put if we were to 216 00:12:38,320 --> 00:12:42,559 Speaker 1: run the text of Freakonomics through SHAR to five six 217 00:12:42,600 --> 00:12:45,439 Speaker 1: through the SHAR to five six hashing algorithm, it would 218 00:12:45,440 --> 00:12:49,000 Speaker 1: come out. It would compress that into a sixty four 219 00:12:49,360 --> 00:12:53,760 Speaker 1: character hash, a sixty four character string of letters and numbers. 220 00:12:54,920 --> 00:12:58,800 Speaker 1: But if we were to go back and change that text, 221 00:12:58,800 --> 00:13:01,160 Speaker 1: if we were to make the small is possible change 222 00:13:01,240 --> 00:13:05,480 Speaker 1: to that text one like full store or yea yeah, yeah, 223 00:13:05,520 --> 00:13:09,080 Speaker 1: one period one comma just take a tiny make tiny 224 00:13:09,080 --> 00:13:13,240 Speaker 1: little change, feed it back through the hashing algorithm. Again, 225 00:13:14,160 --> 00:13:18,240 Speaker 1: the output, the hash that came out would be completely different. 226 00:13:19,480 --> 00:13:24,199 Speaker 1: So yeah, the smallest change will result in a completely 227 00:13:24,360 --> 00:13:28,760 Speaker 1: different hash value. Does that make sense? Yeah, it's it 228 00:13:28,800 --> 00:13:34,360 Speaker 1: can't be reverse engineered, exactly, yeah, exactly. So the great 229 00:13:34,360 --> 00:13:37,360 Speaker 1: thing about hash functions is that you can very easily 230 00:13:37,679 --> 00:13:41,120 Speaker 1: verify the output if you have the correct input. So 231 00:13:41,280 --> 00:13:43,240 Speaker 1: if I if you were to say, this is the 232 00:13:43,440 --> 00:13:46,280 Speaker 1: this is the hash output of freaking of the text 233 00:13:46,280 --> 00:13:49,760 Speaker 1: of freaconomics, I could just run that text through and 234 00:13:50,080 --> 00:13:52,360 Speaker 1: compare the hashes and if they were if they matched up, 235 00:13:52,360 --> 00:13:54,840 Speaker 1: then I'd know that the input data was was correct. 236 00:13:55,640 --> 00:13:57,680 Speaker 1: And the weird thing is, it doesn't matter whether it's 237 00:13:57,720 --> 00:14:00,079 Speaker 1: the entire text of fre economics, the entire text to 238 00:14:00,200 --> 00:14:04,440 Speaker 1: the Bible, or just a text message or just a 239 00:14:04,520 --> 00:14:07,360 Speaker 1: few a few numbers written down, whatever it is, it 240 00:14:07,400 --> 00:14:11,400 Speaker 1: will always be spat out by this hashing algorithm as 241 00:14:11,600 --> 00:14:14,640 Speaker 1: a as a hash. So does that make sense? Hashing? 242 00:14:14,640 --> 00:14:18,640 Speaker 1: Are you kind of are you clear on that? Much clearer? Good? Okay, 243 00:14:18,720 --> 00:14:21,120 Speaker 1: Now I know that we're still there. That I've left 244 00:14:21,160 --> 00:14:23,960 Speaker 1: that analogy of the group of people trying to reach consensus, 245 00:14:24,000 --> 00:14:25,880 Speaker 1: I've kind of left that hanging a bit. But just 246 00:14:25,960 --> 00:14:27,960 Speaker 1: keep that in mind. Keep that in mind that a 247 00:14:27,960 --> 00:14:31,440 Speaker 1: group of people are trying to reach an agreement, but 248 00:14:31,720 --> 00:14:35,160 Speaker 1: in order for people to have a vote in that group, 249 00:14:35,200 --> 00:14:37,000 Speaker 1: they need to have some sort of skin in the game. 250 00:14:37,320 --> 00:14:40,080 Speaker 1: Hash hashing. Talking about hashing is the first part of that. 251 00:14:40,160 --> 00:14:43,040 Speaker 1: But I will refer back to that analogy to sort 252 00:14:43,040 --> 00:14:45,840 Speaker 1: of round it off. But before we do that, should 253 00:14:45,880 --> 00:15:01,600 Speaker 1: we take a break? Sounds good. So we've talked about 254 00:15:01,640 --> 00:15:04,760 Speaker 1: how every transaction stored in a block is hashed. It's 255 00:15:04,760 --> 00:15:07,480 Speaker 1: going it goes through this hashing algorithm and it comes 256 00:15:07,480 --> 00:15:11,640 Speaker 1: out with this hash value. Now, what happens then is 257 00:15:11,800 --> 00:15:15,760 Speaker 1: it's then added to the hash of another transaction and 258 00:15:15,840 --> 00:15:20,600 Speaker 1: it's hashed again. The resulting hash is added to the 259 00:15:20,640 --> 00:15:25,560 Speaker 1: hash of another transaction and hashed again, triple hushed, triple hashed. 260 00:15:25,840 --> 00:15:28,320 Speaker 1: And this this hashing goes on and on and on. 261 00:15:28,400 --> 00:15:32,280 Speaker 1: These hashes are constantly being added together and hashed again 262 00:15:32,800 --> 00:15:37,160 Speaker 1: until there is only one hash left. Does that make sense? 263 00:15:37,720 --> 00:15:40,320 Speaker 1: What is that one harsh it's left? Okay, I'm glad 264 00:15:40,320 --> 00:15:44,200 Speaker 1: you asked, because that is called the root hash. And 265 00:15:44,440 --> 00:15:48,760 Speaker 1: this whole process of hashing, adding, and hashing again is 266 00:15:48,840 --> 00:15:54,320 Speaker 1: arranged in a structure called a mircle tree. Okay, So 267 00:15:54,560 --> 00:15:58,120 Speaker 1: just to to to kind of paint a picture anything 268 00:15:58,120 --> 00:16:00,160 Speaker 1: to do with Angela Merkel or nothing to do with 269 00:16:00,200 --> 00:16:02,960 Speaker 1: Angela Merkel. It's actually I knew you were going to 270 00:16:03,000 --> 00:16:05,160 Speaker 1: ask that. I know you so well that I knew 271 00:16:05,160 --> 00:16:09,320 Speaker 1: you would you would bring up the Yeah it is. 272 00:16:09,400 --> 00:16:12,080 Speaker 1: It is natural. Now. It's actually named after an American 273 00:16:12,080 --> 00:16:16,800 Speaker 1: computer scientist called Ralph Merkel Oh Ralphie Ralphie, who patented 274 00:16:16,960 --> 00:16:19,320 Speaker 1: this struct that this method of structuring large amounts of 275 00:16:19,400 --> 00:16:24,080 Speaker 1: data in nine. Okay, so let me just kind of 276 00:16:24,120 --> 00:16:27,440 Speaker 1: paint a visual picture for you. Imagine imagine a tree, 277 00:16:28,000 --> 00:16:32,760 Speaker 1: and all the leaves on the tree are transactions, individual transactions. 278 00:16:33,560 --> 00:16:36,240 Speaker 1: Now these, as I say, these are gradually these are hashed, 279 00:16:36,680 --> 00:16:40,680 Speaker 1: can become twigs. Yeah, two hashed transactions are then added 280 00:16:40,680 --> 00:16:44,320 Speaker 1: together and hashed again. So can you imagine these are 281 00:16:44,360 --> 00:16:48,280 Speaker 1: sort of gradually as as more hashed. As more added 282 00:16:48,320 --> 00:16:52,280 Speaker 1: together and then rehashed, the number starts to go down, 283 00:16:53,000 --> 00:16:55,120 Speaker 1: and then the number of hash values that you're left 284 00:16:55,160 --> 00:16:58,120 Speaker 1: with starts to go down, and so you sort of 285 00:16:58,160 --> 00:17:00,280 Speaker 1: go down from the leaves. Things begin to thick up 286 00:17:00,280 --> 00:17:02,720 Speaker 1: a bit. It's a bit like, um, you know, when 287 00:17:02,720 --> 00:17:05,119 Speaker 1: you have the table for like a tournament, for a 288 00:17:05,160 --> 00:17:10,280 Speaker 1: sports torment, and you have the first round sixteen eight four, Yeah, 289 00:17:10,359 --> 00:17:12,760 Speaker 1: and it gradually sort of goes down until you've got 290 00:17:12,760 --> 00:17:15,400 Speaker 1: to and then and then one winner. This is basically 291 00:17:15,840 --> 00:17:18,280 Speaker 1: a similar way to the way a Mirkele tree is 292 00:17:18,280 --> 00:17:21,720 Speaker 1: structured sort of like a river, all the trio trees 293 00:17:21,720 --> 00:17:26,640 Speaker 1: and comes into one, yeah, flowing into each other. Yeah, 294 00:17:26,640 --> 00:17:29,920 Speaker 1: that's yeah, that's a that's a nice little analogy that So, yeah, 295 00:17:30,000 --> 00:17:32,600 Speaker 1: what you end up with as they're gradually all hashed together, 296 00:17:32,680 --> 00:17:35,359 Speaker 1: you end up with the root hash. And you can 297 00:17:35,400 --> 00:17:37,080 Speaker 1: think of that as like the root of the tree. 298 00:17:37,240 --> 00:17:40,000 Speaker 1: Obviously all the big or the big river or the 299 00:17:40,040 --> 00:17:42,679 Speaker 1: final winner of the tournament, whichever, whichever works for you. 300 00:17:43,400 --> 00:17:46,439 Speaker 1: And this is the structure of a Merkele tree. What 301 00:17:46,560 --> 00:17:49,119 Speaker 1: you get when you use this this way of structuring 302 00:17:49,200 --> 00:17:51,800 Speaker 1: data is this root hash, and that acts as a 303 00:17:51,840 --> 00:17:55,439 Speaker 1: summary of all the data in the block. Are you 304 00:17:55,480 --> 00:17:58,760 Speaker 1: with me? That's cool, that's good because yeah, mircle trees 305 00:17:58,880 --> 00:18:01,679 