WEBVTT - The Mark Moss Show Dec 13, 2021 0:00:00.320 --> 0:00:03.120 Hey, welcome back. You are listening to the Mark Moa Show, 0:00:03.240 --> 0:00:06.440 and we're talking about bitcoin. We're talking about cryptocurrencies, and 0:00:06.480 --> 0:00:10.399 we are talking about the decentralized revolution. We are talking 0:00:10.400 --> 0:00:13.200 about a revolution that is sweeping the world. And I'm 0:00:13.200 --> 0:00:15.520 trying to bring this to you each end, every week. 0:00:15.760 --> 0:00:18.120 It should be the most important part of your week, 0:00:18.160 --> 0:00:22.000 the most powerful, the most profitable part of your week, 0:00:22.040 --> 0:00:27.080 because you're literally witnessing, like I said, a revolution, a 0:00:27.240 --> 0:00:31.640 decentralized revolution, a technological revolution that's literally going to change 0:00:31.680 --> 0:00:35.280 the way the world works. We've had about five technological 0:00:35.280 --> 0:00:38.080 revolutions over the last two d and fifty years. They 0:00:38.120 --> 0:00:42.160 happen um about every fifty years, and we're witnessing one 0:00:42.360 --> 0:00:47.320 right now. It's one of the key pivotal moments in history. 0:00:47.680 --> 0:00:50.080 You know, when you study history like I do, you'll 0:00:50.120 --> 0:00:52.480 see that. You know, history books are written about key 0:00:52.600 --> 0:00:56.320 points right where history changes, and history books will be 0:00:56.320 --> 0:01:00.040 written about this point in time. And while you know, 0:01:00.160 --> 0:01:02.960 the future is uncertain and sometimes it's scary, UM, I 0:01:03.000 --> 0:01:07.640 think it's scary anyway, UM, it can be overwhelming. Sometimes 0:01:08.240 --> 0:01:11.160 I also like to step back and appreciate the fact 0:01:11.160 --> 0:01:15.160 that we are literally witnessing this happening. We're living through it, um, 0:01:15.200 --> 0:01:18.760 and we have massive opportunity in front of us. So, UM, 0:01:18.800 --> 0:01:21.119 if you listen on a regular basis, thank you, welcome back. 0:01:21.120 --> 0:01:23.360 I'm gonna make sure that I'm gonna make it a 0:01:23.360 --> 0:01:25.040 priority to make sure it's the most important part of 0:01:25.080 --> 0:01:27.199 the week. If you're new to the Markma Show listening 0:01:27.200 --> 0:01:30.679 about bitcoin and cryptocurrencies, then UM, pull out your phone 0:01:30.720 --> 0:01:33.039 if you're not driving, and put a calendar reminder for 0:01:33.080 --> 0:01:35.840 this channel at this time to come back with me 0:01:35.920 --> 0:01:39.920 each and every week. Now, I try to talk about 0:01:40.600 --> 0:01:42.720 There's a couple of things that I'm trying to do. One, 0:01:42.800 --> 0:01:45.600 I want to give you the education you need so 0:01:45.680 --> 0:01:48.440 you understand what's happening with bitcoin and cryptocurrencies in this 0:01:48.480 --> 0:01:52.920 decentralized revolution. You need to have the education, the education 0:01:53.080 --> 0:01:57.559 what is going on? What is this? How does it work? How? 0:01:57.920 --> 0:01:59.600 How can it make money for me? Right? How can it? 0:01:59.680 --> 0:02:01.800 How can it saved the world? Right? So you need 0:02:01.840 --> 0:02:04.880 that education base and education is so important. That's why 0:02:05.520 --> 0:02:07.760 you know, you see people that win the lottery or 0:02:07.880 --> 0:02:10.320 pro athletes that make a hundred million dollars, or you know, 0:02:10.639 --> 0:02:13.120 rappers or musicians and they make all this money and 0:02:13.120 --> 0:02:14.959 then they go broke. And the reason why they go 0:02:15.000 --> 0:02:17.280 broke is because they got the money, but they didn't 0:02:17.360 --> 0:02:20.440 have the education. And so if you want to participate 0:02:20.600 --> 0:02:24.440 in this this revolution, in this wealth transfer, then you 0:02:24.480 --> 0:02:27.880 have to understand what's going on. Now you can get lucky. 