YouTube Transcript:
From Bitcoin To HBAR - Hedera Hashgraph Documentary

Skip watching entire videos - get the full transcript, search for keywords, and copy with one click.

Video Transcript

Video Summary

Summary

Core Theme

This content explores the revolutionary potential of distributed ledger technology, initially exemplified by Bitcoin, and its evolution towards more advanced systems like Hashgraph, highlighting their capacity to reshape global finance, governance, and the internet itself by fostering decentralization, efficiency, and individual freedom.

Mind Map

Click to expand

Click to explore the full interactive mind map • Zoom, pan, and navigate

Today mankind stands at a crossroads

And the path that humanity chooses may have a greater impact on our freedom and prosperity

Than any event in history in 2008 a new

Technology was introduced. That is so important that hits destiny and the destiny of mankind are

Inextricably interlinked, it is so powerful that if captured and controlled

It could enslave all of humanity, but if allowed to remain free and flourish it could foster

unimaginable levels of peace and prosperity

It has the power to replace all financial systems

Globally to supplant 90% of Wall Street and to provide some functions of government it has no agenda

It's always fair and impartial it cannot be manipulated

subverted corrupted or cheated and

It inverts the power structure and places control of one's destiny in the hands of the individual in

The future when we look back at the 2.6 million year timeline of human

Development and the major turning points that led to modern civilization

the creation of farming the domestication of animals the invention of the wheel the harnessing of electricity and the splitting of the atom

The 60 year development of computers the internet and this new technology

will be looked upon as a single event a

Turning point that will change the course of human history

It's called full consensus distributed ledger technology

And so far its major use has been for crypto currencies such as Bitcoin

But its potential goes far far beyond that

Hi, I'm here in Washington DC

Across the street from the Federal Reserve because I'm really excited about something

We could be on the verge of a paradigm shift in

Currency and trade that could put places like this the Federal Reserve and other central banks out of business in

Our fourth episode of hidden secrets of money we called upon the viewers

To join a discussion to develop a new world monetary system and the people that put forth the most logical and compelling

Arguments where the cryptocurrency and Bitcoin people?

So I'm here at a massive Bitcoin conference that has drawn experts from all over the world

And I'm going to be hanging out with them asking a lot of questions

Developing my own opinion. I'd like you to develop yours because this could be something that changes the world

The most common question I get lately is when are you gonna make an episode of hidden secrets of money about crypto currencies

The reason this has taken so long is that I wasn't happy releasing this video until I was comfortable explaining

How it works and now I finally can

As I said in the intro we're gonna start this journey at my first ever Bitcoin conference

This was the first time I had done a deep dive into researching Bitcoin and after it finished

I kept on learning and

Learning some more and it actually became difficult to finish this episode because the speed at which this space is evolving

But just a few weeks ago

I learned about something new that could change everything and I knew we had to get this video out quickly

This really is big

We'll learn more about this latest

Breakthrough later in the video because in order to explain it we need to go right back to the beginning and learn how Bitcoin works

Like most people at first I found the whole thing to be very abstract and complicated

But now I've found a way of breaking it down so that you don't have to be a rocket scientist to get it

I'm going to explain it by using an ancient problem that Bitcoin claims to have solved. It's called the Byzantine generals

Problem and until now it's been unsolvable

The problem goes like this

How do you make absolutely sure that multiple entities which are separated by distance R in absolute?

full agreement

Before an action is taken in other words

How can individual parties find a way to guarantee full consensus?

Here's the example

Imagine that you are a general in the Byzantine army and you're planning to attack an enemy city

You have the city, surrounded by several battalions

Each of them camped several miles from the other and each of them. Led by another general a

Coordinated attack on the city from all sides at the same time will be successful

But an uncoordinated attack will likely end in defeat

you have decided to attack at dawn, but you have no walkie-talkies or cell phones and

Signals from flags torches, or smoke could be seen by the enemy

How do you make sure with absolute certainty that all of the other generals reach?

consensus and all attack together at dawn

You could send messengers on horseback, but what if one of them is captured or killed before delivering the message

You would need to have a reply from each of your generals confirming that they have received your message

Which means that they would have to send messengers to you on horseback, but what if they are captured or killed?

what if a messenger is captured by the enemy and an imposter messenger with a fake reply is sent back to you and

How do the other generals know that the messages that they receive from you are genuine and haven't been?

intercepted and altered by the enemy

Worse yet what if some of the other generals are traitors

And they send messages back to you confirming that they will attack at dawn

When their true intention is to retreat?

How can you ever be absolutely certain that all of your battalions will reach consensus and attack simultaneously

Like I said this problem has remained unsolved for thousands of years and at its core

It's all about individual parties being able to trust each other directly. No strings attached

Bitcoin claims to have conquered this, bro

now imagine that the battalions are actually computers on a network and

that the generals are copies of a computer program running a ledger a

ledger that via some very complex math

Records transactions and events in the exact order that they happened

The key here is that all of these Ledger's are exactly the same for every one as

Soon as a change is made on one copy of a ledger if it is proven to be true by the math all

Other copies of the ledger are updated to match

What we have here is a distributed ledger that is also always in consensus

This is one of the first things to understand about Bitcoin

It is the first full consensus distributed ledger mankind has ever seen

This network can be expanded across the entire planet

It means that individual parties on

opposite sides of the world can come to consensus on an event without requiring any third party as an

intermediary for trust

whether it's an order from a general to his troops, or are an order from you for a pizza a

Distributed ledger confirms via math whether an event is true and records it permanently

Bitcoin the first full consensus distributed ledger is a trust machine

But is it 100 percent reliable

That's a question for later in the episode, but for now where did Bitcoin come from and who invented it

Well Bitcoin was originally developed by an a pseudo, nonnamous developer, Satoshi, Nakamoto

There's a lot of speculation about who he is and frankly I I work directly with him, but I have no idea

but that never really worried me because

Bitcoin itself is open source and so any engineer can evaluate the Bitcoin source code

evaluate the Bitcoin cryptography and understand and trust the software

So you don't have to trust who wrote it you trust the software itself and so that was one of the big

reasons why Satoshi chose

Open-source for Bitcoin is so you can have trust in the system. You don't have to trust who he is

I don't know who Satoshi Nakamoto is I?