Speaker 1: are I remember when I first started reading about these 306 00:18:02,040 --> 00:18:05,080 Speaker 1: years ago, and I just thought, wow, this is this 307 00:18:05,160 --> 00:18:08,480 Speaker 1: is really this is way above my pay grades. It's 308 00:18:08,560 --> 00:18:12,879 Speaker 1: it's complicated stuff, but it's important to Yeah, it's an 309 00:18:12,920 --> 00:18:16,320 Speaker 1: important part of understanding how all this data and because 310 00:18:16,359 --> 00:18:19,359 Speaker 1: there is a lot of data, how it's all structured 311 00:18:19,480 --> 00:18:24,520 Speaker 1: and and stored in these blocks on the blockchain. So hopefully, yeah, 312 00:18:24,560 --> 00:18:26,800 Speaker 1: hopefully that sort of opened up the idea of a 313 00:18:26,800 --> 00:18:29,960 Speaker 1: mircle tree a bit more. Now, if someone were to 314 00:18:30,040 --> 00:18:32,880 Speaker 1: try go and go back and alter any of the data, 315 00:18:32,960 --> 00:18:35,400 Speaker 1: say reverse the transaction that they've made to get their 316 00:18:35,440 --> 00:18:39,760 Speaker 1: BTC back, the root hash would be completely altered. Because 317 00:18:39,760 --> 00:18:42,040 Speaker 1: do you remember I said, even if you make the tiniest, 318 00:18:42,200 --> 00:18:47,480 Speaker 1: tiniest adjustment to the input data, the output the hash, 319 00:18:47,640 --> 00:18:51,040 Speaker 1: the hash that you're left with is completely changed. So 320 00:18:51,200 --> 00:18:54,560 Speaker 1: anyone trying to make even the smallest adjudgment adjustment to 321 00:18:54,680 --> 00:18:59,000 Speaker 1: the information in the block, that would change the root hash, 322 00:18:59,000 --> 00:19:01,800 Speaker 1: and it would be it would be obvious, um that 323 00:19:01,920 --> 00:19:06,600 Speaker 1: something fishy was going something was amiss exactly. So this 324 00:19:06,680 --> 00:19:10,000 Speaker 1: is how all that transactional data is stored in a 325 00:19:10,119 --> 00:19:14,360 Speaker 1: block on the blockchain. So we then come to the 326 00:19:14,440 --> 00:19:17,960 Speaker 1: next step, and that is to link the block to 327 00:19:18,280 --> 00:19:21,600 Speaker 1: the previous block on the chain. Now things get even 328 00:19:21,640 --> 00:19:25,640 Speaker 1: more complex from here. Okay, I'm about to throw I'm 329 00:19:25,800 --> 00:19:27,760 Speaker 1: going to throw some other terms here. You've dealt with 330 00:19:27,800 --> 00:19:31,840 Speaker 1: merkle trees wonderfully. Well is that patronizing? Am I being patronizing? 331 00:19:32,840 --> 00:19:38,960 Speaker 1: I'm used to it, Yes, but we'll talk about it. No, 332 00:19:39,119 --> 00:19:44,199 Speaker 1: this is, this is not this is It's fairly complex. 333 00:19:44,480 --> 00:19:47,679 Speaker 1: So yeah, I've I've simplified it a lot, because this 334 00:19:47,760 --> 00:19:49,800 Speaker 1: is the sort of thing. The deeper you go, the 335 00:19:49,880 --> 00:19:53,560 Speaker 1: more just completely mind bending it gets. It's quite good 336 00:19:53,600 --> 00:19:55,800 Speaker 1: to have it explained to you rather than having to 337 00:19:55,840 --> 00:19:57,720 Speaker 1: read it, you know what I mean. Having an analogy 338 00:19:57,720 --> 00:20:00,119 Speaker 1: it kind of builds a picture a lot easier in 339 00:20:00,200 --> 00:20:03,160 Speaker 1: my head. Good. Yeah, which is which is very much 340 00:20:03,200 --> 00:20:07,080 Speaker 1: the point. And yeah, it's it's something that I it's 341 00:20:07,160 --> 00:20:09,080 Speaker 1: something that I sort of really struggle with when I 342 00:20:09,119 --> 00:20:11,280 Speaker 1: get too when I get too deep into it. This 343 00:20:11,359 --> 00:20:14,360 Speaker 1: is you know, this, this is a field of sort 344 00:20:14,359 --> 00:20:16,639 Speaker 1: of computer science or mathematics or however you want to 345 00:20:16,640 --> 00:20:18,960 Speaker 1: look at it. That is. Yeah, it's pretty high levels. 346 00:20:19,000 --> 00:20:22,119 Speaker 1: So I've had to break it down so that I 347 00:20:22,119 --> 00:20:24,400 Speaker 1: can understand it myself. And then you've had to put 348 00:20:24,400 --> 00:20:27,399 Speaker 1: it into an analogy so that I can understand exactly 349 00:20:27,600 --> 00:20:30,600 Speaker 1: linking the blocks, linking one block to the previous block 350 00:20:30,640 --> 00:20:33,800 Speaker 1: on the chain, and keeping the network going. So this 351 00:20:33,880 --> 00:20:37,000 Speaker 1: happens in the following way. Each block has something called 352 00:20:37,200 --> 00:20:40,160 Speaker 1: a block header. Now you can think of the block 353 00:20:40,240 --> 00:20:43,240 Speaker 1: header as kind of like the tld R of the 354 00:20:43,240 --> 00:20:46,760 Speaker 1: block itself that too long didn't read um and back 355 00:20:46,800 --> 00:20:49,439 Speaker 1: of the book. The summary exactly. Yeah, the blurb, the 356 00:20:49,480 --> 00:20:51,199 Speaker 1: blurb on the back of the book. Now, there are 357 00:20:51,320 --> 00:20:54,959 Speaker 1: six bits of info contained in a block header, and 358 00:20:55,040 --> 00:20:58,680 Speaker 1: they are you're gonna like this, okay. Those six bits 359 00:20:58,680 --> 00:21:02,439 Speaker 1: of info are leslie the version of the software that 360 00:21:02,480 --> 00:21:05,760 Speaker 1: the bitcoin client is running, the Bitcoin soft. Yeah, the 361 00:21:05,800 --> 00:21:09,840 Speaker 1: software is updated occasionally, m so it just it just 362 00:21:09,880 --> 00:21:13,480 Speaker 1: says which particular version it's running, not too important. There's 363 00:21:13,520 --> 00:21:17,960 Speaker 1: also a time stamp. Then we have the root hash 364 00:21:18,320 --> 00:21:21,560 Speaker 1: of the transactions in the actual block, so that yeah, 365 00:21:21,560 --> 00:21:24,600 Speaker 1: there's a lot of information contained within that root hash. Obviously, 366 00:21:25,560 --> 00:21:32,199 Speaker 1: it also has the preceding blocks hash okay, okay. And 367 00:21:32,240 --> 00:21:35,800 Speaker 1: there are two other things. This is where it gets complicated. 368 00:21:36,240 --> 00:21:40,920 Speaker 1: There's something called a target that's another number, and there's 369 00:21:40,960 --> 00:21:49,240 Speaker 1: also something called a nonce. I knew you'd like. All 370 00:21:49,240 --> 00:21:52,800 Speaker 1: this information that's contained in the blockheader, this blurb of 371 00:21:52,880 --> 00:21:55,840 Speaker 1: the block itself, all of this is itself expressed as 372 00:21:55,880 --> 00:21:59,560 Speaker 1: a long string of letters and numbers. Okay. Now let's 373 00:21:59,560 --> 00:22:02,840 Speaker 1: explain those last two terms, especially especially the last one. 374 00:22:02,880 --> 00:22:06,199 Speaker 1: So firstly, the target, Remember there was a number, and 375 00:22:06,200 --> 00:22:08,880 Speaker 1: they're called the target. So the target is merely an 376 00:22:08,920 --> 00:22:12,760 Speaker 1: extremely long number. The why is it called a target 377 00:22:13,160 --> 00:22:16,280 Speaker 1: because well that should hopefully become obvious. Okay, I'll just 378 00:22:16,280 --> 00:22:19,320 Speaker 1: show up and let you explain. That's all right. So, yeah, 379 00:22:19,320 --> 00:22:21,959 Speaker 1: the target is just an extremely long number. The nonce 380 00:22:22,800 --> 00:22:27,840 Speaker 1: is just a random number. Okay. Now, the job of 381 00:22:27,920 --> 00:22:31,640 Speaker 1: the minor is to hash the blockheader. Remember the blockheader 382 00:22:31,720 --> 00:22:34,159 Speaker 1: has expressed itself as a number. See hash that number 383 00:22:34,640 --> 00:22:40,240 Speaker 1: and the nonce together. Okay. Still, if and from that 384 00:22:40,280 --> 00:22:42,760 Speaker 1: you'll get an output, you'll get another hash as an output. 