Blockchain Technology

Summary

This video script offers an in-depth exploration of blockchain technology, covering its definition, key terms, history, and applications. It delves into the workings of cryptocurrencies like Bitcoin and Ethereum, highlighting benefits, limitations, and the technology's impact on various industries. The script also discusses notable cryptocurrency disasters and the challenges faced by blockchain, providing a comprehensive guide for those interested in understanding this transformative technology.

Takeaways

• 😀 Blockchain technology allows transactions to be recorded in blocks and accessed by a distributed network without a central authority.
• 🔒 It provides a secure way to create, transfer, and record asset ownership and transactions through cryptographic means.
• 📈 Blockchain offers benefits such as reduced cost and complexity, trusted recordkeeping, improved discoverability, and a shared trusted process.
• 🚧 Limitations of blockchain include the need for high-performance transactions, a suitable business network, and potential database or messaging solution replacements.
• 🌐 Decentralized nodes are integral to blockchain, operating as systems that record transactions without a financial intermediary like a bank.
• 💻 A node in blockchain is a computer that participates in the network, keeping a copy of the blockchain and verifying transactions through mining.
• 🔑 Hashing is a cryptographic function used in blockchain to ensure that the same input always produces the same hash, securing the integrity of the blockchain.
• 💰 Transactions in blockchain are validated through methods like proof of work and proof of stake, which require computational power and can be energy-intensive.
• 📊 The history of blockchain includes the inception of Bitcoin in 2009, its rise in value over the years, and the development of various blockchain versions like Bitcoin and Ethereum.
• 🚸 Cryptocurrencies are digital currencies that operate on blockchain technology, with Bitcoin and Ethereum being the most well-known.
• 🛑 Concerns with blockchain and cryptocurrencies include bans in some countries, high operational costs, network power requirements, and the potential for market bubbles and volatility.

Q & A

What is blockchain technology?

Blockchain technology is a system that allows transactions to be gathered into blocks and cryptographically recorded in chronological order, creating a distributed ledger that can be accessed by different services without the need for a central authority.

Why is the video being recorded for the second time?

The video is being recorded for the second time because the audio did not record during the first attempt, necessitating a re-recording for the sake of the presenter's sanity and to ensure the content is accessible and understandable.

What are some benefits of using blockchain technology?

Benefits of blockchain technology include reduced cost and complexity, the provision of a trusted recordkeeping source, improved discoverability, and a shared trusted process among participants.

What are the limitations of blockchain technology mentioned in the script?

Limitations of blockchain technology include the need for high-performance transactions, the lack of a business network for small organizations, the need for a database replacement, a messaging solution, and transaction processing replacements.

What is a decentralized node in the context of blockchain?

A decentralized node in the context of blockchain refers to individuals or systems that participate in the blockchain network, contributing to the decentralized ledger without the need for a financial intermediary like a bank.

How does the process of blockchain transactions work?

Blockchain transactions are initiated and broadcasted over a P2P network, encrypted and validated through consensus mechanisms. Once verified, a new block is created and appended to the existing chain of blocks.

What is a hash in the context of blockchain?

A hash in the context of blockchain is a function that converts an input of letters and numbers into an encrypted output of a fixed length. It is used to ensure the integrity and security of the blockchain by producing a unique output for each set of transaction data.

What are the two main types of transaction validation in blockchain?

The two main types of transaction validation in blockchain are Proof of Work and Proof of Stake. Proof of Work uses a resource-intensive hashing process to confirm transactions, while Proof of Stake involves validating blocks created by miners and requires users to prove ownership of their stake.

What is the brief history of blockchain technology mentioned in the script?

The brief history includes the publication of the idea under the pseudonym Satoshi Nakamoto in 2008, the start of the Bitcoin Network in 2009, the launch of the first cryptocurrency stock exchange in 2010, and significant value milestones of Bitcoin in 2011, 2013, and 2017.

What are the three types of blockchain networks?