Also, don't know who Euclid was

Might have been some dude in Sicily

a few years, BC

But we don't really know we have some historical records that tell us that Euclid was someone who invented geometry in

the ancient world but

It doesn't matter

Euclidean geometry works whether I know who you chlid is or not whether Euclid was a nice guy or

an evil person

Euclidean geometry

Simply works. It's completely independent of its creator, and if we didn't know who

Invented the electric motor or the radio or any of these core technology developments?

electricity

So what they still work? You don't have to have any appeal to Authority

We don't have to worry about the motives now in a centralized system. Where someone is in control it

Matters who is behind the curtains it really matters

Who is in control it matters?

who invented it because they remain in control or they might have a secret way of controlling it bitcoin is wide open and

No, one is in control and everyone can see exactly how it works

So how does it work and what's the point?

crypto currencies like Bitcoin

Allow people to transact with each other using the internet anywhere on earth

Instead of having an account number like a checking account or a credit card

Crypto currencies are much more secure because they have a public key and a private key

It's like having to account numbers one for deposits and another for withdrawals

You'll often see them displayed as a string of characters, or a scannable code

This level of security means that you could put your public key on a billboard if you wanted to and your funds would

Still be secure the only thing other people can do with your public key is send funds to you

It's your private key that gives you access to your funds as long as you keep control of your private key

Your funds are absolutely safe and theft and fraud are virtually impossible

But just like cash in your wallet

You need to keep it safe to prevent it from being stolen its security is entirely your responsibility

Cryptocurrencies can also give you privacy just like cash

You don't have to disclose any personal information when you spend them by contrast a credit card has your name

Account number and expiration date these act like a public key

But the equivalent of your private key your signature and security code are displayed in plain sight

This is just plain stupid. I've toured five national money museums and while I was at one of them

I saw a group of young students on a school outing

I can just imagine that some day in the future a group of kids will be standing around the credit card display

Pointing and laughing at the incredible stupidity of the system we once used and this is the point

Crypto currencies are lightyears ahead of our current technology since Bitcoin was the first cryptocurrency

I'm going to use it as our example, and I'll expand on our earlier description of a distributed ledger

But first where does Bitcoin get its value

Bitcoin is brand new to mankind in that it's both a currency and a payment network

Simultaneously, and this is where Bitcoin gets its value the immense network of computers all around the world running the Bitcoin

distributed ledger every

Second of every day these computers are keeping the ledger updated and in full consensus via a system that

Incentivizes them to process and confirm transactions the system that Bitcoin runs on is called blockchain

Think of it as a modern version of an old-fashioned bookkeeping ledger

but instead of a handwritten list of entries and calculations a blockchain is a digital list of entries and

Calculations a block is simply a bundle of transactions

think of a block as a whole page of transaction in the old-fashioned ledger a

Blockchain is just a chain of blocks

It's the same as a whole series of pages in the old-fashioned ledger easy, huh?

Here's how it works the Bitcoin blockchain

Actually exists in every one of the millions of computers on the network as exact copies of each other

However for this example so that we can zoom in and you can really see just how a blockchain works

I'm going to show it as one giant blockchain in the middle of a small network of computers

Let's follow a pizza transaction with Bitcoin when the transaction occurs it first appears on the network in a pool of

Unconfirmed transactions along with thousands of others from all around the world

millions of different computers from the network

Then gather some of these transactions and place them in their own blocks the computers are all creating blocks

Constantly in the hope that theirs will be the next one added to the official chain a new block is added to the chain

Every ten minutes or so when one of the computers wins the right to have its block?

Recognized as the next in the chain and is rewarded with a prize of newly created bitcoins

The way a computer wins the prize is by trying to guess the answer to an extremely difficult math problem in

Fact the problem is so difficult that even with millions of computers making guesses

Billions or even trillions of times per second it still takes roughly 10 minutes to find the answer

Once one of the computers guesses the correct answer and wins all of the millions of computers on the network that did not win are

Instructed to throw away all the work. They have done

update their Ledger's with the block from the winning computer and

Start again with a new math problem in doing so the computers use an immense amount of power and cost a literal fortune to run

So why do they do it because it can be very profitable

This is where the term mining for bitcoins comes from instead of striking gold by mining for precious metals in the wilderness

These computers are hoping to strike Bitcoin by mining precious numbers on the Chane

But when these millions of computers are selecting transactions to go into their blocks

They aren't all selecting the same transactions and not all the blocks are the same size

Some contain more transactions some contain less when blocks are thrown away the transactions they contain go back into the pool of

unconfirmed

Transactions this means that the probability of a transaction being confirmed and staying in the order it was confirmed in is not

Absolute but it becomes more of a certainty every 10 minutes as new blocks are added in fact for very large

transactions

It's suggested that you wait for six or more blocks about 60 minutes to be absolutely certain that a payment is permanent so

Why is it so slow?

Why is your pizza cold before you own it interestingly?

