0:10 [Music]
0:12 blockchain technology has been around
0:13 for a while now
0:15 and if you've chosen to watch this video
0:16 it means that you have some doubt
0:19 regarding this whole contraption or how
0:21 it works well today I ara
0:22 I'm gonna try to tackle the whole
0:24 blockchain technology thing and we're
0:26 gonna try and understand how it looks
0:28 down to the tiniest detail I'll be as
0:31 simple as possible when explaining but
0:32 we will be also tackling some of the
0:34 more complex mathematical parts of the
0:37 technology too okay so let's start with
0:39 a simple definition of blockchain
0:41 technology so blockchain is a
0:43 decentralized distributed public
0:45 Ledger's system now let's break down the
0:47 definition and understand each and every
0:50 technical jargon the first few technical
0:51 terms that we encounter are
0:53 decentralized and distributed to
0:55 understand what it means to be
0:57 decentralized and distributed let's
0:58 start with the status quo
1:01 now the centralization any organization
1:03 of network where decisions regarding the
1:06 organization's are made by a chosen
1:07 group of people in the centralized
1:09 system presently we are surrounded by a
1:11 massive centralized system which we use
1:14 every day be if you want to order food
1:15 from some delivery and logistics system
1:17 like Zomato or you want to book a cab
1:19 through uber you're basically going
1:21 through a third party this third party
1:24 has complete power on the rules and
1:26 regulations of the system even though
1:27 these guys have a majority of the power
1:30 they greatly rely on your charge to stay
1:32 functional for example I'm sure you keep
1:34 your money in the bank instead of just
1:36 doing it away under your bed at home
1:38 because you trust bank more than your
1:40 next-door neighbor a decentralized
1:42 system is exactly the opposite of a
1:45 centralized system it is when a service
1:47 is ruled by no single governing
1:49 authority you are using a decentralized
1:51 system right now that is the internet
1:53 nobody really owns the internet and
1:56 nobody is really supervising what
1:58 websites can or cannot do so that was
2:01 pretty easy to understand but what does
2:03 it mean to be distributed so do you
2:04 understand what a distributed system is
2:07 let's look back and analyze what has
2:09 been the common reason for a majority of
2:12 the data breaches of the past so in 2013
2:15 Yahoo faced a huge data breach which
2:17 affected around 3 billion users then in 2014
2:18 2014
2:20 eBay faced a cyber attack which
2:22 compromised the user information for our
2:26 145 million profiles again in 2016
2:28 Adult Friend Finder which is also a site
2:31 was also attacked hackers collected
2:33 around 20 years of data on six databases
2:36 that impure names email addresses and
2:38 passwords now all these attacks were
2:40 successful because these companies chose
2:42 to keep all their data in one basket or
2:45 if I may say one server which makes it
2:47 very easy for a hacker to creep in and
2:49 do creepy stuff by distributing
2:51 everything everywhere the hacker would
2:53 need to change the data in all the
2:54 places at once
2:56 blockchain is distributed and
2:59 decentralized this means that whatever
3:01 is stored on a blockchain is distributed
3:03 and the blockchain in itself is owned by
3:06 no single governing body by distributing
3:09 everything everywhere a bad actor would
3:11 need to change the data in all places at
3:13 once in order to do their sneaky things
3:15 it feels weird but by opening up and
3:17 giving the data to everyone you protect
3:19 it so what we see from breaking down the
3:22 definition so far is that blockchain is
3:24 some sort of a system which is owned by
3:26 nobody and has no single point of
3:28 functionality and instead is distributed
3:30 in nature now let's look at the other
3:32 half of the definition which states that
3:34 blockchain is a public ledger system so
3:36 first of all let's get our heads around
3:39 this whole ledger system a ledger is a
3:41 list of anything the term ledger
3:43 originates from banking as it was first
3:45 going to denote a list or a book
3:47 containing financial transactions now in
3:49 reference to blockchain technology what
3:52 exactly is a ledger well it's all the
3:53 transactions that are committed on the
3:55 network to understand what I mean
3:57 let's jump back to the genesis of
3:59 blockchain technology so the birth of
4:01 blockchain technology date sparked in
4:04 2009 and the timing was impeccable
4:06 while the world was facing one of the