385 00:22:42,880 --> 00:22:45,679 Speaker 1: Is that supposed to equate to the target. Yeah, so 386 00:22:45,840 --> 00:22:49,640 Speaker 1: if the output is lower than the target, then they've 387 00:22:49,760 --> 00:22:54,720 Speaker 1: essentially guessed correctly. Okay, so you're basically trying to you're 388 00:22:54,800 --> 00:22:57,760 Speaker 1: basically you've got this extremely and bear in mind these 389 00:22:57,800 --> 00:23:02,000 Speaker 1: are like a giant game of higher or lower. It 390 00:23:02,119 --> 00:23:05,040 Speaker 1: is a lower again. Yeah, that's actually that's actually a 391 00:23:05,040 --> 00:23:10,040 Speaker 1: really good Yeah. I think I think that analogy of 392 00:23:10,119 --> 00:23:12,000 Speaker 1: higher or lower could stand up here. I mean, this 393 00:23:12,080 --> 00:23:15,399 Speaker 1: is obviously very simplified as to what's going on. But 394 00:23:15,840 --> 00:23:17,640 Speaker 1: when you when you bear in mind that we're talking 395 00:23:17,680 --> 00:23:22,760 Speaker 1: about some seriously big numbers, um, then it begins you 396 00:23:22,800 --> 00:23:25,880 Speaker 1: begin to realize that what the problem that they're trying 397 00:23:25,880 --> 00:23:30,480 Speaker 1: to solve is actually really difficult. It's very very difficult 398 00:23:30,800 --> 00:23:34,119 Speaker 1: to arrive at this at this number that's that's lower 399 00:23:34,160 --> 00:23:39,040 Speaker 1: than this huge target number. So if the minor doesn't 400 00:23:39,040 --> 00:23:41,520 Speaker 1: guess correctly and they won't get it right first time 401 00:23:41,560 --> 00:23:45,639 Speaker 1: because it's so difficult, they adjust the nonce slightly and 402 00:23:45,680 --> 00:23:50,440 Speaker 1: they try again. So they do this. They keep on 403 00:23:50,480 --> 00:23:54,800 Speaker 1: doing this until they or another minor guess correctly. Now 404 00:23:55,400 --> 00:23:58,600 Speaker 1: this is where the computing power is going exactly exactly. 405 00:23:58,640 --> 00:24:03,879 Speaker 1: Now what game of a giant game of exactly? So 406 00:24:03,960 --> 00:24:07,040 Speaker 1: this means submitting a lot of guessing. I mean trillions 407 00:24:07,040 --> 00:24:09,879 Speaker 1: of guests is here, trillions upon trillions of guests to 408 00:24:09,960 --> 00:24:13,040 Speaker 1: try and get These computers are doing hundreds of second. 409 00:24:13,040 --> 00:24:16,920 Speaker 1: I'm assuming absolutely, I think they can do. I think 410 00:24:16,960 --> 00:24:21,040 Speaker 1: I think they can actually do up to billions a second. 411 00:24:21,240 --> 00:24:23,400 Speaker 1: It's yeah, well we're going to touch on the heart, 412 00:24:23,560 --> 00:24:27,239 Speaker 1: but one one minor. Yeah, oh really. They're using some 413 00:24:27,320 --> 00:24:29,639 Speaker 1: pretty extraordinary hardware, which we'll talk about in a minute. 414 00:24:30,440 --> 00:24:33,200 Speaker 1: But yeah, doing this requires a lot of computing power. 415 00:24:33,280 --> 00:24:35,840 Speaker 1: It consumes a lot of energy, and this energy must 416 00:24:35,880 --> 00:24:39,159 Speaker 1: obviously be paid for. Now, this is the work in 417 00:24:39,240 --> 00:24:42,800 Speaker 1: proof of work. What these computers are doing in proof 418 00:24:42,840 --> 00:24:46,159 Speaker 1: of work is essentially that they're carrying out what is 419 00:24:46,280 --> 00:24:49,840 Speaker 1: really a very simple function. They're not doing. This is 420 00:24:49,920 --> 00:24:54,960 Speaker 1: sometimes this process is sometimes explains yeah yeah, but it's 421 00:24:54,960 --> 00:24:57,520 Speaker 1: a very simple function that the computer is carrying out. 422 00:24:57,560 --> 00:25:01,840 Speaker 1: It's guessing. It's not, for instance, solving a particularly complicated 423 00:25:01,880 --> 00:25:04,840 Speaker 1: equation or anything like that. And sometimes when people talk 424 00:25:04,880 --> 00:25:09,600 Speaker 1: about bitcoin mining, it's sometimes expressed what the miners are 425 00:25:09,600 --> 00:25:13,040 Speaker 1: having to do. They're sometimes said to be solving mathematical 426 00:25:13,119 --> 00:25:16,600 Speaker 1: puzzles or solving equations or anything like that, and that's 427 00:25:16,640 --> 00:25:19,800 Speaker 1: not strictly true. What they're really doing is kind of 428 00:25:19,840 --> 00:25:25,240 Speaker 1: real grunt work, real computing heavy lifting. They're not doing 429 00:25:25,280 --> 00:25:33,520 Speaker 1: anything complicated. It's just very very yeah. Um, So miners 430 00:25:33,560 --> 00:25:38,240 Speaker 1: are expending this electricity in order to participate on the network, 431 00:25:38,840 --> 00:25:42,040 Speaker 1: and once the work has been successfully completed, the block 432 00:25:42,280 --> 00:25:45,040 Speaker 1: is added to the chain by the miner who submitted 433 00:25:45,119 --> 00:25:48,919 Speaker 1: the correct guess, and the network begins working on the 434 00:25:48,960 --> 00:25:53,920 Speaker 1: next block of transactions. Okay, we're making sense. So let's 435 00:25:54,000 --> 00:25:56,600 Speaker 1: refer this back to that group of friends analogy that 436 00:25:56,640 --> 00:26:00,639 Speaker 1: we were talking about earlier. So this idea of you 437 00:26:00,720 --> 00:26:04,120 Speaker 1: want people, you want more people to participate on the network, 438 00:26:04,160 --> 00:26:05,720 Speaker 1: but they have to have some skin in the game 439 00:26:05,760 --> 00:26:08,440 Speaker 1: to be involved. Yeah, and this proof of work is 440 00:26:08,480 --> 00:26:11,040 Speaker 1: exactly what that skin in the game is. So in 441 00:26:11,160 --> 00:26:13,520 Speaker 1: order to join the network, in order to have a 442 00:26:13,600 --> 00:26:19,200 Speaker 1: vote on consensus, they are having to expend this computing power. Um, 443 00:26:19,280 --> 00:26:22,720 Speaker 1: so let's using the group of friends analogy. Let's say 444 00:26:22,720 --> 00:26:25,440 Speaker 1: that in order to let's simplify it hugely and say 445 00:26:25,480 --> 00:26:27,920 Speaker 1: in that in order to have a vote, you had 446 00:26:28,000 --> 00:26:31,760 Speaker 1: to you had to solve a cross word puzzle, say, 447 00:26:32,080 --> 00:26:36,440 Speaker 1: which means that anyone who was wanting to wanting to participate, 448 00:26:36,440 --> 00:26:38,840 Speaker 1: they'd have to they'd have to kind of put something down, 449 00:26:38,840 --> 00:26:41,440 Speaker 1: They'd have to expend time, they'd have to expend effort, 450 00:26:42,440 --> 00:26:45,640 Speaker 1: and this would this would turn people off who weren't 451 00:26:46,080 --> 00:26:48,879 Speaker 1: you know, who weren't all that bothered, who weren't willing 452 00:26:48,960 --> 00:26:51,560 Speaker 1: to do it, or or if you know, if you 453 00:26:51,600 --> 00:26:54,280 Speaker 1: were trying to bring other people on that you controlled, 454 00:26:55,200 --> 00:26:57,159 Speaker 1: it wouldn't be as easy as just bringing them in 455 00:26:57,520 --> 00:27:00,800 Speaker 1: and getting them to vote. They have to expend power. 456 00:27:00,840 --> 00:27:03,560 Speaker 1: And what this translates to what translates to on a 457 00:27:03,560 --> 00:27:07,040 Speaker 1: blockchain in real life is basically they have to expend 458 00:27:07,040 --> 00:27:09,119 Speaker 1: this work and they have to pay for that computing power. 459 00:27:10,200 --> 00:27:12,520 Speaker 1: So yeah, they have they have skin in the game. 460 00:27:12,560 --> 00:27:15,119 Speaker 1: It has to be. They have to they have to 461 00:27:15,240 --> 00:27:21,080 Speaker 1: prove that they've done work. Proof of work makes sense. Good. Okay, 462 00:27:21,119 --> 00:27:24,320 Speaker 1: Now just to just to give another analogy. I like 463 00:27:24,400 --> 00:27:27,200 Speaker 1: that that that higher or lower analogy was was great. 464 00:27:27,000 --> 00:27:29,159 Speaker 1: That The best sort of simple analogy I've seen for 465 00:27:29,200 --> 00:27:32,879 Speaker 1: this is to imagine the miners as gamblers at a 466 00:27:32,880 --> 00:27:36,880 Speaker 1: at a dice table. Now imagine that each of them 467 00:27:36,920 --> 00:27:42,560 Speaker 1: has a one thousand sided die and they have to 468 00:27:42,680 --> 00:27:46,560 Speaker 1: roll it until one of them gets a number lower 469 00:27:46,560 --> 00:27:49,000 Speaker 1: than let's say, for for the sake of argument, lower 470 00:27:49,040 --> 00:27:53,479 Speaker 1: than five. So just yeah, just have a think about that. Like, 471 00:27:53,520 --> 00:27:57,480 Speaker 1: you're throwing these dice one with a thousand different sides on, 472 00:27:57,800 --> 00:27:59,640 Speaker 1: and you're trying to load this. You're trying to roll 473 00:27:59,640 --> 00:28:01,199 Speaker 1: this very real low number. Do you see how that 474 00:28:01,200 --> 00:28:05,000 Speaker 1: would be. It would be quite difficult to do. But 475 00:28:05,080 --> 00:28:09,000 Speaker 1: the one that eventually rolls that number below five, they 476 00:28:09,080 --> 00:28:12,399 Speaker 1: are They are the winner and the network, and you 477 00:28:12,440 --> 00:28:15,040 Speaker 1: can think of the network itself as the miners sort 478 00:28:15,040 --> 00:28:18,399 Speaker 1: of around the table. It's very easy to look down 479 00:28:18,520 --> 00:28:21,320 Speaker 1: and see that that five has been rolled, So you 480 00:28:21,359 --> 00:28:23,720 Speaker 1: get that's the way that they can sort of validate it. 481 00:28:23,760 --> 00:28:25,879 Speaker 1: That they can they can approve it if you like. 482 00:28:26,000 --> 00:28:28,679 Speaker 1: They look down, they see that a five has been rolled. Okay, 483 00:28:28,720 --> 00:28:31,879 Speaker 1: we're all agreed. Next block and they start rolling again. 