The three types of blockchain networks are public blockchain, consortium blockchain, and private blockchain. Public blockchains are fully decentralized and open to anyone, consortium blockchains are controlled by a fixed set of nodes, often used by groups with pre-existing trust, and private blockchains have tightly controlled access with restricted permissions for reading or modifying the blockchain.

What are some concerns regarding the use of blockchain technology?

Some concerns include its ban in certain countries, the high cost and resource requirements for running blockchain networks, the potential for a bubble burst due to overhyping of the technology, and the volatility and risks associated with investing in cryptocurrencies.

What are some applications of blockchain technology globally?

Applications of blockchain technology globally include uses in healthcare for secure record-keeping, in financial services for transaction efficiency and security, in retail for supply chain management, in real estate for property transactions, in transport and tourism for secure booking systems, and in media for content distribution and rights management.

What was the impact of the GX hack on the cryptocurrency community?

The GX hack in 2014, where hackers gained access to the exchange and stole around $450 million worth of Bitcoins, led to a significant drop in the price of Bitcoin, widespread panic, and skepticism among investors, ultimately causing the exchange to file for bankruptcy.

What is Ethereum and how does it differ from Bitcoin?

Ethereum is a decentralized platform that runs smart contracts and applications, aiming to replace internet protocols with blockchain technology. Unlike Bitcoin, which focuses on disrupting online banking and payments, Ethereum's goal is broader, aiming to enable a wide range of decentralized applications.

What are some key features of Bitcoin as described in the script?

Key features of Bitcoin include its right-only, immutable data storage, transparent and decentralized nature with no need for intermediaries, consistent state across all participants, resistance against malicious participants, and openness to everyone.

What are some challenges associated with Bitcoin and blockchain technology?

Challenges include high energy consumption, scalability issues, the potential for money laundering, personal responsibility for managing one's assets, and questions around the creation and prevention of inflation within the system.

How does the mining process in Bitcoin work?

Mining in Bitcoin involves verifying transactions by solving computational puzzles. Miners compete to win Bitcoins, similar to a lottery, and are awarded transaction fees as well as new Bitcoins. This process requires high overhead with power consumption and the use of high-end GPUs, which has led to a graphics card shortage.

What are some examples of businesses that accept Bitcoin as a form of payment?

Examples of businesses that accept Bitcoin include Overstock, Microsoft, DISH Network, and various online retailers and service providers.

Outlines

00:00

📝 Introduction to Blockchain Technology

The script begins with an introduction to blockchain technology, emphasizing the importance of understanding it due to the presenter's previous recording mishap. It outlines the session's agenda, which includes defining blockchain, discussing key terms, exploring its history, and examining cryptocurrencies like Ethereum and Bitcoin. Blockchain is described as a system that records transactions in blocks and maintains a cryptographically secure ledger accessible by different services without the need for central authority, facilitating the creation, transfer, and recording of asset ownership and value.

05:02

🔒 Understanding Blockchain's Benefits and Limitations

This paragraph delves into the advantages and limitations of blockchain technology. Benefits include cost reduction, trusted recordkeeping, improved discoverability, and a shared trusted process. Limitations are also highlighted, such as the need for high-performance transactions, database and messaging solutions, and transaction processing replacements. The paragraph serves as a foundation for understanding the technology's role in debates and discussions.

10:03

🌐 Decentralized Nodes and Blockchain Mechanics

The script explains the concept of decentralized nodes in blockchain networks, which are systems that record transactions without financial intermediaries. It details how blockchain eliminates the need for trust among individuals for transactions involving account balances or property ownership. The process of transaction initiation, broadcasting over a P2P network, encryption, and validation through mining is outlined. The role of nodes, the structure of blocks, and the concept of hashing as a cryptographic function are also discussed.

15:04

💡 Blockchain History and Types

The paragraph provides a brief history of blockchain, starting with the 2008 publication by Satoshi Nakamoto and leading up to the significant milestones in Bitcoin's value and acceptance by companies like Microsoft. It differentiates between public, consortium, and private blockchains, explaining the level of decentralization and control in each. The paragraph also introduces the concept of cryptocurrency, including coins, tokens, and altcoins, and addresses concerns such as bans in some countries, resource intensity, and market volatility.