4:08 toughest economic crisis a group or
4:10 person under the pseudonym of Satoshi
4:12 Nakamoto introduced to the public
4:15 Bitcoin a digital currency not owned by
4:18 the government but in essence very much
4:20 like fiat currency or some of you would
4:23 call cash so in the sense it could be
4:25 spent anonymously it could be hard to
4:28 track and it is easily trusted now the
4:29 underlying tech that powered Bitcoin was
4:32 blockchain so any transaction that was
4:34 made using Bitcoin as a currency was
4:36 registered on a list called
4:38 and this Ledger was then distributed to
4:40 all the members that had agreed to
4:42 participate in the network everybody
4:44 could essentially keep tabs on each
4:46 other's transactions and to anybody
4:48 trying to tamper with records would be
4:50 easily identified due to the distributed
4:51 nature of the system
4:53 now since the meteoric increase in both
4:56 value and fame of Bitcoin other such
4:58 networks have come up with each Network
5:00 ranked decentralized some service or the
5:02 other but the fundamentals of the
5:04 network remain the same ok so now that
5:06 I've explained what it means to be a job
5:07 let's try and understand what it means
5:10 to be public so it is hard to fathom the
5:11 power of public when it comes to
5:13 blockchain because it's the participants
5:15 or the public whatever I call him is
5:17 responsible for the most integral part
5:19 of the system that is validation so
5:21 let's take a scenario where a blockchain
5:23 network has only four participants
5:26 namely a B C and D every time one of
5:28 them spent some money in Bitcoin they
5:30 broadcast the transaction down to the
5:34 last detail onto the network but how are
5:35 the remaining members supposed to know
5:38 what a is saying indeed is valid or not
5:40 this is handled by block chains unique
5:42 method of validation called consensus
5:44 this means that every participating
5:46 member must agree or come to consensus
5:48 regarding the validity of the
5:50 transaction every network has its own
5:52 unique way of achieving consensus and
5:54 bitcoin protocol uses a method called
5:56 proof of work the video is going to get
5:58 a little more tactical as we are going
6:00 to be discussing a few new technical
6:02 jargons from here on but I'll try my
6:04 best to be as simplistic as possible now
6:06 let's go back to the little scenario I
6:09 had just discussed and here a broadcasts
6:11 a transaction to the rest of the network
6:13 now let's also assume that this is not
6:15 the first transaction of the network and
6:17 this particular transaction is an
6:19 addition to an already ongoing list of
6:20 transactions that have already been
6:23 piloted every time a new transaction is
6:24 committed to the network a new block
6:26 gets created and all these transactions
6:29 are firstly hashed so what exactly is
6:31 hashing to answer simply hashing is a
6:34 process of converting a long string into
6:36 a unique string generally of much
6:38 shorter and fixed length what is
6:40 important to understand for you as a
6:41 viewer is that the generated hash
6:44 depends completely on the input even a
6:46 slight change in the input will change
6:48 the output hash completely secondly in
6:49 blockchain a unique kind of
6:51 washing is used and this is called
6:53 cryptography caching because they cannot
6:55 be practically reverse engineered so now
6:57 to get a better understanding of hashing
6:59 and how it integrates into blockchain
7:01 let's think back I had just mentioned
7:03 that the list of transaction is taken
7:06 together and hashed so the output hash
7:08 or the digest is called the block hash
7:10 and stands as a unique identifier of
7:12 that certain block so suppose he were to
7:14 sneakily try and change the history of
7:16 transactions in a certain block the
7:18 output block hash would be changed drastically
7:19 drastically
7:21 which would easily denote that something
7:23 has been tampered with so right now our
7:25 focus is to see how a function can prove
7:28 that a particular list of transaction is
7:30 truthful imagine someone shows you a
7:32 list of transactions and they say hey I
7:34 found a special number so that when you
7:36 put that number at the end of this list
7:39 of transactions and apply sha-256 to the
7:41 entire thing the first 30 bits of that
7:44 output are all zeros how tough do you
7:46 think it would be to figure out that
7:48 number so let's bring in some math here
7:50 let's say the harsh is only made up of
7:52 ones and zeroes and it's 256 characters