484 00:28:32,680 --> 00:28:36,440 Speaker 1: Makes sense? Yeah, okay, so this and as I said, 485 00:28:36,440 --> 00:28:39,800 Speaker 1: the one that rolls that number below five in this analogy, 486 00:28:39,840 --> 00:28:42,360 Speaker 1: that very very low number that they're all striving for, 487 00:28:42,520 --> 00:28:46,440 Speaker 1: they win. Now what does winning mean? And this brings 488 00:28:46,520 --> 00:28:51,040 Speaker 1: us onto the question of block rewards again. Last time 489 00:28:51,200 --> 00:28:54,160 Speaker 1: we talked about this kind of carrat and stick that 490 00:28:55,040 --> 00:28:58,400 Speaker 1: participants on a blockchain had in order to take In 491 00:28:58,480 --> 00:29:01,640 Speaker 1: order to take part, obviously, they have to expend this work. 492 00:29:01,960 --> 00:29:04,360 Speaker 1: But why would they Why would they expend this work? 493 00:29:04,400 --> 00:29:08,080 Speaker 1: They have to have they have to have um, they 494 00:29:08,120 --> 00:29:10,440 Speaker 1: have to have something to aim for. They have to 495 00:29:10,480 --> 00:29:13,760 Speaker 1: have a reward. What's the skin in the game. Yeah, 496 00:29:13,840 --> 00:29:15,400 Speaker 1: it has to be worth their while. And this is 497 00:29:15,440 --> 00:29:18,880 Speaker 1: where block rewards can come in. Okay, Mike, quite a 498 00:29:18,880 --> 00:29:20,880 Speaker 1: lot of information there. Should we take a quick break? 499 00:29:21,520 --> 00:29:24,040 Speaker 1: Do we have to? You want to carry on? I would, 500 00:29:24,120 --> 00:29:26,720 Speaker 1: but I know we have some sponsors. All right, let's 501 00:29:26,720 --> 00:29:42,560 Speaker 1: hear from there. Okay, and we're back welcome back everyone. 502 00:29:43,120 --> 00:29:46,360 Speaker 1: Let's carry on now. We talked about how miners get 503 00:29:46,360 --> 00:29:49,560 Speaker 1: a cut of transaction fees. Every Bitcoin transaction that takes place, 504 00:29:49,600 --> 00:29:52,200 Speaker 1: every transaction that takes place on the bitcoin network, a 505 00:29:52,400 --> 00:29:54,680 Speaker 1: small fee is levied, a very very small fee, and 506 00:29:54,720 --> 00:29:57,080 Speaker 1: that goes to the minus. That's one way of them 507 00:29:57,120 --> 00:30:00,920 Speaker 1: generating revenue. But the other one is the big one, 508 00:30:00,960 --> 00:30:03,840 Speaker 1: and that is block rewards. Now, because the miners are 509 00:30:03,960 --> 00:30:06,680 Speaker 1: using all this electricity to do all this hashing and 510 00:30:06,720 --> 00:30:09,320 Speaker 1: guessing of these random numbers, there must be something in 511 00:30:09,360 --> 00:30:13,040 Speaker 1: it for them, the main incentive being this block reward. Now, 512 00:30:13,080 --> 00:30:17,239 Speaker 1: in Bitcoin's case, a number of btc. An amount of 513 00:30:17,240 --> 00:30:20,840 Speaker 1: BTC is awarded to the miner who makes the correct guess. 514 00:30:21,440 --> 00:30:25,320 Speaker 1: This is called the block reward. It's currently around six 515 00:30:25,360 --> 00:30:27,760 Speaker 1: and a quarter btc, but it used to be a 516 00:30:27,760 --> 00:30:32,200 Speaker 1: lot higher. Now obviously, at today's prices um Bitcoin is 517 00:30:32,200 --> 00:30:35,400 Speaker 1: is hovering around the fifty dollar mark at the moment, 518 00:30:35,440 --> 00:30:38,320 Speaker 1: so six and the quarter btc is a lot of 519 00:30:38,360 --> 00:30:43,280 Speaker 1: money um. Now, this reward used to be higher. What 520 00:30:43,400 --> 00:30:47,280 Speaker 1: happens is every four years or so, roughly every four years, 521 00:30:48,120 --> 00:30:52,000 Speaker 1: the block reward is programmed to half to cut in half, 522 00:30:52,880 --> 00:30:59,000 Speaker 1: so previously it was thirteen btc for that that was 523 00:30:59,040 --> 00:31:01,400 Speaker 1: the block reward for mining a block, for guessing this 524 00:31:01,720 --> 00:31:05,360 Speaker 1: for guessing this number correctly. But obviously back then BTC 525 00:31:05,680 --> 00:31:09,640 Speaker 1: was worth a lot less. This is called the harving. 526 00:31:10,040 --> 00:31:12,040 Speaker 1: This is called the bitcoin harving. You may have heard 527 00:31:12,040 --> 00:31:16,400 Speaker 1: this referred to. And this decreases Bitcoin's inflation rate because 528 00:31:16,640 --> 00:31:20,240 Speaker 1: fewer btc are created with each block, because this happens 529 00:31:20,440 --> 00:31:23,320 Speaker 1: obviously for every single block. So every single block that's mine, 530 00:31:23,560 --> 00:31:27,800 Speaker 1: which takes place roughly every ten minutes, sees another six 531 00:31:27,840 --> 00:31:31,880 Speaker 1: and a quarter btc created and awarded to the miner 532 00:31:32,120 --> 00:31:35,320 Speaker 1: who guess the guess the random number and mind the block. 533 00:31:36,280 --> 00:31:40,440 Speaker 1: Makes sense, Yeah, okay, so it could someone just get 534 00:31:40,520 --> 00:31:46,360 Speaker 1: really lucky and mine a hundred blocks a day. Very unlikely, 535 00:31:46,920 --> 00:31:50,080 Speaker 1: very unlikely, and we'll see why, because yeah, it's some 536 00:31:50,560 --> 00:31:53,600 Speaker 1: In bitcoin's early days, it would it was possible to 537 00:31:53,680 --> 00:31:56,800 Speaker 1: mine a lot more. But because there are so many 538 00:31:57,040 --> 00:31:59,720 Speaker 1: computers on the network, because there are so many miners 539 00:32:00,240 --> 00:32:02,880 Speaker 1: now competing to do this, because there is because there 540 00:32:02,960 --> 00:32:07,040 Speaker 1: is a lot at stake, um, it's very very difficult, 541 00:32:07,040 --> 00:32:09,600 Speaker 1: and more and more computing power has been thrown at 542 00:32:09,640 --> 00:32:13,640 Speaker 1: the network, which means that you, in order to even 543 00:32:13,720 --> 00:32:18,000 Speaker 1: stand a chance of of winning this lottery, if you like, 544 00:32:18,400 --> 00:32:22,440 Speaker 1: you need to be contributing a lot of computing power yourself. 545 00:32:22,800 --> 00:32:24,600 Speaker 1: You can think of it as like a lottery. When 546 00:32:24,600 --> 00:32:27,160 Speaker 1: you enter a lottery, If you buy one ticket, you 547 00:32:27,280 --> 00:32:30,600 Speaker 1: have a very very very small chance of winning the jackpot, 548 00:32:31,360 --> 00:32:34,760 Speaker 1: but if you buy more tickets, your chances go up. Now, 549 00:32:34,760 --> 00:32:39,280 Speaker 1: obviously it's not ever guaranteed. Um, well, it would be guaranteed, 550 00:32:39,280 --> 00:32:41,040 Speaker 1: I guess if you were able to buy all the tickets, 551 00:32:41,040 --> 00:32:43,160 Speaker 1: but then it wouldn't be worth your while. But yeah, 552 00:32:43,440 --> 00:32:45,440 Speaker 1: I think a lottery is a good way to think 553 00:32:45,440 --> 00:32:50,800 Speaker 1: about it. Um and computing power basically equaling lottery tickets, 554 00:32:50,840 --> 00:32:55,280 Speaker 1: increasing your chances of winning each time. So, although bitcoin 555 00:32:55,360 --> 00:32:59,200 Speaker 1: mining is very expensive because you need specialized equipment and 556 00:32:59,400 --> 00:33:01,400 Speaker 1: you need the electrac you need to pay for the 557 00:33:01,400 --> 00:33:04,920 Speaker 1: electricity to run it and also keep it cool. Um, 558 00:33:04,960 --> 00:33:07,960 Speaker 1: but it can still be profitable because of this block reward. 