The system is slowed down on purpose

And here's why?

With the insane difficulty of guessing the answer to the math problem you would think that the odds of two or more computers

winning at the same time are

Extremely improbable, but it actually happens quite often

This is called a soft fork and when it occurs all the computers in the network

Received both of the winning blocks and are instructed to create a new block that will chain to the block they received first

But because of varying internet connection speeds different

Computers receive different winning blocks at different times the tie is broken

Roughly ten minutes later when one of the computers solves the new math problem

And it's block is added to the ledger and the longest chain wins

but what happens to all of the blocks on the other side of the fork they're discarded along with all the

Transactions they contained which go back into the pool of unconfirmed transactions this soft

Forking is the main reason the system must be slowed down on purpose

Via the math problem if the system was instant it would be forking everywhere all the time and there would be no consensus

No one would have any idea

Of which ledger was the correct one and every computer would be busy building a different block to create yet another fork

The slowness and immense amount of computing power is required to keep the bitcoin Ledger in full consensus

Therefore as more and more computing power is added to the network the system automatically

Adjusts to increase the difficulty of solving the math problem

Which then requires even more power?

If bitcoin is ever going to be widely used it will be using a massive amount of the world's energy

There are other systems for reaching consensus, but we'll look at those later in the episode

For now Bitcoin is working as intended and allows people to transact with each other using the internet anywhere on earth

Bitcoin it's the first full consensus distributed ledger that mankind has ever seen but it's not the last

I'm here at the conference with Eric grill of coin outlet

And I am going to buy some of my very first bitcoins right now

And so Eric's going to show me how to do this. He's gonna. Tell me this is a paper wallet

That's correct, so I can put I can load this paper currency. That's inside this little ziplock here

with bitcoins, and so I'm gonna take

$100 bill and

Hold that for a second, so what am I supposed to do with this now?

You'll scan the your public address into the in there. Yes, okay, and pull it out when it beeps okay?

Okay, it beeped awesome show your balance and okay, and okay

Aha, so I've got

0.16 0 7 3 2 9 4

bitcoins, and I just finished this session, and now it's sent it and it's done and

so basically

In the blockchain the hundred dollars that I just put in

Gave me that

0.16 something

bitcoins in the blockchain it's been assigned to my account code and

Behind here I can peel this open, and there's a code that is my private key that

Purchasing power is now protected in the blockchain

That is mirrored around the world millions of times, so thank you very much Eric great. That's great meeting you yeah

Wonderful machine and a great advancement forward for and when it comes to convenience yes the people built it. They'll start understanding

Cryptocurrencies more when they get an exposure that's very similar to an ATM

That's what we're married. Yes. Okay. Thanks. Thank you

So I've spent a day at the conference now

I wanted to come and sort of elaborate on some of the things that I've soaked up and I came here to Washington Circle in

Washington DC

Behind me as a statue of George Washington a lot of people don't know this

But you know the Revolutionary War was a war fought to free themselves from

regulation from government intrusion on their lives from too much taxation and

The founding fathers were fighting for liberty and freedom and at the end of the war George

Washington was in control of the armies of this continent and could have crowned himself Emperor

But instead chose to resign his commission and retire to private life

Giving us this gift of a free Republic

One of the things that I'm getting from this conference is that a lot of them are worried about regulation and so it's this same

revolution being fought all over again

They're worried about regulation they can't actually stop

transactions with crypto currencies

but they could come and try and punish us afterwards and make it less likely to be used and

This is a tool that could free humanity

It's an amazing leap in technology and amazing leap in the potential evolution of mankind

And so if this battle is lost and governments do succeed in trying to regulate

The crypto currencies it would be like losing the Revolutionary War

this stands for everything that the founding fathers stood for the belief in freedom liberty and the

individual choice and responsibility for your own actions

On day two I

Listened to more of the experts and the more I learned the more I realized just how much I needed to know

Even once you know all the technical details about Bitcoin. There's still a lot to learn about keeping your funds secure in the real world

One of the most interesting things I found out is in the early days of the Internet

They were actually paving the way for something like Bitcoin before they even knew what it would be

So when the first web browser was built

There was a 404 error page not found and there's also a 402 error

Payment method not specified so back when they originally built the web browser

They were thinking about the time

when they would eventually

Discover the technology create the technology to transfer value over the Internet they didn't have the technology back then

But they still had the foresight that eventually we would get there

Well now we're here

Bitcoin is a solution to that

You guys it's hard to isolate. What in particular about Bitcoin is so amazing, but I've had to name one thing

I would say was a distributed network

This is kind of an amazing thing because it's essentially immortal it can exist

In trillions of copies all over the world what that means essentially is that it can't be destroyed

I mean you could apply every regulator every bureaucrat every politician every

Central banker in the world assign it to destroy the blockchain

and they could spend you know 24/7 doing this smashing copy after copy after copy and

destroy trillions of copies, but so long as there's one left somewhere and there always will be it can reproduce itself instantly and

Come into existence of billions and trillions of times over again

Virtually instantly what this means is that the blockchain itself is more powerful that all the government's in the world

Combined many times over this is huge. We've never had a tool this

powerful to beat back the despot of the

Throughout most of the convention

I couldn't find anybody that shared a few of the concerns that I have about Bitcoin such as being a

Deflationary currency that was until I met Chris Ellis Chris

Tell me about the concerns that you have so

Bitcoin right now is still an experiment as are most crypto currencies and the price is mostly supported by a

Speculative sentiment and that's because markets are forward pricing mechanisms people are looking at the information

And they're buying on the basis of what they believe other people will do in the future with that information