0:02:28.440 --> 0:02:30.919 You can you can go buy some random meme coin 0:02:30.960 --> 0:02:32.840 because one of your friends told you to, and you 0:02:32.919 --> 0:02:34.839 might get lucky. And that's great and and I hope 0:02:34.840 --> 0:02:36.800 it works out for you. You can also get lucky 0:02:36.840 --> 0:02:38.800 buying lottery tickets, and you can also get lucky going 0:02:38.800 --> 0:02:41.440 to Vegas as well. But it's not a good long 0:02:41.520 --> 0:02:44.640 term strategy. You need to have the edge. You need 0:02:44.680 --> 0:02:46.280 to have the education. And so I want to bring 0:02:46.320 --> 0:02:48.239 you that education eagent every week and kind of kind 0:02:48.240 --> 0:02:51.000 of help you build that base. I also keep you 0:02:51.080 --> 0:02:53.360 up to date on the latest news and development, so 0:02:53.400 --> 0:02:56.000 you know what's going on, so you know you're not 0:02:56.040 --> 0:02:58.640 just being distracted by the price, but rather you know 0:02:58.919 --> 0:03:00.520 what's going on. And I keep you have to date. 0:03:00.560 --> 0:03:02.040 That way, when you you know you go to the 0:03:02.160 --> 0:03:04.400 go to the cocktail party this weekend, you can talk 0:03:04.400 --> 0:03:06.120 with your friends and you can sound like you're the 0:03:06.120 --> 0:03:08.280 smartest guy in the room. I'm gonna I'm gonna be 0:03:08.360 --> 0:03:10.720 that secret weapon for you. And then of course I 0:03:10.760 --> 0:03:12.560 want to make it entertaining so it's fun while you're 0:03:12.639 --> 0:03:15.880 learning these things. Today, I want to start off with 0:03:16.040 --> 0:03:17.840 some good education that we have, and I want to 0:03:17.840 --> 0:03:21.200 talk about some of the big differences that are happening 0:03:21.639 --> 0:03:25.120 in the cryptocurrency space. And there's a big difference between 0:03:25.560 --> 0:03:30.280 UM how they work and how they achieve this decentralization UM. 0:03:30.320 --> 0:03:32.360 And there's two main ways that's done through proof of 0:03:32.440 --> 0:03:35.320 work and proof of steak. So I'm gonna talk to 0:03:35.320 --> 0:03:37.080 you a little bit about what those means so you 0:03:37.120 --> 0:03:39.800 can understand what that is, the trade offs, the pros 0:03:39.800 --> 0:03:42.280 and cons, what are the differences of there. I then 0:03:42.360 --> 0:03:44.320 want to take that and I want to dig into 0:03:44.400 --> 0:03:47.040 a little bit into UM the proof of steak and 0:03:47.080 --> 0:03:49.560 then what kind of use cases it may have UM 0:03:49.600 --> 0:03:51.640 ways to look at that, and then we're gonna dig 0:03:51.680 --> 0:03:53.680 into a little bit of defy. We're gonna talk about 0:03:53.680 --> 0:03:56.800 this decentralized finance UM, and then we'll even talk a 0:03:56.880 --> 0:03:58.720 little bit about some n f T s. All Right, 0:03:59.120 --> 0:04:01.880 it's a it's a it's a big subject to dive into. 0:04:01.880 --> 0:04:02.960 And I don't have a lot of time, so I'm 0:04:02.960 --> 0:04:04.760 gonna go through some of this a little bit faster, 0:04:05.160 --> 0:04:06.800 and then if I get some good feedback from you guys, 0:04:06.960 --> 0:04:08.560 we'll dig in a little bit more into each of 0:04:08.600 --> 0:04:10.960 these subjects. All right. So that's what I thought we'd 0:04:11.160 --> 0:04:14.760 cover today. Give you that foundation so you understand what 0:04:14.840 --> 0:04:17.560 the heck is going on. Now if you're just tuning in, 0:04:17.640 --> 0:04:20.159 you listen to the markma Show and we're talking about bitcoin, 0:04:20.240 --> 0:04:23.800 and we're talking about cryptocurrencies, and we're talking about the 0:04:23.880 --> 0:04:28.080 decentralized revolution. So when we say decentralized, what does that 0:04:28.200 --> 0:04:33.240 even mean. Well, it's the opposite of centralized, right, So, um, 0:04:33.400 --> 0:04:35.960 most databases are all data based up and down now 0:04:36.000 --> 0:04:42.360 are centralized. So Facebook, Amazon, Netflix, these are giant databases. 0:04:42.600 --> 0:04:45.599 It's a giant computer that stores all the data in 0:04:45.600 --> 0:04:49.839 a centralized database. Everything in the world is a centralized database. 0:04:50.640 --> 0:04:53.280 It's also why you see these major hacks happening, right. 