7:55 long in such a case the probability that
7:57 a harsh happens to start with thirty
8:00 successive zeroes is around 1/2 raised
8:03 to 30 which is about one in a billion
8:05 and because sha-256 is a cryptographic
8:07 hash function the only way to find the
8:09 special number is just guessing and
8:11 checking so the person trying to check
8:14 validity of the block almost certainly
8:15 had to go through about a billion
8:17 different numbers before finding the
8:20 special one and once you know number
8:22 it's really quick to verify you just run
8:24 the hash and see that there are thirty
8:27 zeros in other words you can verify that
8:29 they went through a large amount of work
8:30 but without having to go through the
8:33 same effort yourself this is called
8:35 proof of work what's important is that
8:37 all of this work is intrinsically tied
8:39 to the list of transactions if you
8:41 change one of those transactions even
8:43 slightly it would completely change the
8:45 hash so you'd have to go through another
8:47 billion guesses find new proof of work
8:49 or a new number that would start 30
8:51 zeros when tied up with the altered list
8:53 nothing back to our distributed ledger
8:56 situation where everyone is there
8:58 broadcasting their transactions and we
8:59 want to wait for them to agree on what
9:01 block is correct
9:03 as I said the core idea behind the
9:05 original Bitcoin people is to have
9:07 everyone trust whichever ledger has the
9:08 most work put into it
9:10 the way this works is to first organize
9:13 a given ledger into blocks now in the
9:15 same way a transaction is only
9:17 considered valid when it's signed by the
9:19 sender a block is only considered valid
9:21 if it has a proof of hope so let's see
9:23 how proof of work is actually helping us
9:26 in identifying any sort of mismatch in a
9:28 transaction so firstly now imagine
9:30 there's this list of five transactions
9:32 between a B C and D and the block hash
9:35 is whatever you see on the screen now if
9:37 you were to slightly change any
9:39 transaction or if you were to slightly
9:41 change the order of the transaction the
9:44 complete hash is changed drastically so
9:46 this will easily tell anybody that the
9:48 proof of work is wrong as he can compare
9:50 it with the other block genes on are the
9:52 copies and this is how you reach
9:55 consensus that this block is not valid
9:57 okay so that explains how proof of work
10:00 ties in with blockchain now also to make
10:01 sure that there's a standard order to
10:03 these blocks we'll make it so that a
10:05 block has to contain the hash of the
10:07 previous block as its header so firstly
10:09 it already contains the transaction and
10:11 the proof of work which looks something
10:13 like this and now the next block will
10:16 also have the block hash of the previous
10:18 block so it'll look something like this
10:21 now since the block hash has been
10:24 chained we can see a certain chain being
10:26 formed so instead of just calling it
10:28 sledge the system is being commonly
10:31 known as a blockchain okay so the last
10:33 part that's left is mindless now every
10:35 time someone validates a certain block
10:37 after putting it in all the work to find
10:38 a special number the system rewards them
10:40 but since Network specific
10:41 cryptocurrency now in the Bitcoin
10:43 protocol currently the block reward as
10:48 February 2 2018 is 12.5 bitcoins not not
10:50 only does is incentivize system the
10:53 network running but also generating
10:55 currency now some people have invested
10:57 in high-performance GPUs so that they
11:00 can validate new blocks quicker than the
11:02 others and earn and live off the block
11:05 rewards these people are known as - okay
11:07 guys I think I've covered most aspects
11:09 of blockchain we understood how
11:11 blockchain is a decentralized and
11:13 distributed system we saw the public
11:15 nature of blockchain and how influence
11:17 he ties up the public participation
11:19 using incentivization we also saw how
11:21 the security and integrity of the system
11:23 is maintained using cryptography hash
11:25 functions tied up with a consensus
11:27 mechanism and this brings us to the end
11:29 of the video I hope you learned as much
11:31 as I did file compiling this video on
11:33 blockchain so that's it for me and
11:35 goodbye I hope you have enjoyed
11:38 listening to this video please be kind
11:40 enough to like it and you can comment
11:43 any of your doubts and queries and we
11:46 will reply them at the earliest do look
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