And I think that a lot of people having spoken to a lot of merchants as well

They are telling me anecdotally that people are not spending their bitcoins, so I am concerned. I think the the economic

Side of Bitcoin is probably

The weakest, that's why we need a lot of these

Alternative crypto currencies to play around with some of the parameters, but we should we should consider this an experiment for now mm-hmm

one of my concerns is that

in a deflation

velocity slows down because your currency is going to be worth more tomorrow than it is today and

So people have a tendency to hoard currency in a deflation like the Great Depression for instance

Bitcoin is going to have

So many coins per month released, and then that level drops every is it every year or four years

Until it gets to a level where it reaches 21 million coins and it stars

When it stops I have two concerns

One the Bitcoin mining that people are doing is what encourages

Them to leave computers running all over the planet, and that's what makes Bitcoin work now

I know there's a small transaction fee, and if velocity the number of transactions picks up enough

Then the transaction fee is a reason to leave your computer on

but you have a deflationary currency that encourages hoarding and not spending it on transactions and

So when it reaches the 21 million

What is the reward for leaving the Computers running if velocity?

Slows and people tend to hoard it and there's no new coins to be mine

Anymore so and plus the cost of power is probably going to go up in the future. Yeah. Have you got any other concerns?

Yeah, one of my concerns in this space is that there are most people here are

communications and marketing they're in the business of persuading people and

I think we need more developers

we need to inspire younger people there are probably fewer than a thousand people on the planet that actually know how to

Code a cryptocurrency and that is a huge form of centralization they become like Congress

And then we have to kind of go to them as lay people who don't know how to code and ask for changes or otherwise

We end up having to fork the code and produce our own one so I still think there's a lot to do in terms of

outreach getting existing programmers into the Bitcoin space onto the github

Repository so they can start making their own changes and start experimenting and learning as well

So what have I learned in the past few days about Bitcoin and other cryptocurrencies

I've learned that they're a simple mathematical formula that is fair honest and impartial I've

Learned that this is more than just a digital currency

I thought that this was just for sending value from one person to another

This is a revolution that will change the world it will tear down borders

It will connect the globe it is as important as the internet was

But because it connects people because it frees people there will come a day

Where there is a call to regulate it - stop it - shut it down possibly?

The people that are calling for those things their motives need to be questioned

Because what they are trying to prevent is freedom. It's that simple

One of the things that cryptocurrency does is it provides freedom and the people that are will be calling for its?

Regulation or its abandonment will be the financial sector a central bank's?

government's because

It provides for a lot of the things that government does very poorly it will do very well

That the financial system currently does very poorly it will do well

It's fair honest impartial instant and cannot be subverted

The only caveat are that Bitcoin has first mover advantage

It's the largest one, but it may not be the one that succeeds

It's an experiment at this point

But the important thing is that the genie is out of the bottle freedom is on its way to us right now

We can all support it or we can let it languish

And I think that this cannot be stopped so am I going to sell my gold and silver and convert it all to Bitcoin

absolutely not

Bitcoin as I said is an experiment

There is a possibility that these things could go to zero before they're fully developed

There's a possibility of some sort of catastrophic failure

Right now it has proved very robust and unhackable

You don't know what is going to happen in the future so one thing to keep in mind

The Germans came up with the Enigma machine in World War two, and it was supposedly uncrackable

And then we broke the code

And then they added another dial to it to increase the complexity many-fold

And it was supposed to be uncrackable and we cracked the code

So bitcoin has not been completely proven

It's got five years of existence now and robustness

This may be the answer to all of mankind's problems when it comes to a simple medium of exchange

But it's more than that you can make these smart contracts that settle

with with a set of rules

So somebody doesn't get paid until all of the rules that you have established are fulfilled

You can create escrow with yourself where there's a third party that has to sign off that a transaction has been completed

Before the payment goes through they're working on things where you can take delivery of something

Continuously and pay for it as you use it

It would be like paying for the internet for every second that you're using it only or paying for the gas

That's delivered to your house instead of monthly

You are being billed per thermal unit and with no frictional costs involved so this adds up to efficiency

Therefore mankind is left over with more prosperity if there's no third party in between bleeding off

Economic energy you end up with more prosperity

This is a very good thing for all of us and because it is so fair and impartial

There's less of a need for the court system. There's less need for

government, and rules and regulation and

People to enforce all of this stuff in the future there will be less need for Wall Street that Wall Street

Does not realize it yet?

But they are antiquated

dinosaurs of the past about to go extinct you can attach stocks and bonds and things such as that to

Crypto currencies and companies could now do I POS just on the internet they do not need Wall Street anymore?

They don't need a third party like goldman sachs or some other big brokerage house taking a cut

There's no need to worry about corruption because the code cannot be corrupted

I do know that I am going to be putting some of my capital into

Cryptocurrencies from now on and supporting this movement and helping to push the freedom of mankind

Forward and here's something else the reason that people buy bitcoin is the same reason that people buy gold and silver

It's an alternative to all of the other

currencies the fiat currencies that are being printed into oblivion on this planet right now, and they eliminate the

Need for a third party trust you don't have to trust somebody else with your bitcoins

You only have to trust yourself. You don't have to trust somebody else with your gold and silver you have to trust yourself

So the reasons are the same and so I would

encourage every precious metals investor to investigate Bitcoin and the other cryptocurrencies

And I would encourage every Bitcoin and cryptocurrency

User and investor to investigate precious metals, I'm going to hold both

I look at the crypto currencies as a very speculative

volatile and

Potentially risky play I look at gold and silver

Just like savings. I see them as something that has never failed in

5,000 years they are proven and I see them as extremely undervalued

Compared to the morass of fiat currencies on this planet at this point

So when I came here

I expected to find nothing but a digital payment system and what I found is a technology that can revolutionize