0:04:53.320 --> 0:04:57.000 Experience was hacked. Everybody's information got leaked onto the onto 0:04:57.040 --> 0:05:01.520 the web. Facebook gets hacked. Um, even the n s 0:05:01.600 --> 0:05:03.520 A was hacked. And when they hacked the n s A, 0:05:04.040 --> 0:05:06.760 they stole the N s as hacking software, which is 0:05:06.760 --> 0:05:09.440 why we have all these ransomware attacks today. They say 0:05:09.480 --> 0:05:13.040 it's Bitcoin's fault, Cryptocurrenci's fault. No, no, no, no, it's 0:05:13.080 --> 0:05:15.600 the NSA's fault. They're the one that got hacked. They 0:05:15.600 --> 0:05:17.599 could have just told Microsoft to fix the patch, but 0:05:17.640 --> 0:05:20.159 they didn't, and now we have this ransomware attack. But 0:05:20.279 --> 0:05:23.000 that's a whole another story. Um. But so those are 0:05:23.120 --> 0:05:25.880 centralized databases, and no matter if you have the best 0:05:25.880 --> 0:05:27.960 security in the history of the world, like the n 0:05:28.040 --> 0:05:30.640 s A UM in a in a secure building, with 0:05:30.720 --> 0:05:32.600 the best I T team in the world, UM and 0:05:32.640 --> 0:05:36.000 the best hypersecurity experts, you still get hacked. All right. 0:05:36.560 --> 0:05:39.480 What we have the opposite is we have decentralized databases. 0:05:39.520 --> 0:05:42.720 So Bitcoin was started as a decentralized database. So what 0:05:42.760 --> 0:05:45.720 does that mean. It means that it's study and having 0:05:45.839 --> 0:05:50.440 one computer with one database. Now you have hundreds of 0:05:50.480 --> 0:05:54.640 thousands or millions of computers, each with their own copy 0:05:54.880 --> 0:05:58.839 of the database. And then all of those computers, those 0:05:58.880 --> 0:06:02.279 millions of computers be spread all around the world in 0:06:02.320 --> 0:06:06.520 different locations, and they each run the exact copy of 0:06:06.560 --> 0:06:10.120 the full database. And then in order for a transaction, 0:06:10.160 --> 0:06:13.960 to happen, the databases have to achieve consensus. That means 0:06:13.960 --> 0:06:17.480 they have to have fifty or more have to agree 0:06:17.839 --> 0:06:21.240 that that is a valid transaction, and that's what creates 0:06:21.240 --> 0:06:24.760 the decentralization. It would be kind of like if I 0:06:24.839 --> 0:06:28.360 had a billion dollars. If I had a hundred billion 0:06:28.400 --> 0:06:30.960 dollars sitting in a bank account, there would be a 0:06:31.000 --> 0:06:32.840 lot of people that want to break into that bank account. 0:06:32.920 --> 0:06:36.200 Bank robbers would be planning and scheming to break into 0:06:36.240 --> 0:06:39.440 that bank. And and if it was a hundred billion dollars, 0:06:39.440 --> 0:06:42.400 they could spend a lot of money and time trying 0:06:42.440 --> 0:06:44.599 to break into that bank because the reward would be 0:06:44.640 --> 0:06:47.839 so high. Right, But what if I had a hundred 0:06:47.839 --> 0:06:51.440 billion banks that each had one dollar in them each? 0:06:52.000 --> 0:06:54.919 Mm hmmm. See, now it wouldn't be worth anyone's time. 0:06:55.440 --> 0:06:58.520 The cost to do the attack would be more than 0:06:58.560 --> 0:07:01.599 the reward they could potentially get. Now you're starting to 0:07:01.640 --> 0:07:04.320 get the idea. Now. Bitcoin is a lot of things, 0:07:04.320 --> 0:07:06.560 and I talked about this on a regular basis. Um, 0:07:06.600 --> 0:07:08.640 it's sort of like digital cash, it's sort of like 0:07:08.680 --> 0:07:11.480 digital gold. Um, it's sort of like a lot of things. 0:07:11.520 --> 0:07:13.520 But one thing we do know for sure is it's 0:07:13.640 --> 0:07:16.520 the most secure computer network in the history of the world. 0:07:16.920 --> 0:07:20.120 While all those other centralized databases have been hacked, the 0:07:20.160 --> 0:07:23.680 Bitcoin network has never been hacked. As a matter of fact. 0:07:24.040 --> 0:07:27.440 Unlike the n s A that has an cybersecurity team 0:07:27.480 --> 0:07:30.760 and you know, impeneture walls and all these things protecting it. 0:07:30.960 --> 0:07:34.760 Unlike that, the Bitcoin network is completely open. It's open source. 