20:05

🏥 Applications and Impacts of Blockchain

This section discusses the applications of blockchain technology in various sectors such as healthcare, financial services, retail, real estate, transport, tourism, and media. It also covers major cryptocurrency disasters, including the hacks of exchanges like Mt. Gox, DAO, Bitfinex, and Coincheck, and the collapse of Terra USD and Luna. These events highlight the risks and challenges in the crypto industry, including security breaches and market panic.

🚀 Ethereum and the Future of Blockchain

The script concludes with a focus on Ethereum as a decentralized platform for smart contracts and applications, contrasting it with Bitcoin's aim to disrupt online banking. It discusses the potential of blockchain to replace internet protocols and the unique features of cryptocurrencies like e-cash. The paragraph also touches on the challenges of Bitcoin mining, energy consumption, scalability, and the personal responsibility of managing digital assets.

🤔 Conclusion and Reflection on Blockchain and Cryptocurrency

In the final paragraph, the script wraps up the presentation by summarizing key points about Bitcoin, its creation by the pseudonymous Satoshi Nakamoto, and its use in platforms like Silk Road. It mentions other cryptocurrencies and the process of buying and selling them through exchanges and wallets. The paragraph ends with a note on the presenter's hope that the audience has gained valuable knowledge and a wish for success in future debates and discussions on the topic.

Keywords

💡Blockchain Technology

Blockchain technology is a decentralized system that records transactions across multiple computers in a way that ensures the integrity and chronological order of the data. It is the foundational concept of the video, as it underpins the discussion on cryptocurrencies like Bitcoin and Ethereum. The script mentions that blockchain allows for the creation and transfer of value or assets in a trustless environment, facilitated by a network of decentralized nodes.

💡Decentralized Nodes

Decentralized nodes are the individual systems or entities that participate in a blockchain network without the need for a central authority. They are crucial for validating transactions and adding new blocks to the chain. In the script, nodes are described as part of the blockchain's distributed ledger system, eliminating the need for trust among individuals for transactions involving account balances or property ownership.

💡Cryptographic Hashing

Cryptographic hashing is a process that converts input data into a fixed-length string of numbers and letters, which is used to verify the integrity of data in blockchain transactions. The script explains that a hash function is deterministic, meaning the same input will always produce the same hash, making it a vital tool for ensuring the immutability of the blockchain.

💡Transaction

In the context of the video, a transaction refers to a transfer of value or assets that is recorded on the blockchain. Transactions are the basic units of activity in a blockchain network, and they are what miners work to validate and add to the blockchain. The script describes how transactions are initiated, broadcasted, and verified, ultimately being added to blocks.

💡Mining

Mining in the blockchain context is the process of validating transactions and adding them to the blockchain. Miners use computational power to solve complex puzzles, and successful mining results in the creation of new coins and the confirmation of transactions. The script mentions that mining requires high computational power and electricity, and it serves to secure the network and maintain the blockchain ledger.

💡Proof of Work

Proof of Work is a consensus mechanism used in blockchain networks, such as Bitcoin, where miners must perform a certain amount of computational work to validate transactions and earn the right to add a new block to the chain. The script explains that this process is resource-intensive and serves to deter malicious activity by making it costly to attempt fraudulent transactions.

💡Proof of Stake

Proof of Stake is an alternative consensus mechanism to Proof of Work, where validators are chosen to create a new block based on their ownership stake in the cryptocurrency. The script notes that Proof of Stake makes monopoly difficult and enhances security by requiring users to prove ownership of their stake, rather than solving computational puzzles.

💡Smart Contracts

Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They are a key feature of Ethereum and allow for trustless transactions and automated execution of agreements. The script describes Ethereum as a platform that runs smart contracts, which can execute exactly as programmed without the possibility of downtime, censorship, fraud, control, or third-party interference.