The planet if the founding fathers of America were standing here beside me

They would be fighting for this revolution

Hi, this is an action alert for July 11th 2014

I promised all of the insiders that I'd keep them updated on what I'm doing

financially and

Recently I've done something quite unusual up until now my portfolio is entirely

precious metals gold and silver physical

but

I've been investigating Bitcoin quite a bit I was in Washington DC

Recently at a Bitcoin conference, and I learned a lot about it. I became convinced that this has a tremendous upside potential

The downside potential it would be short-term

And there is a downside risk that it could entirely fail

So I'm not going to put a lot of my portfolio into it but someday

I will probably be up to around 10% of my portfolio going into Bitcoin believe it or not

The other thing that I'm doing is I'm buying a bunch of Pegasus 1 ounce

Rounds because they're a bargain, and I recently cut a video about how?

One of the things I didn't get around to during the conference was talking to retailers about their experience of accepting Bitcoin as payment

I'd become interested in accepting Bitcoin at my own business

But I still had some questions so I made a trip to Salt Lake City to see Patrick Byrne now. This is a guy

I've really got respect for because he understands monetary history

economics and the frictional nature of our current monetary system and Wall Street

So I know that you're in a fairly low profit margin business being an online retailer of discount goods

I too, am in a very low profit margin

Business you've been taking Bitcoin

You're one of the first large businesses to adopt Bitcoin the first the first large business excellent

What is your recommendation for me?

well

We have

Publicly, and you can look at our public filings our gross margins are in the high teens which is quite low

For a retailer and our operating margin is

A little over 1% 1.2 percent and of course to take people's credit cards

Costs about 2 or 3 or 4% for most businesses if you start

doing sales in Bitcoin

And it saves you say 3% on your expense those those sales instead of being

1% that margin go to 4% net margin

so it's really especially if you're a tight margin business it makes a lot of sense to accept Bitcoin and

Avoid those credit card processing fees those credit card companies and that part of the financial industry really has an amazing

ability to sit on your

The exchanges you're making with the public and extract they're basically extracting the entire

profit margin for themselves and

Bitcoin ends that

Cryptocurrency ends that so so it's a frictionless system frictionless system, but you can you know the Empire is gonna strike back?

No matter what they're saying. I think the financial industry is quite. Sorry

They didn't do more to put a stop to Bitcoin kill it in its cradle now that it's getting some momentum. They're not able to

You know that's their entire business model is to extract is to be in that position where they can extract the rents

through their monopoly or oligopoly and

Bitcoin ends that so it's really an arrow right at the heart of their business model if you don't trust the financial system anymore

There's basically two ways of checking out you can buy gold physical gold and silver and get it

somewhere safe where it can't be taken from you and

the other solution is to

Get get into the crypto revolution

Since starting this episode we've seen a blockchain boom the IPO as I mentioned are happening now

but they're actually called ICO initial coin offerings and

The early nonchalance of the financial industry has been replaced by a race to develop their own blockchain payment systems

Because of its rate of growth Bitcoin has been stressed to the limits where it was once fast and cheap it is now

Slow and expensive in fact the issues Bitcoin has suffered from have led to political infighting

Bitcoin forking into multiple versions and

alternative cryptocurrencies gaining market share every day

Distributed ledger technology has caught fire

And there's a speculative mania occurring while the speculation can't go on forever one thing is for sure

Blockchain is here to stay or is it?

Last week I was in New York City

For a meeting that we had scheduled that I thought was going to take a couple of days

And it ended up only taking a couple of hours so with all the leftover time I decided to go visit an old friend

Demetri Covina's he used to have a one of the best financial shows on television called capital account

you might remember him from Episode two of hidden secrets of money where he talked about Greece and the hubris of leaders and

empires and how history repeats

Anyway, he has a new podcast called hidden forces and when we visited him

He was all fired up about this new technology and this podcast you know when I listened to it

I got all fired up and he invited us to attend an event so we went home to Los Angeles

There for two days and right back to New York again

and to the event that he hosted about

Hash Graff

technology

created by Leland Baird that is

Probably going to end up replacing

blockchain technology I mean

This is big. We went to the event we listened to some of the people that are involved with this

And we were just absolutely blown away

So I'm going back

To visit with Demetri now and get his take on how the event went last night and where the future of this thing is going

Since the advent of Bitcoin there have been many thousands of blockchain based crypto currencies created

And now there are more of them being created every single day

So what's different about hash graph well it isn't blockchain. It's totally different in fact the way

It works is a real Mind-bender and not very easy for me to explain that I'm gonna give it a try

instead of a block in a blockchain

Hash graph calls their packages of information

Events your computer takes a transaction like a payment or anything else for that matter

such as an action in a videogame an offer to sell merchandise or even sell stocks or bonds a bid on that item a

contract or even a law pretty much any

Information or transaction you want to record and it puts it in the event for transmitting information quickly

hash graph uses a

Technology that has been the gold standard in computer science for decades it's super fast and it's called gossip protocol

Your computer randomly tells another computer in the network

About the event you've created and that

Computer responds by telling your computer about any events it heard about then that computer tells another

Computer about your event and the other events it heard about and the computer

It's talking to responds by telling all the events it knows about it's absolutely the best most efficient way to spread

Information, and it's exponentially fast

But here's the twist

Each time a computer tells another computer about an event it also includes the information of the time it heard it