0:07:34.920 --> 0:07:37.800 Anybody can see it, anybody can see the code. It's permissionless, 0:07:37.840 --> 0:07:40.840 anybody can join it, anybody can build on it. And 0:07:40.840 --> 0:07:45.000 there's a trillion dollars of value sitting there in an 0:07:45.040 --> 0:07:49.360 open network that's not guarded, it's not protected, anybody can 0:07:49.400 --> 0:07:53.320 start programming on it, and it's never been hacked. It's 0:07:53.320 --> 0:07:55.520 pretty amazing. It's never been hacked. And the reason why 0:07:55.680 --> 0:07:59.520 is because it's a decentralized database. All right, So that 0:07:59.640 --> 0:08:03.280 sets the foundation. Now stick with me. I'm gonna I'm 0:08:03.280 --> 0:08:05.520 gonna I'm gonna dig into a little bit of technical, 0:08:05.200 --> 0:08:07.920 technical stuff, but I'll try to keep it simple. So, 0:08:08.600 --> 0:08:12.120 how do these databases achieve consensus? Remember they all have 0:08:12.160 --> 0:08:17.400 to achieve better well, with Bitcoin, it's done via a 0:08:17.440 --> 0:08:21.040 proof of work protocol, a proof of work, all right, 0:08:21.160 --> 0:08:24.160 So there's proof of work, and then there's a new 0:08:24.320 --> 0:08:26.880 version that's come out with all these new protocols called 0:08:26.960 --> 0:08:29.600 proof of steak, and there's a big difference, and you 0:08:29.640 --> 0:08:32.840 need to understand what the difference is. Proof of work 0:08:33.320 --> 0:08:37.040 is good for money. Proof of work is a decentralized database, 0:08:37.320 --> 0:08:40.800 where proof of steak is more like equity. It's more 0:08:40.840 --> 0:08:44.440 like a corporation um where you have these central players 0:08:44.480 --> 0:08:46.640 that can control it. But I want to explain to you, 0:08:46.679 --> 0:08:50.240 without going into super crazy detail, what the differences are, 0:08:50.440 --> 0:08:53.079 what type of programs would work on each one, and 0:08:53.120 --> 0:08:55.720 some pros and cons of each and then we're gonna 0:08:55.720 --> 0:08:58.520 get them to defy. What defy is how it works, 0:08:58.840 --> 0:09:00.800 some dangers that you need to be watching out for. 0:09:01.120 --> 0:09:02.880 And then I'm gonna talk a little bit about about 0:09:03.000 --> 0:09:05.679 n f t s and some some real dangers and 0:09:05.720 --> 0:09:07.320 n f t s that you need to know about. 0:09:07.600 --> 0:09:09.000 I get asked all the time, and I want to 0:09:09.000 --> 0:09:11.400 bring this to you. You're listening to the markma Show. 0:09:11.559 --> 0:09:14.240 Of course we're talking about bitcoin, we're talking about cryptocurrencies, 0:09:14.240 --> 0:09:18.319 and we're talking about the decentralized revolution. Trying to give 0:09:18.360 --> 0:09:21.439 you the information, the education you need to participate to 0:09:21.600 --> 0:09:25.320 profit from the largest wealth transfer in history. We're talking 0:09:25.320 --> 0:09:28.040 about proof of steak versus proof of work, and I'll 0:09:28.040 --> 0:09:30.720 be right back. Hey, welcome back. You are listening to 0:09:30.760 --> 0:09:32.959 the Markma Show, and of course each and every week 0:09:33.000 --> 0:09:36.160 I'm talking about bitcoin and cryptocurrencies and the decentralized revolution, 0:09:36.200 --> 0:09:39.959 which is the most important part of your week because 0:09:39.960 --> 0:09:42.400 this is the biggest revolution that we're witnessing. All the 0:09:42.480 --> 0:09:44.719 humanity is gonna be changed, that's how powerful this is. 0:09:45.040 --> 0:09:49.000 And we're currently we're talking about UM. Why, well really 0:09:49.000 --> 0:09:52.960 what bitcoin and how this decentralized UM technology works. And 0:09:53.000 --> 0:09:55.319 I was explaining, how do you have all these individual 0:09:55.440 --> 0:09:59.000 databases and they achieve consensus? So the network has to 0:09:59.040 --> 0:10:03.120 agree with each other, and there's two main consensus protocols. 