💡Cryptocurrency

Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. The script discusses various types of cryptocurrencies, including coins, tokens, and altcoins, and their roles within the blockchain ecosystem. It also touches on the history and evolution of cryptocurrencies, such as the significant milestones in Bitcoin's value over time.

💡Public, Consortium, and Private Blockchains

The script differentiates between three types of blockchains based on their level of decentralization and access control: public, consortium, and private. Public blockchains are fully decentralized and open to anyone, consortium blockchains are controlled by a pre-defined group of participants, and private blockchains have tightly controlled access with permissions required for participation. These distinctions are important for understanding the various applications and use cases of blockchain technology.

💡Scalability

Scalability in the context of blockchain refers to the ability of a network to handle a growing amount of transactions and data without a decrease in performance. The script mentions scalability as one of the challenges faced by blockchain technology, highlighting the need for solutions that can accommodate increasing demands without compromising the network's integrity or efficiency.

💡Energy Consumption

Energy consumption is a significant concern for blockchain networks, particularly those that rely on Proof of Work mining, which requires vast amounts of computational power. The script points out that the high energy usage of mining operations is a challenge for the sustainability and environmental impact of blockchain technology.

Highlights

Introduction to blockchain technology as a system for recording transactions in blocks cryptographically.

Emphasis on the importance of watching the video for understanding blockchain due to the presenter's effort in re-recording.

Definition of blockchain as a large network allowing access to a distributed ledger without a central authority.

Benefits of blockchain technology, including reduced cost and complexity, and improved record-keeping trust.

Limitations of blockchain such as the need for high-performance transactions and potential lack of business network.

Explanation of decentralized nodes and their role in blockchain as systems not requiring financial intermediaries.

Description of how blockchain transactions work, including the process from initiation to validation and block creation.

Details on nodes, blocks, and hashing, including their functions and importance in the blockchain network.

Discussion on transaction validation methods, proof of work and proof of stake, and their roles in blockchain security.

A brief history of blockchain development from the 2008 publication by Satoshi Nakamoto to the significant value milestones of Bitcoin.

Different versions of blockchains like Bitcoin and Ethereum, and the distinction between public, consortium, and private blockchains.

Overview of cryptocurrency as electronic peer-to-peer currencies and their operation within blockchain technology.

Concerns related to blockchain, including bans in some countries, high operational costs, and the risk of bubble bursts.

Applications of blockchain technology in various sectors such as healthcare, financial services, retail, real estate, and media.

Major cryptocurrency disasters, including the Mt. Gox hack and the DAO attack, and their impacts on the crypto community.

Ethereum's role as a decentralized platform for smart contracts and its goal to replace internet protocols.

Bitcoin's function as both a token representing digital currency and a protocol maintaining a ledger of balances.

Challenges in cryptocurrency mining, including high energy consumption and the environmental impact.

Economics of cryptocurrency, the importance of consensus protocols, and the evaluation of currency system efficiency.

Policies safeguarding Bitcoin transactions, including authentication, integrity, availability, and confidentiality measures.

Conclusion summarizing the key points of the presentation and wishing success to the audience, likely students preparing for debates or competitions.