And who had heard it from and the time they heard it

And who they heard it from and so on and so on it's called gossip about gossip

And it lets everyone know what everyone else knows and exactly when they knew it in just fractions of a second

The other major component is an even older technology

And it's the most robust secure and certain way of coming to absolute consensus

It's called voting protocol, but until now

It was so slow that nobody ever used it and the twist that hash graph has given. It is that there's no voting

Instead because everyone already knows what everyone else knows you can mathematically

Calculate with 100% certainty how they would vote it's virtual voting and it allows hash graph to come to consensus almost instantly

So instead of recording things on a block and then adding it to the blockchain once every 10 minutes

Hash graph events are added to the system

instantly the moment they're created so they don't have ten minutes worth of

Information in them this means that they're small and they contain far less data

so they use very little bandwidth and are much easier to transmit and

because it's not trying to guess the answer to an incredibly complex math problem trillions of times per second hash graph uses just a

Miniscule amount of power from what I've seen so far

Compared to blockchain hash graph is lightning-fast more secure and provably fair all events are time-stamped the moment

They're woven into the system so the record of whose event came first in who's came second is instant

and there's no such thing as soft forking or

Unconfirmed events it can also replace huge portions of the internet that are currently run by

Centralized servers by replacing them with the shared computing power of all of our own computers iPads and cell phones

It looks like hash graph might just have the potential of fulfilling all the original hopes and dreams

I had for blockchain technology the power to decentralize and remove the middlemen from commerce

banking stock markets and much of the legal system and government with the speed at which this

Technology is evolving the future is looking bright and hash graph is the perfect example of just how fast things are moving in this field

Well I think the really amazing innovation that Leemon has made is in the way in which he has made adjustments to the gossip protocol

And to the voting system in order to make them compatible at scale right because a voting algorithm can work

And you can reach consensus in the in the exact same way

but in order to

Deploy that in the real world the bandwidth constraints on it would be such that you'd never actually be able to practically use it

But by incorporating the gossip protocol and creating the hash graph

And then being able to use that in conjunction with the local data that you have in memory and running a voting algorithm

locally on the computer without having to cast any votes or send any votes over the

You're actually able to get all those strong guarantees that you get with a voting algorithm

But you're able to do it at scale and that's what's so remarkable and to be quite honest. It's it's hard to imagine

How no one thought of it it's one of those brilliant ideas that you could have only

Looked in retrospect and said how did no one think of this but at the time

No one did so one of the challenges

I think with any new technology like this is how do you really explain to people?

How do you make a compelling case for what makes a technology so compelling right and?

One of the things that's so compelling about this technology is the throughput it's the speed

And it's it's you know you can tell people that they've tested over 300,000 minimum tested

Transactions per second versus bitcoins three to seven max, but like how do you kind of get that in your head?

And I sort of did a back-of-the-envelope calculation

and that's roughly twice the speed of sound relative to a snail's pace Bitcoin being a snail's pace and

This network literally being like a supersonic jet traveling at twice the speed of sound

Which is I mean just wrap your head around that for a second? It's it's remarkable

It's not even like within so you can see the difference

It's tremendous and understanding of course that the speed of the network

The reason why bitcoin is so slow is because they have to make it slow because if it's not slow it would fall apart it

Would branch off everywhere you would never have consensus

now remember the explanation of the Byzantine generals problem from earlier

And how blockchain was built to solve it? Here's something not many people know

blockchain systems aren't

Technically Byzantine fault tolerant they came close, but no cigar

So I like many people assume that block chain was Byzantine fault tolerant and in fact

I didn't fully appreciate what that even meant I sort of just assumed it and

because I saw it as a sort of part of the larger picture of

Blockchain being very secure and not having been hacked

but in fact it isn't

Byzantine fault tolerant and the reason why it's not Byzantine is

Because in order to be Byzantine you have there has to become a point in time when you've reached consensus

You know you've reached consensus, and you know you'll never be wrong and you're never going to change your mind

And that doesn't happen with blockchain because the nature of the network the the geometrical qualities of the blockchain network

require you to always sort of

Recognize that you're never entirely sure your probabilistically more confident that you're arriving at consensus

But that's also why on the blockchain network. You need to keep a

entire history of the ledger

because you sort of have to have the capacity to do a

Forensic analysis in the event that you are mistaken in the event that the network has fork

Then you don't know it

And so that's something that you don't have to do with hash graph because with hash graph

Your your comb coming to consensus every few seconds

And you can dump the entire history of the network's data and just keep rolling forward because you're absolutely sure that you reached

Consensus and that's the difference. I think the major problem the sort of the big deal in the blockchain community for years ever since

The community figured out that they could take this protocol that bitcoin was built on and sort of extrapolate it and use it to build

these distributed

Systems this distributed architecture around storage and computation etc and building

applications on top of it is that there's there was a recognition that it was that it had limitations it had limitations at scale and

the community's been trying to figure out how to address that while at the same time building apps on top of it and

Something that LeMans said which really has stuck with me is that while everyone was really busy

Building apps they forgot about what the core of distributed technology is all about which is reaching consensus

And what hash graph has done is it has revolutionized that process we can agree about the things that were communicating about at

Scale and that's a revolution. It's the biggest revolution since the web

Right and you were just following your heart to do it. Oh, thanks the thing it wasn't right

So we've been looking at this amazing new technology for about a week now and what I find so

Incredibly amazing is that it holds the promise to solve all of the problems that the other

distributed ledger

distributed network ledger systems have

Bitcoin once it started to scale up it turned out that it used an immense amount of energy to run the system and

Also as it scaled up it became slower and slower and slower to where it was no longer at currency