559 00:33:08,000 --> 00:33:10,440 Speaker 1: And remember, as I said, a new block is produced 560 00:33:10,520 --> 00:33:15,000 Speaker 1: roughly every ten minutes, so there are constantly always always 561 00:33:15,040 --> 00:33:18,160 Speaker 1: Bitcoin always BTC too playful? Is that why sometimes when 562 00:33:18,200 --> 00:33:20,040 Speaker 1: you make a transaction it can take a little time 563 00:33:20,280 --> 00:33:24,120 Speaker 1: for it to show up. Exactly, Yeah, exactly. The Yeah, 564 00:33:24,160 --> 00:33:27,520 Speaker 1: the network, the Bitcoin network is quite slow. This is 565 00:33:27,520 --> 00:33:31,040 Speaker 1: something we will touch on shortly. Um, so remind me 566 00:33:31,040 --> 00:33:32,880 Speaker 1: to come back to that. But I want to talk 567 00:33:32,920 --> 00:33:36,960 Speaker 1: now about increasing the difficulty. Now we've we've just begun 568 00:33:37,000 --> 00:33:39,960 Speaker 1: to touch on this idea of you need all this 569 00:33:40,040 --> 00:33:43,400 Speaker 1: computing power in order to mind bitcoins, so why not 570 00:33:43,560 --> 00:33:47,040 Speaker 1: just why not just buy more lottery tickets? So you 571 00:33:47,120 --> 00:33:50,160 Speaker 1: might imagine that if mining is so profitable, what stops 572 00:33:50,200 --> 00:33:52,520 Speaker 1: more and more miners from joining the network and committing 573 00:33:52,680 --> 00:33:55,360 Speaker 1: so much hash power? This is what it's generally referred to. 574 00:33:55,960 --> 00:33:59,400 Speaker 1: This this this computing power being committed, we call it 575 00:33:59,440 --> 00:34:04,160 Speaker 1: hash power. Um, what what stops them from from committing 576 00:34:04,160 --> 00:34:07,240 Speaker 1: all this hash power? And then the block is getting 577 00:34:07,240 --> 00:34:09,680 Speaker 1: solved much much quicker because I remember, as I said, 578 00:34:09,719 --> 00:34:12,160 Speaker 1: a new block is created pretty much every ten minutes, 579 00:34:12,520 --> 00:34:16,400 Speaker 1: and that that stays, that stays consistent. Now, this is 580 00:34:16,440 --> 00:34:20,400 Speaker 1: a really difficult thing to achieve, because so Toshi Nakamoto 581 00:34:20,480 --> 00:34:23,520 Speaker 1: he anticipated this and he put a safeguard in place, 582 00:34:23,560 --> 00:34:26,640 Speaker 1: because what you don't want is blocks just being produced 583 00:34:26,680 --> 00:34:30,120 Speaker 1: far too quickly. You want you want them to space out. 584 00:34:30,200 --> 00:34:33,720 Speaker 1: So the network sort of works constantly, and it also 585 00:34:34,360 --> 00:34:37,160 Speaker 1: means that it's not possible for one minor just to 586 00:34:37,160 --> 00:34:39,719 Speaker 1: commit so much hash power that they that they win 587 00:34:39,800 --> 00:34:44,160 Speaker 1: the majority of blocks. It helps keep it decentralized. But 588 00:34:44,200 --> 00:34:47,600 Speaker 1: of course, if if more miners join the network, then 589 00:34:47,760 --> 00:34:50,440 Speaker 1: the average time so sorry, I should say, the average 590 00:34:50,440 --> 00:34:52,959 Speaker 1: time for the miners on the network to solver block 591 00:34:53,160 --> 00:34:55,920 Speaker 1: is ten minutes with all the computing power that's currently 592 00:34:55,920 --> 00:34:59,160 Speaker 1: on the network. That's the average time. Now, if more 593 00:34:59,200 --> 00:35:03,719 Speaker 1: miners join, this average goes down, right, So what's the 594 00:35:03,800 --> 00:35:07,600 Speaker 1: total program the network to do? Was to increase the 595 00:35:07,640 --> 00:35:11,160 Speaker 1: difficulty of solving a block if more hashing power was added. 596 00:35:12,560 --> 00:35:15,480 Speaker 1: Still with me, So you can think of let's go 597 00:35:15,520 --> 00:35:18,760 Speaker 1: back to that example of gamblers rolling those one thousand 598 00:35:18,760 --> 00:35:22,560 Speaker 1: sided dice. Now, let's imagine so they're chasing this very 599 00:35:22,640 --> 00:35:24,799 Speaker 1: very low number. They've all got this one thousand sided dice. 600 00:35:24,840 --> 00:35:27,160 Speaker 1: They're all trying to roll a five or lower in 601 00:35:27,239 --> 00:35:30,279 Speaker 1: order to get you know, that's the target. Um, So 602 00:35:30,320 --> 00:35:32,440 Speaker 1: what happens in more gamblers turn up with more one 603 00:35:32,440 --> 00:35:36,480 Speaker 1: thousand sided dice, obviously the chances would would increase that 604 00:35:36,480 --> 00:35:39,640 Speaker 1: that that that side roll. Yeah, so they increase the 605 00:35:39,680 --> 00:35:42,719 Speaker 1: number of sides and the dice. No. What happens is 606 00:35:42,840 --> 00:35:46,359 Speaker 1: the number itself gets lower. So let's say they're trying 607 00:35:46,400 --> 00:35:48,520 Speaker 1: to roll five or below. The target gets lower and 608 00:35:48,560 --> 00:35:52,719 Speaker 1: not the nons. Yes, yeah, well the target, yeah, the 609 00:35:53,040 --> 00:35:56,120 Speaker 1: target gets Yeah, the target gets lower. I think I'll 610 00:35:56,120 --> 00:35:58,480 Speaker 1: have to double check that. Okay, So imagine you yeah, 611 00:35:58,480 --> 00:36:01,759 Speaker 1: imagine you have these new these new gamblers, these new 612 00:36:01,800 --> 00:36:05,600 Speaker 1: dice rollers coming to the table. So what happens in 613 00:36:05,680 --> 00:36:10,360 Speaker 1: order to keep that average time at ten minutes? The 614 00:36:10,480 --> 00:36:12,759 Speaker 1: number it's the number that they have to lower roll 615 00:36:13,080 --> 00:36:16,200 Speaker 1: roll lower than is decreased. So let's say they were 616 00:36:16,200 --> 00:36:19,640 Speaker 1: trying to roll lower than a five. As more joined, 617 00:36:19,719 --> 00:36:22,680 Speaker 1: they'd have to roll lower than a four, say, so 618 00:36:22,960 --> 00:36:25,839 Speaker 1: that average goes back, that average is kept the same, 619 00:36:26,960 --> 00:36:30,799 Speaker 1: and this is this is called increasing the difficulty. It 620 00:36:30,880 --> 00:36:33,880 Speaker 1: increases the average time that it takes for that number 621 00:36:33,880 --> 00:36:36,920 Speaker 1: to be rolled. And the Bitcoin blockchain is designed to 622 00:36:37,000 --> 00:36:40,200 Speaker 1: increase the difficulty if more miners and therefore more hash 623 00:36:40,239 --> 00:36:43,880 Speaker 1: power join the network, and crucially as well, it's also 624 00:36:43,960 --> 00:36:48,240 Speaker 1: programmed to decrease the difficulty if miners leave the network. 625 00:36:49,000 --> 00:36:51,920 Speaker 1: So do you remember we were talking in the last episode. 626 00:36:51,920 --> 00:36:55,560 Speaker 1: I think about bitcoin mining being very concentrated in China. 627 00:36:56,080 --> 00:37:01,399 Speaker 1: Then in mid China just banded normal, no more bitcoin mining, 628 00:37:01,440 --> 00:37:04,600 Speaker 1: we don't like this. So what that forced miners in 629 00:37:04,680 --> 00:37:07,359 Speaker 1: China to do was basically to pack up their equipment. Now, 630 00:37:07,400 --> 00:37:10,239 Speaker 1: some of them just just shut up shop and you know, 631 00:37:10,360 --> 00:37:12,759 Speaker 1: went out of business, but most of them packed up 632 00:37:12,800 --> 00:37:14,759 Speaker 1: their equipment, which took a heck of a long time, 633 00:37:15,000 --> 00:37:17,600 Speaker 1: and shipped it somewhere else. Now, as I said, they 634 00:37:17,640 --> 00:37:19,480 Speaker 1: went to places like, they went all over there. A 635 00:37:19,520 --> 00:37:22,480 Speaker 1: lot of them went to the USA, but also a 636 00:37:22,560 --> 00:37:25,680 Speaker 1: lot of them went to countries in Central Asia where 637 00:37:27,080 --> 00:37:29,239 Speaker 1: where there was sort of cheap power to be had, 638 00:37:29,360 --> 00:37:31,320 Speaker 1: because one of the benefits of mining in China was 639 00:37:31,360 --> 00:37:33,759 Speaker 1: that there was a lot of cheap power. Unfortunately, a 640 00:37:33,800 --> 00:37:37,759 Speaker 1: lot of that power was generated by burning coal. So yeah, 641 00:37:37,880 --> 00:37:40,759 Speaker 1: so they went elsewhere, these miners. So that meant that 642 00:37:41,360 --> 00:37:44,680 Speaker 1: the network lost a lot of hash power because the 643 00:37:44,719 --> 00:37:48,000 Speaker 1: mine obviously takes time to shut down a mining operation, 644 00:37:48,040 --> 00:37:53,560 Speaker 1: pack it altogether exactly exactly. So the bitcoin network decreased 645 00:37:53,640 --> 00:37:56,959 Speaker 1: the difficulty, and that meant that the average block time 646 00:37:57,120 --> 00:38:00,919 Speaker 1: was still was kept around ten minutes. So this takes 647 00:38:01,000 --> 00:38:04,440 Speaker 1: us this idea of the difficulty decreasing. This takes us 648 00:38:04,440 --> 00:38:08,080 Speaker 1: back to bitcoin's early days because we're going to talk 649 00:38:08,080 --> 00:38:09,960 Speaker 1: now about how mining is done. We're going to get 650 00:38:10,040 --> 00:38:13,200 Speaker 1: dig dig a bit more into into what actually is 651 00:38:13,239 --> 00:38:17,160 Speaker 1: taking place. In bitcoin's early days, it was really really 652 00:38:17,200 --> 00:38:20,000 Speaker 1: easy to mine. And this is because there were hardly 653 00:38:20,040 --> 00:38:22,840 Speaker 1: any miners on the network and so the difficulty was 654 00:38:22,920 --> 00:38:26,520 Speaker 1: really low. So imagine we go, let's go back to 655 00:38:26,520 --> 00:38:29,400 Speaker 1: our dice example again. Let's say that the number that 656 00:38:29,400 --> 00:38:31,759 Speaker 1: they were having to roll lower than was something like 657 00:38:31,800 --> 00:38:35,920 Speaker 1: three d. Yeah, so yeah, there were a fewer miners 658 00:38:35,920 --> 00:38:37,640 Speaker 1: doing it, but they had it. They had an easier 659 00:38:37,680 --> 00:38:40,960 Speaker 1: target basically, and it was so easy to do that 660 00:38:41,000 --> 00:38:43,880 Speaker 1: you could mind bitcoin on a regular laptop. This is 661 00:38:43,880 --> 00:38:46,759 Speaker 1: really Yeah. I I always find this crazy. I mean, 662 00:38:46,960 --> 00:38:49,200 Speaker 1: it's so easy with hindsight now, but you look back 663 00:38:49,200 --> 00:38:52,319 Speaker 1: at you look back at bitcoin's early days and yeah, 664 00:38:52,360 --> 00:38:55,120 Speaker 1: I mean the first person ever mining bitcoin was Stoshi 665 00:38:55,719 --> 00:38:58,480 Speaker 1: and the block reward I believe was about fifty BTC, 666 00:38:59,360 --> 00:39:03,960 Speaker 1: which of see today would be millions of dollars um, 667 00:39:04,160 --> 00:39:06,759 Speaker 1: but yeah, it was. It could be. You could do 668 00:39:06,800 --> 00:39:10,080 Speaker 1: it just using the CPU, the central processing unit of 669 00:39:10,080 --> 00:39:12,040 Speaker 1: your computer, so you could just do it on the laptop. 