Transcripts

okay hi guys uh welcome back to another

content session and today we're going to

be looking at blockchain technology I

feel like I just need to tell you guys

that you better watch this video and

know this video because this is my

second time recording this cuz the first

time I recorded it the audio didn't

record

so this effort just to have to go and

record it again so please watch it for

the sake of my sanity but anyways let's

get into

it um so we're going to be looking at at

what blockchain technology is we're

going to be looking at some important

terms that you guys need to know in

terms of blockchain Technology then

we're going to look at a brief history

of it we're going to look through

cryptocurrency and we're going to look

through ethereum and

Bitcoin okay so what is blockchain

technology so it's a technology that

permits transactions to be gathered into

blocks and recorded

cryptographically uh recorded

cryptographically chain blocks in uh it

chain blocks in chronological order and

allows the resulting ledger to be

accessed by different service okay so

it's um a very large process large

Network that exists when it comes to

block technology and this just talks

about like the distributed Ledger that

is used in blockchain technology and can

be accessed um by a central Authority

but of individuals or entities with no

basis to trust each other so it's used

to create value or issue assets it's

used to transfer value or the ownership

of assets it's used to record those

transactions uh sorry it's used to

record those transfers of values or

ownership of assets and um it's to allow

the owners of the assets to exercise

certain rights associated with ownership

and to record the exercise of those

asset of those rights right um so then

we're going to look at this just talks

about like some of the blockchain

benefits so it can reduce cost and

complex complexity it can be trust a

trusted recordkeeping Source um it can

improve discoverability and it's a

shared uh it's a shared trusted process

okay um then this looks at some of the

limitations and these two slides come

into hand you when you're having debates

because you know you need to prove or

disprove the validity or importance of

blockchain technology you need to know

some of the advantages and limitations

so some of the limitations include the

fact that it needs high performance

transactions um if you have a small

organization you may not have a business

Network to have blockchain technology um

you need to look for a database

replacement um you need to look for a

messaging solution and you need to look

for transaction processing Replacements

okay then these are like on like a few

of the terms that you guys need to know

so the first thing we're going to look

at is decentralized nodes so blockchain

is the digital and decentralized Ledger

like we spoke about earlier um

technology that records all transactions

without the need for a financial

intermediary like a bank so the concept

is a system that is decentralized and

network via nodes right so you

effectively like the people involved or

like systems involved are refer to as

the notes then the way in which the

transactions work is that uh blockchains

are eliminating the requirement of trust

among individuals for simple

transactions involving accounts balance

balances or ownership of

properties okay so the next thing we

need to look at is how works

specifically so the transactions are

initiated and the transaction is

broadcasted over the P2P Network which

is encrypted minus rush to validate the

transactions and once the transaction is

verified a new block is created and

appended to the existing blocks okay um

so this is just a little flow diagram of

how it actually works so just read

through

that then in terms of what a node block

and hashing is so a node is simply a

computer that participates in the

blockchain network right so um it does

this by by keeping a shallow copy of the

blockchain which is your light chain by

keeping a full copy of the blockchain

which is your full node and by verifying

the transaction through mining then a

block um contains transaction data and

other important details related to the

creation of that block such as the time

when it was created and other unique

information so in order to create a

block you must have a record which you

wish to store then in terms of a hashing

a hash is a function that converts an

input of letters and numbers into an

encrypted output of a fixed length so in

context of cryptocurrencies like Bitcoin

the transactions are taken as an input

and run through a hashing algorithm

which gives an output of a fixed l so

blockchain uses a cryptographic hash

function meaning that the output is

random but deterministic so this means

that the same input will always produce

the same hash the process is one way so

the output hash cannot be used to

produce the original input right then in

terms of what a transaction and Mining

is so so a blockchain transaction um can

be defined as a small unit of task that

is stored in a public record so

transaction is a transfer Bitcoin value

that is broadcast the network and

collected into blocks a transaction

typically refer references previous

transaction outputs as new transaction

inputs and dedicates all input Bitcoin