It was basically a speculative

Vehicle you people could make some gains in purchasing power on it

but it wasn't something that you could stand in line at a Starbucks and pay for a cup of coffee for a

Friend of mine just did a transaction that took four hours for confirmation and so

this is

incredibly fast pretty much

Instantaneous the number of transactions that it can process per second is mind-boggling compared to Bitcoin

And it uses almost no power, so it solves all of the issues that I had with Bitcoin

there's a lot of different crypto currencies now and many of them are engineered to either be faster or to be more sound and

Robust, but everything has a set of trade-off

And so whatever feature that they want to offer they have to give up something else so the really fast ones if they

Want them to still be fast once they're scaled up? They're

More vulnerable to some sort of attack or hacking

The ones that are less vulnerable to attack and hacking have the problem of scaling they're going to be slow

So you know speed fairness where the transactions are recorded in the absolute order that they came in

some cryptocurrencies offer you the ability to pay extra to have your transaction mine first and that really isn't fair a

Distributed ledger should be recording everything at the absolute time of event and then full consensus is reached and there's no argument

No going back

This is set in stone for ever

So now we're actually on our way to talk to some of the team at hash graf and learn more about this

When I first arrived I was chatting with some of the hash graph team about how much energy the Bitcoin system

uses these days it has literally gone through the roof if

Bitcoin were to replace the entire world monetary system and financial markets it would use more power than the entire world

produces it's completely unsustainable

This is one of the reasons. I'm interested in hash graph

It's amazing efficiency the other reason these guys already have

commercial customers using their technology at an industrial scale

How it's being used today is in private enterprises? It's been deployed by the

Credit union Association where Cu ledger is a group of

6,000 credit unions and a consortium that had to make a decision what distributed ledger

Technology were they're going to use it and we beat IBM hyper ledger, and we're super proud of that

it's we're a small company no more than six people today and

The fact that we could go up against IBM. It's a true David and Goliath story, and we're really proud of that

it's also being used in aetherium based projects where a lot of these ico coin offerings are starting to realize the limitations of

the etherium protocol in that today

It's five to seven transactions per second

Hash graph is again that hundreds of thousands of transactions per second

Which opens up a whole new genre of applications that could never run on aetherium our technology speaks for itself

It's night and day in true comparison to everything else in the market and everything falls short

Especially when it comes to security we're asynchronous Byzantine fault tolerant. We're the strongest form of security you can get in a distributed architecture

You don't have to take our word for that. There's 30 years of academic literature on

in the space of voting based systems

Ours is a voting based system without the voting we do virtual voting which sounds weird, but it works. It's peer-reviewed

Mathematically proven, that's what got the credit unions the fact that

We have absolutes certainty that when we achieve consensus. This is consensus

It's not it's not blockchain in that with every additional confirmation

We become a little more certain, but we're never truly certain

and that's the case certainly of blockchain with hash graph you never have that what if

You're a hundred percent certain that this is the way things are this isn't theoretical

We're not talking about a white paper or some voodoo idea that is

Is not practical because the fact of the matter is this is a tech stack that you can go download today

It's been out for a while now

We took it to TechCrunch Disrupt to have developers and the hackathon out there build on it

We gave a $5,000 prize to a team that built up the hash graph fair auction ledger

and what that is is a distributed auction for the first time ever in the history of mankind where there is no centralized infrastructure, but

Distributed parties could submit a bid and we can still decide who won that auction think Sotheby's or eBay

But without a leader without any vulnerability and with complete fairness, that's never existed before

Well for me the most exciting

Applications or potential applications for hash graph are

in in terms of Internet of Things

identity and

In allowing us to be able to control our own identity

instead of it being in the hands of

corporations or other

organizations from our currency or economic standpoint

It opens up possibilities in in developing countries

You know there's so many possibilities that before hash graph got invented. You know all these possibilities didn't exist, but now they do

It really does seem like hash graph has cracked the problem of consensus at scale once again

You can see the speed of evolution in this space right in front of your eyes and like I said in Washington DC

It may not be Bitcoin that dominates this space it may not be aetherium it may not be hash graph

But you need to understand how quickly this thing is moving. It's a very exciting time

The more I found out about this technology the more, I needed to know about it

So I headed straight to Texas to meet with lemon Baird hash graft CEO mance Harmon

We we both lived in the same town

It was actually a suburb of Austin, Texas, Cedar Park, Texas

And there is a Starbucks on the corner we would meet there after

Kids have gone to bed and would sit at the Starbucks until they would close and very often

Until late in the evening after they've closed we would often watch the people at Starbucks

Bag up all the trash and throw it over into the dumpster and leave it

And I would be sitting there talking about

The latest thought and in the latest evolution of the hash graph that you know what's the latest rabbit hole that?

Leeman was going down in terms of exploration of how to solve this problem

And so there are great many memories of this process in that particular location

It's clearly the case that we're wanting to change the face of the internet

We're wanting to make the internet what it should have been from the beginning

But nobody stopped to figure out

What's the right way to do this and the internet grew up in such a way that there are serious?

Architectural flaws and security flaws and and there's a lack of trust at a very real sense

And we see the opportunity to fix that problem

And there's a general understanding across the community that what we're doing today in the world of distributed consensus is

sort of equivalent in many ways to what happened in the

mid-90s with the introduction of the World Wide Web and how that changed Society and fundamental

And and so we're not alone in this it's obvious to the community

We just happen to have the best technology in the market at the right moment in time

And so we've been given this privilege of being able to be on the leading edge and and perhaps

uh sure in this new trust layer on top of the existing Internet and

There's a certain camaraderie that comes along with wanting to

Do so your to do something as as bold as say we're going to change the internet

So it's funny the ledger field is very broad and people come to it from different directions some people thirty years ago

We're coming to it from making computers not have faults

but they're also concerned about how to

Create cryptocurrencies or how to create smart contracts or how to create?