670 00:39:12,360 --> 00:39:15,560 Speaker 1: But gradually, as more people began to hear of Bitcoiner's 671 00:39:15,600 --> 00:39:18,080 Speaker 1: word got out, more miners joined the network, and so 672 00:39:18,200 --> 00:39:21,640 Speaker 1: the difficulty began to increase in order to keep that 673 00:39:21,640 --> 00:39:25,840 Speaker 1: block time nicely averaged out. UM. And then this is 674 00:39:25,840 --> 00:39:27,399 Speaker 1: one of that, this is one of my favorite parts 675 00:39:27,440 --> 00:39:29,640 Speaker 1: of the whole bitcoin story is there's a there was 676 00:39:29,680 --> 00:39:33,719 Speaker 1: a computer programmer down in Florida, UM, and he had 677 00:39:33,760 --> 00:39:35,799 Speaker 1: this He hit on a bright idea. He was he 678 00:39:35,840 --> 00:39:38,200 Speaker 1: got into bitcoin, he was mining it on his computer, 679 00:39:38,680 --> 00:39:40,640 Speaker 1: and I think, so the story goes, he was he 680 00:39:40,719 --> 00:39:43,440 Speaker 1: was noticing that he that he when he first started, 681 00:39:43,480 --> 00:39:45,960 Speaker 1: he was winning quite a few he was winning quite 682 00:39:45,960 --> 00:39:48,520 Speaker 1: a getting to mind quite a few blocks and getting 683 00:39:48,560 --> 00:39:51,280 Speaker 1: quite a few block rewards. And then he gradually noticed 684 00:39:51,280 --> 00:39:53,279 Speaker 1: that he was winning fewer and fewer, and then it 685 00:39:53,360 --> 00:39:56,000 Speaker 1: slowed to a trickle, and he realized that there were 686 00:39:56,040 --> 00:39:58,520 Speaker 1: so many miners on the network now that the competition 687 00:39:58,640 --> 00:40:03,200 Speaker 1: was was much much stiffer. So he had a bright idea. 688 00:40:03,600 --> 00:40:07,440 Speaker 1: He realized that because because what he his computer was 689 00:40:07,440 --> 00:40:11,160 Speaker 1: trying to do was as I've said, very sort of 690 00:40:11,160 --> 00:40:14,520 Speaker 1: grunt work, very very straightforward computing. It just required a 691 00:40:14,560 --> 00:40:18,200 Speaker 1: lot of effort. Um, he realized that he could mine 692 00:40:18,239 --> 00:40:22,840 Speaker 1: it using his computers GPU, his graphics processing unit. And 693 00:40:22,960 --> 00:40:26,160 Speaker 1: this is a huge moment in the history of bitcoin 694 00:40:26,239 --> 00:40:29,839 Speaker 1: really because um, it's not particularly complex to do. Your 695 00:40:29,920 --> 00:40:33,000 Speaker 1: GPU can be quite easily configured. So people who know 696 00:40:33,120 --> 00:40:36,200 Speaker 1: these sorts of things tell me, and that's exactly what 697 00:40:36,200 --> 00:40:38,239 Speaker 1: what this guy did. Um. And it turns out that 698 00:40:38,280 --> 00:40:40,319 Speaker 1: GP us, because of the nature of the work they do, 699 00:40:40,400 --> 00:40:43,560 Speaker 1: that ideally suited to doing this. So what he did 700 00:40:43,719 --> 00:40:47,400 Speaker 1: was configure his GPU to mind bitcoin and suddenly he 701 00:40:47,480 --> 00:40:51,640 Speaker 1: found that he was back winning loads. And the really 702 00:40:51,719 --> 00:40:54,440 Speaker 1: lovely twist in this whole story is um that this 703 00:40:54,480 --> 00:40:57,279 Speaker 1: is the guy who later became famous for spending ten 704 00:40:57,400 --> 00:41:01,440 Speaker 1: thousand BTC on a couple of pizzas. Have you heard 705 00:41:01,440 --> 00:41:04,760 Speaker 1: about this bitcoin pizza? His name is laslow Han yex 706 00:41:04,920 --> 00:41:08,080 Speaker 1: I think that's how you pronounce it, um And yeah, 707 00:41:08,160 --> 00:41:12,120 Speaker 1: So the story goes, he uh, he was he was hungry, 708 00:41:12,160 --> 00:41:14,200 Speaker 1: he wanted to buy He had all these bitcoin because 709 00:41:14,239 --> 00:41:18,880 Speaker 1: he'd because he'd suddenly figured out how to how to 710 00:41:19,160 --> 00:41:22,040 Speaker 1: mine way more bitcoin. He had tons of them and 711 00:41:22,080 --> 00:41:25,400 Speaker 1: they were worth they were worth virtually nothing at this point, 712 00:41:26,280 --> 00:41:28,360 Speaker 1: but he yeah, he put out a call that he 713 00:41:28,400 --> 00:41:30,040 Speaker 1: put out a call I think it was on the 714 00:41:30,040 --> 00:41:33,440 Speaker 1: bitcoin bitcoin talk forum or some sort of forum for 715 00:41:33,480 --> 00:41:37,360 Speaker 1: bitcoin users saying does anyone can anyone get me some 716 00:41:37,400 --> 00:41:40,719 Speaker 1: pizzas and I'll give them ten thousand btc? And some 717 00:41:40,800 --> 00:41:42,839 Speaker 1: guy I think apparently he was here in the UK, 718 00:41:43,480 --> 00:41:46,040 Speaker 1: said yeah, I'll take you on and that so Um, 719 00:41:46,560 --> 00:41:50,839 Speaker 1: this guy called up a local pizzeria in Florida near 720 00:41:50,880 --> 00:41:54,200 Speaker 1: to where Laslow lived, got paid for, paid for them 721 00:41:54,239 --> 00:41:56,960 Speaker 1: to send him to pizzas, and Laslow sent this guy 722 00:41:57,000 --> 00:42:00,840 Speaker 1: ten thousand BTC and that was the first corded instance 723 00:42:01,280 --> 00:42:05,400 Speaker 1: of bitcoin being used to pay for anything. Um. And 724 00:42:05,440 --> 00:42:07,359 Speaker 1: of course, yeah, if you do the maths on it, now, 725 00:42:07,480 --> 00:42:11,560 Speaker 1: ten thousand, ten thou btc is billions of dollars. No, 726 00:42:11,719 --> 00:42:15,120 Speaker 1: not quite billions, I think, but hundreds of millions of dollars. Um. 727 00:42:15,160 --> 00:42:20,480 Speaker 1: What was the pizza? We how much? How many toppings 728 00:42:21,600 --> 00:42:23,480 Speaker 1: did you get on that pizza? I don't think it 729 00:42:23,560 --> 00:42:26,440 Speaker 1: was anything. I don't think he had a gold topped pizza. Trump, 730 00:42:27,360 --> 00:42:31,920 Speaker 1: can you put on it? Didn't you put half a 731 00:42:31,920 --> 00:42:36,120 Speaker 1: ton of gold on him? Yeah? Saffron, I want the 732 00:42:36,120 --> 00:42:38,000 Speaker 1: pizza to be made entirely of some I want the 733 00:42:38,000 --> 00:42:41,440 Speaker 1: base to be solid saffron. Okay. So yeah, so this 734 00:42:41,480 --> 00:42:45,239 Speaker 1: guy figured out a way to a more efficient way, 735 00:42:45,280 --> 00:42:48,279 Speaker 1: if you like, of mining bitcoin, and this kind of 736 00:42:48,320 --> 00:42:53,520 Speaker 1: started basically a mining arms race because this became very apparent. 737 00:42:53,520 --> 00:42:55,560 Speaker 1: Suddenly everyone was like, oh wait, hang on a second, 738 00:42:55,840 --> 00:42:58,160 Speaker 1: this guy has found this guy's got a secret weapon. 739 00:42:59,080 --> 00:43:02,760 Speaker 1: So after that, as you can imagine, everyone or any 740 00:43:02,800 --> 00:43:06,040 Speaker 1: minor who was serious about what they were doing, began 741 00:43:06,080 --> 00:43:10,360 Speaker 1: to configure their GPUs, began to buy more powerful computers, 742 00:43:10,960 --> 00:43:13,319 Speaker 1: and this just only got more and more intense as 743 00:43:13,320 --> 00:43:15,720 Speaker 1: the price of bitcoin began to rise because the stakes 744 00:43:16,239 --> 00:43:22,320 Speaker 1: got massively higher, and eventually people started using specialized computers 745 00:43:22,440 --> 00:43:28,160 Speaker 1: known as A six. A six stands for application specific 746 00:43:28,200 --> 00:43:33,640 Speaker 1: integrated circuit. I remembered, thank you. And this is basically 747 00:43:33,800 --> 00:43:36,880 Speaker 1: hardware that has built to perform one task, and A 748 00:43:36,960 --> 00:43:40,759 Speaker 1: six is designed just to do one thing and roll 749 00:43:40,840 --> 00:43:43,799 Speaker 1: that dice. Exactly. I've seen them. They kind of they 750 00:43:43,840 --> 00:43:46,400 Speaker 1: look like tiny motors and yeah they did in just 751 00:43:46,520 --> 00:43:49,800 Speaker 1: giant racks. Yeah, yeah, exactly. And this is this is 752 00:43:49,840 --> 00:43:51,839 Speaker 1: where we've got to now, and this is what this 753 00:43:51,880 --> 00:43:54,880 Speaker 1: is what's so crazy about the whole thing really, because 754 00:43:54,920 --> 00:43:57,719 Speaker 1: it didn't take long for people began to configure these 755 00:43:57,760 --> 00:44:00,880 Speaker 1: A six and build basically specialized bit poin mining machine, 756 00:44:01,000 --> 00:44:03,960 Speaker 1: specialized A six if you like um and yeah, that 757 00:44:04,000 --> 00:44:06,640 Speaker 1: brings us to where we are today. And yeah, exactly right. 