values to new outputs so mining is a

decentralized computational process that

serves two purposes one to create new

coins or tokens to each block and one to

and two to confirm

transactions in a trustful Manner and

adds to existing blocks right so it's

expensive and requires high

computational power and electricity then

in terms of how these transactions are

validated specifically so um the first

thing you use is your proof of work and

the second thing you use is your proof

of stake so proof of work validates

transactions utilizing a resource

intensive hashing process confirming

transactions between Network

participants and write the confirmed

transactions Into The blockchain Ledger

where proof of stake validates block

created by Miners and requires users to

prove ownership of their stake it makes

Monopoly difficult and enhances

security so now we're going to look at a

brief history of blockchain so um in

terms of the history of blockchain um

let's go through like different things

that have occurred right so in 2008 the

idea was published under the pseudonym

Satoshi Nakamoto then in 2009 you had

the start of the Bitcoin Network then in

2010 you your first cryptocurrency Stock

Exchange which launched in

2011 our one Bitcoin was equal to

$1 in 2013 one Bitcoin was equal to

$100 in 2014 Microsoft accepted Bitcoin

in 2017 one Bitcoin was equal to $10,000

us right so that's just like a brief

history of the way in which it's

developed over time um so it was

essentially invent invented to prevent

shortcomings of the traditional Banking

and contract systems for Global Val of

transactions and separation of powers

from leite systems and organizations and

then this just talks to the different

versions of blockchains that you get so

you have um your Bitcoin your ethereum

and new technologies that exist as well

then you have three types of blockchain

you have public blockchain Consortium

blockchain and private blockchain so

public blockchain is fully decentralized

uncontrolled networks with no access

commission required anyone can

participate in the consensus process

determine uh what transaction which

transaction blocks are added um in your

Consortium blockchain uh the consensus

process for new transaction blocks is

controlled by a fix set of nodes so we

already spoke about what nodes are such

as groups of financial institutions

where pre-existing trust is already high

and then a private blockchain is where

access emissions are tightly controlled

with the rights to read or modify the

blockchain restricted to certain users

and permission to read this block

blockchain is restricted

okay then now we need to go through what

is cryptocurrency so cryptocurrency is

electronic peer-to-peer currencies and

they do not exist physically exist they

measured against Real currencies and

there are currencies that uh work and

can be transacted on within blockchain

technology right um so there's a large

number of different types of

cryptocurrencies but we obviously know

some the main ones include Bitcoin and

ethereum then these are the different

types of things that you could get you

get coins you get tokens and you get

altcoins so your coins operate on its

own uh blockchain your token operat on

an existing blockchain infrastructure

like ethereum and altcoins are coins

deriv from alternative to bitcoin so the

majority of coins are varant I variant

of

Bitcoin so some of the concerns of

blockchain so there a vast majority of

this this is an important slide for you

guys to know as well um to be able to

use in your debate so the fact that it's

banned in some countries so some

countries don't offway to be used

secondly it's expensive to run and to be

a part of it requires tremendous amount

of resources Network Power and miners

are required at a constant rate then you

have your bubble burst the technology

being overhyped and can eventually burst

and this also ties in the volatility of

the currencies right so um it's very

risky to invest in it it's also very

complex a lot of people find it very

difficult to understand how to use it it

can be very slow and Compass so to

validate a transaction can take hours in

some cases to to the complex their

complex complexity encrypted and

distributed nature and then you have to

have a vested interest right so more

established financial institutions are

not going to buy into it because they

just don't need it and they don't have

an interest in

it then these talk to some of the um

applications of blockchain Technology

globally so in terms of healthcare

financial services and Retail so read

into these things because these can come

in handy in terms of examples that you

need to use in thebat so just go through

these things it's quite important for

the debate um that you know examples

when it comes to these things because

that's how you win these types of

debates in terms of knowing

examples um this is also in terms of

real estate transport and tourism and

media then if we look at some of the

cryptocurrency disasters right so this

is also very important so um one of the

biggest disasters that occurred in 2014

was the GX hack right so it was one of

the biggest disasters in the history of

cryptocurrency which occurred and at the

time it handled the GX exchange handled

around 70% of all Bitcoin cont actions