0:10:03.240 --> 0:10:07.000 So Bitcoin uses something known as proof of work Ethereum 0:10:07.160 --> 0:10:09.760 also uses proof of work, but then a lot of 0:10:09.760 --> 0:10:14.079 these newer ones use something called proof of steak. Now, 0:10:14.840 --> 0:10:17.760 people are proposing these proof of steak protocols because they 0:10:17.800 --> 0:10:21.040 say they're more efficient. They don't use as much electricity 0:10:21.160 --> 0:10:24.240 or energy that bitcoin does, and so supposedly that makes 0:10:24.280 --> 0:10:28.079 them better. In my opinion, it doesn't. But what what 0:10:28.160 --> 0:10:31.640 I think most people are lacking some context on is 0:10:31.679 --> 0:10:36.480 that everything in life requires a trade off. Everything in 0:10:36.520 --> 0:10:38.280 life has a trade off. Right, there's no such thing 0:10:38.280 --> 0:10:41.480 as a free lunch. So in order to go from 0:10:41.520 --> 0:10:43.240 a proof of work to a proof of steak, maybe 0:10:43.280 --> 0:10:45.840 it is less energy efficient, but what are the tradeoffs? 0:10:45.960 --> 0:10:48.200 What are you giving up? All? Right? So I think 0:10:48.400 --> 0:10:50.720 I wanted to touch on that real quickly, and so 0:10:50.840 --> 0:10:54.319 real quickly. Um, you hear the term blockchain, So blockchain 0:10:54.600 --> 0:10:57.760 you could typically you could read any um it's called 0:10:57.760 --> 0:10:59.839 a white paper, any white paper for any cryptocurrency that 0:11:00.040 --> 0:11:02.320 there fifteen thousand of them, and as you're reading it, 0:11:02.360 --> 0:11:06.080 you could just substitute the word blockchain for database. You 0:11:06.080 --> 0:11:08.040 could read any of those papers and just substitute that 0:11:08.080 --> 0:11:10.520 word blockchain for database, and it would read exactly the 0:11:10.600 --> 0:11:13.560 same way. Now, in the Bitcoin white paper, they didn't 0:11:13.600 --> 0:11:16.719 reference the word blockchain. But the blockchain is basically the 0:11:16.840 --> 0:11:21.600 database and every tent on the Bitcoin blockchain, every ten minutes, 0:11:22.120 --> 0:11:26.679 a new block is added, which has thousands of transactions 0:11:26.720 --> 0:11:29.960 inside of it, and it adds one block onto the next, 0:11:30.040 --> 0:11:32.240 onto the next, onto the next. That's how it works. 0:11:32.880 --> 0:11:36.320 And what happens is you have all these computers that 0:11:36.400 --> 0:11:40.440 are specifically made for this purpose. Um. They didn't used 0:11:40.440 --> 0:11:41.800 to be in the beginning, you could do on your 0:11:41.800 --> 0:11:44.640 home computer. But today they've gotten to be very powerful computers. 0:11:45.160 --> 0:11:47.959 And this this powerful computer is now hooked in and 0:11:48.840 --> 0:11:51.640 to the critics point, that uses energy, and it uses 0:11:51.679 --> 0:11:53.400 quite a lot of energy. It could cost two hundred 0:11:53.440 --> 0:11:55.920 bucks or three hundred bucks a month to run this computer. 0:11:56.520 --> 0:11:58.960 And what what this computer is doing is it's solving. 0:11:59.520 --> 0:12:02.240 These millions of computers that are supporting the Bitcoin network 0:12:02.760 --> 0:12:06.160 are solving a puzzle, and they're trying to solve this 0:12:06.320 --> 0:12:09.600 mathematical puzzle to create the next block. So there's like 0:12:09.640 --> 0:12:12.920 this feedback and mechanism, and like I said, they're created 0:12:12.960 --> 0:12:16.160 about every ten minutes. And regardless of how many miners 0:12:16.200 --> 0:12:18.080 are on the network or not, it doesn't matter. The 0:12:18.200 --> 0:12:23.000 same amount of rewards will be created and released. Um. 0:12:23.040 --> 0:12:25.400 And what's important to understand about this is they all 0:12:25.440 --> 0:12:28.800 do this in this decentralized way. Now, if a minor, 0:12:28.960 --> 0:12:32.079 if one of these computers were to create an invalid block, 0:12:32.559 --> 0:12:34.520 then nobody else, none of the other nodes in the 0:12:34.520 --> 0:12:37.560 network would approve it, and that minor would have wasted 0:12:37.600 --> 0:12:41.640 the electricity they paid for and so it's the incentive. Right, 0:12:41.679 --> 0:12:45.360 Bitcoin changes the incentive structures. So UM show me the incentive, 0:12:45.400 --> 0:12:47.520 I show you the outcome. That's what Charlie Monger says. 0:12:47.600 --> 0:12:50.600 And so all of these miners are incentivized to be 0:12:50.760 --> 0:12:53.000 good actors. I spent a lot of money on the computer. 