758 00:44:06,680 --> 00:44:09,560 Speaker 1: You see that they're just rack upon rack upon rack 759 00:44:09,600 --> 00:44:12,680 Speaker 1: of these things, all just whirring away, and all they're 760 00:44:12,680 --> 00:44:17,400 Speaker 1: doing is guessing they're doing is real brute force confusing 761 00:44:17,560 --> 00:44:22,359 Speaker 1: if you like UM. And this obviously to power these things, 762 00:44:22,360 --> 00:44:24,360 Speaker 1: I mean I think to run to run one a 763 00:44:24,480 --> 00:44:28,239 Speaker 1: sick would be I think you'd end up with a 764 00:44:28,239 --> 00:44:30,320 Speaker 1: pretty hefty electricity bill at the end of the month. 765 00:44:31,440 --> 00:44:35,040 Speaker 1: So you can imagine what running racks of these things. 766 00:44:35,040 --> 00:44:38,160 Speaker 1: And I mean people have thousands, thousands upon thousands of 767 00:44:38,200 --> 00:44:41,600 Speaker 1: A six just running and running and running all the time. Yeah, 768 00:44:42,480 --> 00:44:45,880 Speaker 1: but obviously the bitcoin block rewards are such that bitcoin 769 00:44:45,960 --> 00:44:48,319 Speaker 1: is so valuable now that the block rewards make it 770 00:44:48,360 --> 00:44:51,439 Speaker 1: worth it. But this is why obviously people generally tend 771 00:44:51,480 --> 00:44:55,600 Speaker 1: to go where power is cheaper, and ideally through renewable energy, 772 00:44:55,640 --> 00:44:58,680 Speaker 1: because renewable energy tends to be cheaper and obviously it 773 00:44:58,719 --> 00:45:01,640 Speaker 1: doesn't have you could use them to heat your house. Yeah, 774 00:45:01,680 --> 00:45:03,640 Speaker 1: well this is that this is something. This is another 775 00:45:03,760 --> 00:45:07,280 Speaker 1: This is another part of it, because they do admit 776 00:45:07,400 --> 00:45:09,000 Speaker 1: an awful lot of heat and you have to cool 777 00:45:09,080 --> 00:45:12,120 Speaker 1: them down. Um. So a lot of minus have gone 778 00:45:12,120 --> 00:45:16,200 Speaker 1: to places like Canada or Iceland. Iceland is a particular popular, 779 00:45:16,320 --> 00:45:20,319 Speaker 1: particularly popular place for mining cryptocharacters that have like that, 780 00:45:20,520 --> 00:45:23,640 Speaker 1: that sort of volcanic power. Yeah, I think you can. 781 00:45:23,760 --> 00:45:27,279 Speaker 1: You cannot only power it quite cheaply through yeah, geothermal 782 00:45:27,320 --> 00:45:30,799 Speaker 1: I think. But it's also bloody cold. So if you've 783 00:45:30,800 --> 00:45:32,600 Speaker 1: got a warehouse full of these things, you just I 784 00:45:32,600 --> 00:45:35,760 Speaker 1: don't know, you to open the doors a bit. Yeah, 785 00:45:36,080 --> 00:45:38,640 Speaker 1: let the breeze sort it gonna crack the window, will you? 786 00:45:39,200 --> 00:45:40,719 Speaker 1: But yeah, I mean do you just think if you 787 00:45:40,760 --> 00:45:45,160 Speaker 1: have these the bottom of your house in Iceland? Ye? 788 00:45:45,440 --> 00:45:50,640 Speaker 1: Whack up the older bitcoin? I have heard. Yeah, because 789 00:45:50,640 --> 00:45:53,600 Speaker 1: this this mining, this whole business of mining is obviously 790 00:45:53,640 --> 00:45:56,720 Speaker 1: something that's um that's been kind of front and center 791 00:45:57,280 --> 00:46:02,360 Speaker 1: in in bitcoin recently because of concerns e s g. Environmental, social, 792 00:46:02,400 --> 00:46:05,680 Speaker 1: and governance. And this is what stops a lot of people, 793 00:46:05,760 --> 00:46:08,600 Speaker 1: a lot of institutions, especially investing in bitcoin, is it's 794 00:46:08,640 --> 00:46:12,359 Speaker 1: perceived environmental impact. Um. And I have heard yeah, I 795 00:46:12,400 --> 00:46:16,080 Speaker 1: have heard talk about converting this heat that that these 796 00:46:16,120 --> 00:46:19,600 Speaker 1: A six produce, converting that heat into heat for people's 797 00:46:19,640 --> 00:46:23,080 Speaker 1: homes or you know some other I mean, you can 798 00:46:23,160 --> 00:46:25,360 Speaker 1: use heat for all sorts of things. Can't you create 799 00:46:25,360 --> 00:46:29,120 Speaker 1: more electricity? Yeah? Yeah, so there's I think there are 800 00:46:29,120 --> 00:46:32,600 Speaker 1: all sorts of pretty clever solutions. I mean, what's the energy. 801 00:46:32,600 --> 00:46:34,719 Speaker 1: So the energy that goes in electricity, what comes out 802 00:46:35,120 --> 00:46:39,719 Speaker 1: is computing power, heat and noise I imagine, Yeah, yeah, 803 00:46:39,760 --> 00:46:43,440 Speaker 1: a lot of noise I think wearing around Yeah, um 804 00:46:43,560 --> 00:46:46,919 Speaker 1: so yeah. The environmental impact of bitcoin mining is something 805 00:46:46,960 --> 00:46:50,080 Speaker 1: that's been troubling a lot of people, and you know, 806 00:46:50,200 --> 00:46:52,439 Speaker 1: fair enough really, I mean it does use a lot 807 00:46:52,520 --> 00:46:55,440 Speaker 1: of electricity, and I mean estimates vary, but it's kind 808 00:46:55,440 --> 00:46:58,880 Speaker 1: of people people regularly say or regularly compare it to 809 00:46:58,920 --> 00:47:02,480 Speaker 1: the energy usage a pretty large country. I think Argentina 810 00:47:02,520 --> 00:47:06,879 Speaker 1: has been held up as if you think about all 811 00:47:06,920 --> 00:47:10,880 Speaker 1: the electricity and wasting sort of a third party ledger 812 00:47:11,440 --> 00:47:15,479 Speaker 1: m like, so all the electricity that Visa, master Card 813 00:47:15,640 --> 00:47:19,880 Speaker 1: amex or or all these banks are using, is it 814 00:47:19,920 --> 00:47:23,319 Speaker 1: not comparable? I don't think so. I mean it's it's 815 00:47:23,360 --> 00:47:26,480 Speaker 1: certainly fair to say that. Yeah, the likes of Visa 816 00:47:26,520 --> 00:47:30,359 Speaker 1: will use a lot of electricity. But the problem is, 817 00:47:30,520 --> 00:47:34,200 Speaker 1: I think that because so many minors on the Bitcoin 818 00:47:34,239 --> 00:47:37,719 Speaker 1: network are competing to do this and only one can win, 819 00:47:38,360 --> 00:47:40,480 Speaker 1: a lot of that energy, you can say is just 820 00:47:40,560 --> 00:47:45,120 Speaker 1: being expended really for nothing? Um. But yeah, we shouldn't. 821 00:47:45,160 --> 00:47:48,680 Speaker 1: We shouldn't kid ourselves that other systems were using And 822 00:47:48,719 --> 00:47:51,120 Speaker 1: you you've got to be careful about sort of straying 823 00:47:51,120 --> 00:47:54,080 Speaker 1: into kind of what about is um here? But yeah, 824 00:47:54,280 --> 00:47:57,719 Speaker 1: I mean anything we do, whether it's watching YouTube or 825 00:47:57,800 --> 00:48:02,120 Speaker 1: listening to a podcast, or using visa or banking network 826 00:48:02,200 --> 00:48:05,080 Speaker 1: or anything like that, it does use electricity. It does 827 00:48:05,200 --> 00:48:10,680 Speaker 1: use power, and we need power for our society to function. Um. 828 00:48:10,719 --> 00:48:13,520 Speaker 1: But yet, for me, this is just another kind of 829 00:48:13,800 --> 00:48:16,360 Speaker 1: another argument for saying that we have the we have 830 00:48:16,400 --> 00:48:20,680 Speaker 1: the ability to produce clean and constant energy. It's it's 831 00:48:20,680 --> 00:48:23,520 Speaker 1: about having the will to do it. I think humanity 832 00:48:23,600 --> 00:48:27,680 Speaker 1: is more than capable of producing as much electricity as 833 00:48:27,680 --> 00:48:29,560 Speaker 1: it could ever need, more than it would ever need, 834 00:48:29,840 --> 00:48:33,040 Speaker 1: and it's capable of doing so without burning fossil fuels. 