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Secure Digital Life #42
Recorded on November 21, 2017 at G-Unit Studios in Rhode Island!
Oh no! It's the CryptoTurkey!
- Happy Thanksgiving!!
- Celebrated nationally since about the 18th century as a harvest festival. Lincoln made it a national holiday in 1863. It was based on a feast in 1621 documented by Edward Winslow.
What is Cryptocurrency?
- Remember Blockchains?
- All currency is really cryptocurrency since it has no inherent worth
- The example off the benjamin
- Take 100 and show the serial number
- Write this in a ledger and say it's worth something
- Now, use a lot of ledgers and do the same thing
- Distributed blockchain
So, how does modern cryptocurrency work then?
- First create a blockchain
- Each ledger contains hashes which represent value
- You can buy the hash (like the serial number)
- Unlike the SN, the hash is not easy to steal
- Enter the hash in the blockchain
- Every time something in the blockchain changes, new hashes are generated and updated for the block.
- The example of Eddie (Ratface) Winslow
- EW trades an ounce of gold for bitcoin (this would be about .15 bitcoins (1209/8000)
- EW would then have the hashes for those .15 slices of a single bitcoin.
- The blockchain updates
- EW then decides to buy 1 ounce of MHP on the dark webb (1 oz of MHP is 500$ == .06 bitcoin)
- EW transfers the .06 bitcoin hashes to Mr. Feely, the dark web dealer
- the blockchain updates
- So all these ledgers have hashes for the bitcoins and pieces of bitcoins.
So, how does bitccoin REALLY work?
- There are no physical bitcoins!
- A bitcoin is an address (wallet), hash (private key), and a transaction. The bitcoin ledger (blockchain) is a record of those exchanges.
How do I buy it?
- You buy it from someone else just like you buy dollars.
- An address enters a transaction (Doug to Ed)
- 100$ is moved to Doug (not reported) and Ed gets some bitcoin percentage from the hash address.
- Miners verify the hash on the transfer so it may take a while for the transaction to process (counterfeit currency inspection). This is the computation of the hash. 10 minutes roughly. When all this finishes, the blockchain updates for all the miners. When more than 50% of the miners legitimize the hash, then the ledger is legit.
- Anonymity: the names are not there, just the hashed address.
Protect your wallet!
- If you speculate, remember zero sum game
- Speculate only with fun money, don't bet the farm.