0:12:53.200 --> 0:12:55.360 I spent a lot of money on the electricity, and 0:12:55.400 --> 0:12:58.720 so now I'm incentivized to put up good blocks, to 0:12:58.760 --> 0:13:01.080 be a good actor on the network. If I don't, 0:13:01.480 --> 0:13:03.800 then the electricity I paid for and the money I 0:13:03.840 --> 0:13:07.439 spent on my mining computer would be wasted. All right. 0:13:07.960 --> 0:13:12.000 This is what's called proof of work. Millions of machines 0:13:12.320 --> 0:13:16.560 using electricity to apply processing power to guess the answer 0:13:16.559 --> 0:13:19.839 to a cryptographic puzzle that was left by the most 0:13:19.960 --> 0:13:23.160 recent block. Right, that's proof of work. It's a proof 0:13:23.200 --> 0:13:25.520 of work. We know the work was done. There's proof 0:13:25.559 --> 0:13:27.560 of it because they spent the money. Now this may 0:13:27.600 --> 0:13:29.840 seem like a waste of energy, but this is what 0:13:30.000 --> 0:13:34.319 keeps the system decentralized, all right, the work itself, the 0:13:35.160 --> 0:13:38.720 cost of the work. It's the arbiter of truth, right, 0:13:38.960 --> 0:13:42.520 because in this case, there's no central authority that decides 0:13:43.160 --> 0:13:46.000 what a valid block is so there's nobody there, there's 0:13:46.000 --> 0:13:49.679 no central authority that decides at Instead, it's the longest 0:13:49.760 --> 0:13:54.120 blockchain that wins and is recognized as the truth by 0:13:54.120 --> 0:13:58.520 the rest of the network based off that code. All right. Now, 0:13:58.640 --> 0:14:02.720 the more energy that bitcoin network uses, the more secure 0:14:03.000 --> 0:14:08.440 that its latest transaction is against attacks. So we we 0:14:08.520 --> 0:14:11.120 don't want the bitcoin network to use less energy. As 0:14:11.160 --> 0:14:12.880 a matter of fact, we want the bitcoin network to 0:14:12.960 --> 0:14:17.600 use more energy. The more energy it uses, the more 0:14:17.640 --> 0:14:20.440 resistant it is to attacks. Now, there's a lot of 0:14:20.680 --> 0:14:24.640 uh tiny or actually say smaller block chains that are 0:14:24.640 --> 0:14:27.480 not Bitcoin that have been victims to attacks. We call 0:14:27.560 --> 0:14:32.800 them attacks. So a single entity could temporarily get control 0:14:32.840 --> 0:14:34.480 of a bunch of processing power, so I can go 0:14:34.520 --> 0:14:36.360 rent it. Right now, I can go rent the hash 0:14:36.400 --> 0:14:38.960 power and for a few hundred thousand dollars or a 0:14:38.960 --> 0:14:41.520 few hundred for a few million dollars, I could rent 0:14:41.560 --> 0:14:44.200 that hashpower, that computer power, and I can attack a 0:14:44.280 --> 0:14:47.440 smaller network by taking over majority of the processing power. 0:14:47.600 --> 0:14:50.000 I could reorganize their blocks and do what's called a 0:14:50.040 --> 0:14:53.880 double spend, basically, create my money, create money from than air. 0:14:54.240 --> 0:14:56.920 All right, And and we've seen this happen over and 0:14:57.000 --> 0:15:00.480 over and over with these smaller coins, all right, And 0:15:00.560 --> 0:15:03.000 that's why this proof of work is important. And this 0:15:03.080 --> 0:15:06.400 is also why there will never be another Bitcoin, all right. 0:15:06.760 --> 0:15:10.000 And the reason why is because when other blockchains try 0:15:10.080 --> 0:15:12.160 to start a proof of work and set up like 0:15:12.200 --> 0:15:16.520 what Bitcoin has done, they don't have enough miners, enough 0:15:16.520 --> 0:15:19.360 computers supporting the network. There's not enough energy being used 0:15:19.440 --> 0:15:24.240 to secure it, and they get attacked all the time. Um. So, 0:15:24.560 --> 0:15:27.280 Like one good example is if we look at Bitcoin 0:15:27.680 --> 0:15:30.560 and then in two seventeen there was a fork of Bitcoin, 0:15:30.600 --> 0:15:33.560 and so bitcoin