so hackers got access to the exchange

and $ 850,000 Bitcoins which was worth

around $450 million at the time was

stolen so they had impact in the crypto

community and leted a significant drop

in the price of Bitcoin The Exchange

eventually filed for bankruptcy causing

Widespread Panic and skepticism among

investors um so in 2016 there was

something else that occurred there was

something called the Dao attack so I'm

sorry the Dao hack your Dao is your

decentralized autonomous organization

and while this was an Innovative

contract platform built on the ethereum

blockchain that raised over 150 million

in crowdfunding in 2016 however in June

of like 2016 an unknown hacker exploited

a vulnerability in the daos code and

stole a lot around 3.6 million Isa which

was worth around $50 million at the time

right so the hack led to a hard for in

the ethereum blockchain creating

ethereum and ethereum classic then in

2016 you have your you had your bit

Forex hack this occur in around August

2016 uh so the bit Forex exchange is one

of the world's largest cryptocurrency

exchanges suff a major hack resulting in

death of around 120,000 bitcoins worth

around 72 million at the time right the

hack led to a significant drop in the

price of Bitcoin and caused Widespread

Panic among investors then in 2018 you

had your coin Che hack so coin Che is

the Japanese cryptocurrency exchange and

they suffered a major hack resulting

theft of around 523 million n tokens

which was worth around $534 million at

the time so the hack a significant drop

in the price and obviously naturally

cause Panic among investors right um so

notably after uh a massive boom in 2017

it was also the year that Bitcoin

crashed right so other cryptocurrencies

naturally followed sou and then in

around September 2018 they all fell 80%

from their highs making it worst than

the bubble collapse of 1995 to 2000 so

by November 26th 2018 Bitcoin had lost

80% of its value going below $4,000 Mark

right um then you also have your um

quadriga CX right so in 2019 this

occurred so this is a Canadian

cryptocurrency exchange and they face

controversy that would lead to its fall

in 2019 so reports revealed that the

company CEO Gerald cotton had died

taking the passwords to The Exchange

coal wallet which was used to store

cryptocurrencies offline with so as a

result The Exchange could not access

around $90 million worth of

cryptocurrencies causing naturally like

we said again Widespread Panic among

investors right so now let's look at

these major disasters with what happened

last year right um so we look at we

looked at things that happened

previously so now let's look at what

happened last we had the collapse of

Terra USD and Luna so the collapse of

two main stable coins in the crypto

industry which is Terra USD and Tera

resulted in around $40 billion in

invested losses the other coin that

backed Luna was also affected by the

collapse and has since been renamed

Terra classic so it's important to know

that a stable coin provides a secure and

stable environment F investors who are

usually exposed to high volatility and

Luna and Terra USD were no different so

in theory the price of Terra USD would

stay the same as it was when it was

first created this would make it an

ideal deal asset for crypto investors

when in around April last year L was

around $116 and steadly falling to a

fraction of a penny right um so this uh

this um was quite important to

know um then in terms of um so despite a

lot of technological advancements that

have occurred in the crypto industry

right the financial problems that some

companies are based are still enormous

right so notably statistics by Fortune C

shows that frauders deployed over

117,000 scam tokens this year which is

like in22 and this was up from 41% from

previous year right um so yeah so those

are just important things for you guys

to know um so let's move on to our next

slide so this is looking to what

ethereum is so ethereum is a

decentralized platform that runs smart

contracts applications and application

that run exactly as program without any

possibility of downtime censorship for a

third party interference while Bitcoin

aims disrup PayPal online banking

ethereum has the goal of using a

blockchain to replace internet

part then in terms of ecash obviously we

value e-cash because it's a j it's a

single use it's reliable it's low pay

infation and you can uh preserve privacy

these are some of the protocols that

crypto uses in order to like protect um

people who actually use this you have

blind signatures for eash you have

retroactive double spending

identification you have restricted blind

signature then you have compact offline

eash right then in terms of Bitcoin

right so it's important to know that

Bitcoin is the application of blockchain

Technology whereas blockchain is the

underlying data structure which can be

used for many things including

cryptocurrency right so the way in which

the Bitcoin ecosystem works that you

have a public network in which anyone

including a malicious participant can

participate without restriction so even

though it is not organized by Central

Authority it still work the way in which

it works is that that the more

participants you have the more security

you're able to gain and the um more

likely there's going to be an increase