835 00:48:33,040 --> 00:48:37,120 Speaker 1: But it's it's finding the will to do that. But yes, certainly, 836 00:48:37,320 --> 00:48:41,520 Speaker 1: bitcoin's environmental impact that the sheer electric the sheer amount 837 00:48:41,600 --> 00:48:45,080 Speaker 1: of electricity use. To mind, bitcoin has been has been 838 00:48:45,120 --> 00:48:47,080 Speaker 1: a problem for a while, and this is it's one 839 00:48:47,120 --> 00:48:49,600 Speaker 1: of the things that Elon Musk cited when he because 840 00:48:49,640 --> 00:48:51,480 Speaker 1: you remember he said old Tesla is now going to 841 00:48:51,520 --> 00:48:54,719 Speaker 1: accept btc is payment for its cars, and then he 842 00:48:54,800 --> 00:48:59,480 Speaker 1: didn't about turn not long after, and that was supposedly 843 00:48:59,560 --> 00:49:03,240 Speaker 1: over concerns about bitcoin's environmental impact. And he has said 844 00:49:04,120 --> 00:49:08,480 Speaker 1: that when bitcoin mining, when the amount of renewable energy 845 00:49:08,680 --> 00:49:12,880 Speaker 1: used for bitcoin mining goes above fifty for the entire network, 846 00:49:12,960 --> 00:49:16,080 Speaker 1: then Tesla will start reaccepting btc um. And there are 847 00:49:16,080 --> 00:49:18,640 Speaker 1: plenty of people who argue that it's now much higher 848 00:49:18,680 --> 00:49:21,400 Speaker 1: than that. Some people will tell you it's it's over fifty. 849 00:49:21,719 --> 00:49:25,919 Speaker 1: Some people say it's about But Ellen hasn't gone hasn't 850 00:49:25,920 --> 00:49:30,160 Speaker 1: gone back to that many sales with it I heard, 851 00:49:30,280 --> 00:49:32,520 Speaker 1: I don't know, have four sales or twelve sales really 852 00:49:32,840 --> 00:49:37,280 Speaker 1: with It's interesting. Yeah, it's not a big number. Yeah, 853 00:49:37,320 --> 00:49:40,320 Speaker 1: I mean, I suppose because the price of bitcoin was 854 00:49:40,360 --> 00:49:42,759 Speaker 1: climbing so much at the time, people were kind of 855 00:49:43,120 --> 00:49:45,440 Speaker 1: you know, people were huddling, people were keeping hold of 856 00:49:45,440 --> 00:49:48,120 Speaker 1: it um. And there's one other thing to say about 857 00:49:48,120 --> 00:49:51,680 Speaker 1: the environmental impact of bitcoin. Um and that's that these 858 00:49:51,760 --> 00:49:55,759 Speaker 1: A six, these specialized mining rigs. Obviously, the problem is 859 00:49:55,800 --> 00:49:58,720 Speaker 1: when you're in an arms race, someone is always working 860 00:49:58,760 --> 00:50:01,960 Speaker 1: to fight to get an advance cottage. So periodically some 861 00:50:02,120 --> 00:50:04,799 Speaker 1: company or other will come up with a more efficient 862 00:50:05,040 --> 00:50:09,520 Speaker 1: bitcoin mining by bitcoin mining machine, a better ASIC, and 863 00:50:09,600 --> 00:50:12,360 Speaker 1: all the obsolete ones are just canned, are just chucked 864 00:50:12,360 --> 00:50:15,200 Speaker 1: on the chucked on the on the on the trash, 865 00:50:15,200 --> 00:50:18,040 Speaker 1: which obviously makes for a lot of e waste, which 866 00:50:18,120 --> 00:50:22,680 Speaker 1: is not good. UM. So yeah, it is this. It 867 00:50:22,840 --> 00:50:29,840 Speaker 1: is this amazingly, amazingly energy intensive process and some would say, 868 00:50:29,880 --> 00:50:32,840 Speaker 1: some would say it was wasteful. But all this work 869 00:50:32,920 --> 00:50:35,600 Speaker 1: is being done in order to keep the network secure, 870 00:50:35,640 --> 00:50:38,480 Speaker 1: in order that someone can't just join the network with 871 00:50:38,520 --> 00:50:42,680 Speaker 1: all their buddies and and and have undue influence over it. 872 00:50:43,320 --> 00:50:46,280 Speaker 1: And many argue that proof of work is the only 873 00:50:46,360 --> 00:50:50,400 Speaker 1: really failsafe way of keeping a blockchain like that secure 874 00:50:50,480 --> 00:50:55,080 Speaker 1: because the barriers to entry, the cost of trying to 875 00:50:55,520 --> 00:50:58,400 Speaker 1: trying to corrupt the network is so high that no one, 876 00:50:58,719 --> 00:51:00,919 Speaker 1: no one could be incentivized do it, whether they're doing 877 00:51:00,920 --> 00:51:03,799 Speaker 1: it for supposed financial gain or whether they're doing it 878 00:51:03,880 --> 00:51:05,839 Speaker 1: just because as I think, as I think you said, 879 00:51:05,880 --> 00:51:11,600 Speaker 1: they just want to watch the world. Yeah so so yeah, 880 00:51:11,640 --> 00:51:13,879 Speaker 1: so that's what's that's what's going on. That's what's going 881 00:51:13,920 --> 00:51:16,920 Speaker 1: on with bitcoin mining. That's why it uses so much electricity, 882 00:51:16,960 --> 00:51:19,960 Speaker 1: that's why so many people have had a problem with it. 883 00:51:20,080 --> 00:51:23,759 Speaker 1: So we have a really large and scattered group of 884 00:51:23,760 --> 00:51:28,400 Speaker 1: computers making up this network, truly decentralized. There's no central authority, 885 00:51:28,560 --> 00:51:31,560 Speaker 1: no one is in charge. Some of these computers, the 886 00:51:31,680 --> 00:51:34,920 Speaker 1: notes are merely running the software, storing a record of 887 00:51:34,960 --> 00:51:37,720 Speaker 1: what happens on the network. They don't receive any reward 888 00:51:37,760 --> 00:51:40,120 Speaker 1: for this. They just know that they're contributing to the 889 00:51:40,120 --> 00:51:43,800 Speaker 1: security of the network. Glad to be part of the team, exactly, exactly, 890 00:51:43,960 --> 00:51:47,000 Speaker 1: happy to be happy to be a board. But then 891 00:51:47,040 --> 00:51:50,440 Speaker 1: we have the miners doing the heavy lifting, their BATCHNG transactions. 892 00:51:50,440 --> 00:51:53,200 Speaker 1: They're confirming them and they're ensuring that blocks are added 893 00:51:53,239 --> 00:51:55,680 Speaker 1: to the chain and the network is constantly being updated. 894 00:51:55,920 --> 00:51:58,600 Speaker 1: And in order to do this, in order to participate 895 00:51:58,640 --> 00:52:01,760 Speaker 1: in that process, they are using proof of work because 896 00:52:01,800 --> 00:52:04,040 Speaker 1: it stops them from being able to join the network 897 00:52:04,120 --> 00:52:07,160 Speaker 1: for free and maybe manipulate it to their advantage or 898 00:52:07,200 --> 00:52:10,879 Speaker 1: for destructive purposes or whatever. They get rewarded for their 899 00:52:10,880 --> 00:52:14,400 Speaker 1: work by essentially being entered into a lottery for new bitcoins, 900 00:52:14,440 --> 00:52:17,440 Speaker 1: for new btc, and the more hash power they add 901 00:52:17,480 --> 00:52:20,399 Speaker 1: to the network, the more lottery tickets they get, or 902 00:52:20,680 --> 00:52:23,120 Speaker 1: going back to that dice analogy, the more dice they 903 00:52:23,160 --> 00:52:26,919 Speaker 1: get to roll. And here's the really clever thing about 904 00:52:26,920 --> 00:52:29,400 Speaker 1: all this and what it's what helps keep the bitcoin 905 00:52:29,480 --> 00:52:34,040 Speaker 1: network so secure Because these miners receive bitcoin rewards for 906 00:52:34,040 --> 00:52:37,680 Speaker 1: their work, they have an economic incentive in staying Honestum, 907 00:52:38,120 --> 00:52:40,000 Speaker 1: if they were to go to all the effort of 908 00:52:40,000 --> 00:52:42,000 Speaker 1: trying to take over the network and manipulate it to 909 00:52:42,040 --> 00:52:45,000 Speaker 1: their own ends, whatever those ends would be, it would 910 00:52:45,080 --> 00:52:48,480 Speaker 1: quickly become obvious, people would lose confidence in it, and 911 00:52:48,640 --> 00:52:51,640 Speaker 1: the value of the bitcoin that these miners hold would drop. 912 00:52:52,160 --> 00:52:55,560 Speaker 1: So there's yeah, there's a there's an economic incentive both 913 00:52:55,640 --> 00:53:01,920 Speaker 1: to participate and stay honesty. Yes, I love you, I 914 00:53:02,000 --> 00:53:10,279 Speaker 1: love you too, But can we end this episode? What 915 00:53:11,800 --> 00:53:14,600 Speaker 1: I think? Listen, we just need little chunks, little chunks, 916 00:53:14,680 --> 00:53:17,680 Speaker 1: little chunks when it comes to stuff like this, And 917 00:53:17,760 --> 00:53:20,560 Speaker 1: I think my brain is at capacity. I'm going to 918 00:53:20,640 --> 00:53:23,279 Speaker 1: need another week just to let all this sink in 919 00:53:23,600 --> 00:53:26,200 Speaker 1: and then we're going to tackle part through your blockchain. 920 00:53:26,320 --> 00:53:28,680 Speaker 1: I did see what looked like steam coming out of 921 00:53:28,680 --> 00:53:33,800 Speaker 1: your ears at one point. My nose is bleeding. Fair enough, Mikey, 922 00:53:33,920 --> 00:53:37,160 Speaker 1: because because I love you so much. Yeah, let's call this, 923 00:53:37,400 --> 00:53:39,400 Speaker 1: let's call it today there, and we'll pick this up 924 00:53:39,440 --> 00:53:52,240 Speaker 1: next time. Sounds good. For more podcasts from I heart Radio, 925 00:53:52,520 --> 00:53:56,080 Speaker 1: visit the I heart Radio app, Apple Podcasts, or wherever 926 00:53:56,320 --> 00:53:59,640 Speaker 1: you get your podcasts. The coin view of podcast is 927 00:53:59,680 --> 00:54:01,439 Speaker 1: a action of my heart rate.