cash was spun off of that, and 0:15:33.600 --> 0:15:37.880 then bitcoin SV was spun off of that, and so 0:15:37.920 --> 0:15:39.760 a lot of people are saying, well, bitcoin cash is 0:15:39.800 --> 0:15:43.080 the real Bitcoin or Bitcoin SV, But both of those 0:15:43.080 --> 0:15:48.960 other blockchains have one percent or less of bitcoin network 0:15:49.080 --> 0:15:51.920 total processing power, all right, and they've both been hit 0:15:52.000 --> 0:15:55.400 by these attacks by these reorganizations. In fact, if just 0:15:55.600 --> 0:15:59.720 one percent of the Bitcoin miners decided that they wanted 0:15:59.760 --> 0:16:02.440 to just one percent of the mining miners and Bitcoin 0:16:02.480 --> 0:16:04.800 decided they want to attack on either of those two 0:16:04.880 --> 0:16:07.400 hard works, they could totally do it. But it's not 0:16:07.480 --> 0:16:10.480 true the other way. Bitcoin cash and bitcoin SV could 0:16:10.480 --> 0:16:13.720 not attack Bitcoin because there're only one percent of that. 0:16:13.800 --> 0:16:15.880 So that shows you the importance of the network effects. 0:16:15.880 --> 0:16:18.480 So anyone could copy Bitcoin, sure, they could fork it, 0:16:18.600 --> 0:16:23.000 no problem, but they can't replicate the network. They can't 0:16:23.080 --> 0:16:26.720 get the mining power that secures the network. All right. 0:16:27.720 --> 0:16:31.400 It would be like trying to copy, um, Facebook. I mean, 0:16:31.440 --> 0:16:34.280 I could probably hire developer for you know, ten dollars 0:16:34.280 --> 0:16:36.880 and build a very good copy of Facebook. But that 0:16:36.920 --> 0:16:39.240 doesn't mean I would have any traffic. That doesn't mean 0:16:39.240 --> 0:16:42.000 they can get all the users to come over, right. Uh, 0:16:42.080 --> 0:16:44.400 it would just be an empty shell. All right. Now 0:16:44.480 --> 0:16:47.280 let's compare that to a proof of steak. So that 0:16:47.400 --> 0:16:49.840 was proof of work. Hopefully that makes sense. I wasn't 0:16:49.880 --> 0:16:51.600 trying to go to too technical, but I want to 0:16:51.600 --> 0:16:53.560 give you this rough overview. Now I do want to 0:16:53.560 --> 0:16:58.920 say that this maybe doesn't matter that much. Um. Right now, 0:16:58.960 --> 0:17:02.800 you're hearing my voice come over the radio. How how 0:17:02.920 --> 0:17:05.320 is it that my voice from my studio is showing 0:17:05.400 --> 0:17:07.760 up in your car or your headphones? Do you know 0:17:07.840 --> 0:17:11.040 how that works? Of course the answer is no. Do 0:17:11.040 --> 0:17:12.920 you know who the Do you know who the developer 0:17:13.000 --> 0:17:16.119 is that designed this radio system? No? Of course you 0:17:16.119 --> 0:17:19.560 don't know that either. So none of this really matters, UM. 0:17:19.600 --> 0:17:22.240 But I think at a at a at an at 0:17:22.320 --> 0:17:24.200 least at least a high level, it's a good idea 0:17:24.200 --> 0:17:26.639 to understand this because there's a lot of confusion going 0:17:26.720 --> 0:17:29.159 in into the space, and I at least want to 0:17:29.160 --> 0:17:32.800 give you the two main you know, consensus mechanisms. You 0:17:32.840 --> 0:17:35.440 can understand that by the way. You're listening to Mark 0:17:35.520 --> 0:17:37.639 Moss the Mark mos Show. We're talking about bitcoin, we're 0:17:37.680 --> 0:17:41.679 talking about cryptocurrencies, and we're talking about the decentralized revolution. 0:17:42.560 --> 0:17:45.440 I'm explaining to you the difference of the two big 0:17:45.480 --> 0:17:48.240 consensus mechanisms, the proof of work, which we just went 0:17:48.280 --> 0:17:50.679 over with bitcoin, and then we're gonna talk about what 0:17:50.840 --> 0:17:53.639 proof of steak is and what's being done with that 0:17:53.720 --> 0:17:56.119 and how you should look at that UM again from 0:17:56.160 --> 0:17:58.359 a high level. Then we're gonna talk about defy, and 0:17:58.359 --> 0:18:00.199 we're gonna talk about n f T s and some 0:18:00.359 --> 0:18:02.520 danger that you may not be aware of in the 0:18:02.600 --> 0:18:03.879 n f T space, but I want you to be 0:18:03.920 --> 0:18:06.600 aware of it. So don't go away. I'm gonna be 0:18:06.680 --> 0:18:09.040 right back. Hey everyone, welcome back. You are listening to 0:18:09.040 --> 0:18:11.720 the Mark Moa Show, and we're talking about bitcoin. Of course, 0:18:11.760 --> 0:18:14.040 each and every week, and we're talking about cryptocurrencies and 0:18:14.080 --> 0:18:17.879 we're talking about the de centralized revolution. Now I was 0:18:17.960 --> 0:18:22.520 talking about how bitcoin, what what what what the decentralized 0:18:22.520 --> 0:18:26.360 technology is, and I'm explaining the two basic consensus mechanisms. 