in your Bitcoin value when there's an

increase in the Bitcoin value more

likely you are to draw more participants

so it's just a constant cycle of like

more participants more security increase

value in Bitcoin right um and obviously

one of the main aims was to cut out like

the middle M so you have like a direct

transfer of Bitcoin um then in terms of

building a consensus right so after your

finite time all participants are able to

age on a single state so for example on

who who owns how many Bitcoin right and

then sometimes you want to create

Witnesses so if something is published

on a public blockchain all participants

become Witnesses so this is used for

example by origin stamp to create a

secure time stamp for documents then

some of the key features include the

fact that it's right only it's IM

mutable um data you have transparent

data storage decentralized there's no

need for intermediaries the fact that

there's a consistent State across all

participants um they are resist

generally resistant against malicious

participants and it's open to everyone

however some of the challenges do

include the fact that it uses a lot of

energy so energy consumption the

scalability of it the fact that money

laundering can occur and the fact that

it then becomes a personal

responsibility to manage right and do we

really think people are responsible

enough to manage it right um so uh in

terms of Bitcoin right Bitcoin can exist

as two things right so it can exist as

the token and it can exist as the

protocol so Bitcoin the token is the

digital currency itself and it's a

snipplet of code that represents

ownership of a digital concept whereas

Bitcoin the protocol is a distributed

Network that maintains a ledger of

balances um of Bitcoin the token

otherwise known as blockchain which

we've been talking about right so like

we said blockchain was like a publicly

accessible Ledger it's ordered

chronologically in Block it's

unchangeable verified by decentralized

network of miners right um so some of

the challenges obviously like these are

important things for you to know it's

like how is this created in the first

place how are we able to prevent

inflation so these are questions that

you need to ponder and think on in terms

of like your debates when you have

debates on cryptocurrency when you're

using it as examples like is are these

coins legit how do you prevent the a

coin from double spending um what do you

do in cases with the buyer and seller AR

reliable people so if the buyer pays but

the seller doesn't deliver if the seller

delivers the buyer pays that the buyer

maintains claim then the fact that you

need to rely on proof instead of trust

the fact that it's verifiable by

everyone there's no Central Bank

Clearing House okay then this speaks to

some of like the policies that we spoke

about earlier in terms of like what you

use to safeguard people that participate

in uh Bitcoin trading so you have

authentification you use digital

signatures for integrity you use digital

signatures and your cryptographic hash

for availability you use broadcast

message the P2P Network and

confidentiality is pseudonymity right

then in terms of like the economics to

it

um what we see is that we formally Model

A cryptocurrency system according to the

pro Bitcoin protocol right so a ledger

of digital balances are updated in a

decentralized fashion then you show that

cryptocurrency cannot be cannot achieve

immediate and final set settlement to

avoid double spining problems and then

you also need to evaluate the efficiency

of the currency system right um so then

this just talks to how cryptocurrency

works you use a consensus protocol you

use a reward scheme and you use

confirmation LS right so let's just talk

a little bit about mining right it's

important you guys know what mining is

right so with mining you're able to

verify transactions by solving

computational puzzles so miners compete

to win Bitcoin similar to a lottery and

awarded transaction fees as well as new

Bitcoin so it requires High overhead

with power consumption and and it uses

high-end gpus and has somehow led to a

graphics card shortage so when we spoke

about the fact that you know it was

created by toi nakoto right was an

unknown person using the Alias um when

the Silk Road launched in 2011 they used

Bitcoin as a currency as Bitcoin can be

pseudo Anonymous right um so the fact

that uh no personal information is

required to use Bitcoin transactions are

verified by a network making it hard to

trace um however the blockchain is a per

and public Ledger and the easiest way to

buy and sell requires bank account

information right so other

cryptocurrencies include Litecoin Atari

toy cash and GH um so in terms of buying

buying and selling what what are things

that you require so you require a

Bitcoin wallet you require many wallets

that are tied to exchange you have a

coinbase is your coinbase is the needing

exchange and you buy and sell based on

the current exchange value right so

things that you can pay for with Bitcoin

is uh on the website Overstock

miia EEG Microsoft re Jeweler Green Man

Gaming Dish Network and new um so yeah

that just speaks to all of that and yeah

so I hope you guys learned something so

we' now reach the end of this

presentation and cool um Good Luck for

Nationals all the best