0:18:26.600 --> 0:18:28.440 Proof of work, which we just went over, which is 0:18:28.480 --> 0:18:31.320 what bitcoin a ethereum used today, and now we're going 0:18:31.359 --> 0:18:33.840 to talk about proof of steak, which is what a 0:18:33.840 --> 0:18:37.119 lot of other blockchains are using. And Ethereum is trying 0:18:37.160 --> 0:18:40.320 to transition from a proof of work to a proof 0:18:40.359 --> 0:18:43.439 of steak. Now, as I explained before the break, I 0:18:43.440 --> 0:18:45.520 said that proof of work is a system where miners 0:18:45.560 --> 0:18:50.560 compete with electricity and processing power to build the longest blockchain, 0:18:51.480 --> 0:18:55.879 which then becomes the accepted blockchain and the digital blockchain 0:18:56.720 --> 0:18:59.800 via a proof of work. Right, proof of work because 0:18:59.840 --> 0:19:02.560 they to prove their work by spinning that capital um. 0:19:02.600 --> 0:19:05.320 And it's proof of work because it's connected to real 0:19:05.520 --> 0:19:09.560 world natural resources. So they're taking a real world natural resource, 0:19:09.600 --> 0:19:13.879 electricity and converting it into a virtual asset. It's the 0:19:13.920 --> 0:19:15.240 only thing that's ever been done like this in the 0:19:15.240 --> 0:19:17.600 history of the world. All Right. It's been operated as 0:19:17.640 --> 0:19:20.000 proof of work since since it started in two thousand nine. 0:19:20.000 --> 0:19:24.000 Now Ethereum is the second largest network out there, and 0:19:24.200 --> 0:19:26.959 it's also operated proof of work as well since the beginning. 0:19:27.600 --> 0:19:29.760 But as I said, a lot of new smart contract 0:19:30.000 --> 0:19:32.840 block chains UM that have launched after that are now 0:19:33.000 --> 0:19:36.359 using this proof of steak network. Now, proof of steak 0:19:36.440 --> 0:19:39.639 is a system where holders of the cryptocurrency lock it 0:19:39.760 --> 0:19:43.000 up or they quote unquote steak um not like you 0:19:43.080 --> 0:19:46.560 eat but s T a k E. Steake their coins 0:19:46.960 --> 0:19:49.080 and by staking their coins by locking them up, they 0:19:49.080 --> 0:19:51.919 get to vote on the valid blockchain, and then they 0:19:51.960 --> 0:19:55.920 get rewarded with more coins for successfully creating the new 0:19:55.920 --> 0:19:59.240 blocks instead of like the proof of work, instead of 0:19:59.280 --> 0:20:02.120 having to commit electricity, instead of having to actually put 0:20:02.200 --> 0:20:04.760 money up for the electricity and the processing power to 0:20:04.800 --> 0:20:08.320 create new blocks on the blockchain. Instead, all they're doing 0:20:08.440 --> 0:20:11.240 is staking their coins. They're putting them up without actually 0:20:11.280 --> 0:20:14.480 giving them up. All right, now, proof of proof of 0:20:14.520 --> 0:20:17.360 work or simple right, there's no need to punish these 0:20:17.400 --> 0:20:20.640 bad miners. Remember, they're incentivized to do good work UM 0:20:20.680 --> 0:20:23.800 because if they do it wrong, they lose their UM, 0:20:23.840 --> 0:20:27.760 they lose the money they spent on electricity. Okay, easy 0:20:27.960 --> 0:20:30.840 um that they lose it they self inflict their own wound, 0:20:31.040 --> 0:20:33.640 and and so that that doesn't ever happen because there's 0:20:33.640 --> 0:20:37.080 a tangible connection between the blockchain and the real world 0:20:37.520 --> 0:20:40.480 resource of energy. But proof of stakes way more complex, 0:20:40.480 --> 0:20:41.879