Short stared in short information or how to do databases the database world has been doing this for decades

My interest was slightly different

What I wanted to do was to enable collaboration

My goal is that we should have anyone on earth at any moment can just wave their hand and carve out a chunk of cyberspace

Carve out a world of their own without having to pay anything for free create a court world of their own and invite some friends

And now we have a shared world

Anybody should be able to create this shared world and in this shared world you and I should be able to create

Documents and create movies and create 3d objects and we should be able to collaborate with each other and talk to each other

We should be able to interact in ways where I'm not the dictator of the whole world. I can't delete everything arbitrarily

We should have rules enforced

So maybe it's a fair world where I can't delete things you create or maybe it's a fair world where we vote on things

Or maybe it's a world in which

We have a stock market

And you can make sure that the first bid gets matched up with the first acts not the later ones

We won't have a world that you and I can trust and that our friends that we have invited and maybe the strangers we have

Invited can trust is going to work the way we want

And we can trust that if my computer dies and is erased I can get all the data back the data will never disappear

But to do it totally for free

server involved just the computer the people involved with complete trust without having to trust any one person in any way and

Be able to have this shared world that has the fairness and then the speed I mean

I wanna be able to play gains in this world

So I want a ledger where I'm recording every single time a person moves or shoots or pick something up you want to be able

to do a game and

We're talking hundreds of thousands of transactions per second, maybe we want huge speed and we want complete security

We want privacy we want no one is spying on us this isn't funded by advertisements you want to spy on me

So I have better advertisements we want it just to be something that appears out of nothing

That's just living on our computers

And then when we're able to have a shared world we want to have multiple shared worlds that connect to each other

So maybe you and I and a few friends set up a little stock market just for ourselves to send things back and forth

The banks do this they're called dark pools. It's like a little tiny stock market just for a few players that

Trust each other sort of but not entirely. I don't entirely trust you and have even the problems with dark pools where maybe

Banks are taking advantage of some of the information involved, maybe one banks hosting the server

But they can manipulate the timing a little bit, and we have to worry about this

I don't want that

I want a completely trustworthy stock market that maybe you and I in a few banks set up

But then I want to have a different sort stored world that maybe keeps track of a cryptocurrency

And I want them to be able to link so that that cryptocurrency is used to buy and sell our stocks. I

Want to be able to have a game world that links to a Wikipedia?

World where it appears that pieces of Wikipedia are actually part of our world and as they change in the Wikipedia world they change in

Our world you want to have shared worlds that are internet interlocking with each other that allow shared trust even across these things

This is the vision for what we want

The internet to be it will change the way we even look at what?

Cyberspace is what the Internet is what our networks. Even what our computers?

This is what's going to happen and 20 years from now

when

The children who are born, then are growing up. They're not even going to think about

websites and

Emails as a separate thing and Internet and many of the hacking attack that we have today

They're just gonna take it as a matter of course that any time. I won't talk and wave my hands

I get a shared world. It's free

It's easy it's trustworthy and reliable I can invite two friends or a million friends and it all just works

And it will change the way we think of what the Internet is

That is what I?

started being interested in building and

This is the direction that we're going this is what distributed Ledger's do is

They will ultimately allow us to do that and there's a lot of rough edges is we have growing pains and distributed ledger technology today

but we'll get over the growing pains we will get to a world that really is fast and secure and fair and

We will enable to then have this vision of shared worlds big public ones little private ones everything connected

That was the idea that was five years ago

I like playing with math so I kept playing around with how would you do it, and I convinced myself?

Yeah, it's impossible. You can't do that. There's no way that you can have really high throughput because and

And also have all these security and fairness properties

You just can't do it because ultimately you end up having to tell everybody what you think and then telling people what other people thought

And they you can have millions or billions of extra votes and receipts on votes floating around and just doesn't work so

I was able to convince myself. It's not possible

And I set it aside

And it would come back and haunt me, and it would keep nagging at me, and so I would pick it up again

And I would spend a couple of days going through it and going through the math and realizing

No, I was right. It really is impossible

You can't do that and set it aside again, and this kept going for years

I have lots of math problems some I've been working on for decades they just for whatever reason

I don't know why they just latch on to me, and I can't get away from them and

eventually I said

Wait a second if we're all just talking to each other and you include a tiny bit of extra information

We could each end up with a complete history of exactly how we talked to each other in what order?

But if I had that I would know exactly how information flowed through our community

I would know what you know I would know when you learned it

I would know what you know about what Alice knows and what you know about what Alice knows about what Bob knows and about when?

They learned it. I would know so much that I could take one of those huge

impractical

impossible

to slow voting algorithms and do it with no votes at all I

Could just sit here and say oh, I know how you would vote so don't bother voting don't tell me your vote

I know it. I'll just pretend that you voted and I'll just pretend and I'll just get to the conclusion and

So all we do is we just talk to e we talk anyway to send out our transactions

We had a tiny bit of information and it gives us this entire history the history is called a hash graph

You just get this entire hash graph that lets you see such incredible amounts of information

about who knows what when

That then you get consensus for free

But that's where we're going and where we're at the very early stages

I mean the planet is at the early stages of what Ledger's can do and

I think whatever you think that Ledger's might be able to do they can do that

But they can also do more

and we are just as as a as a species beginning to learn what the final limits are and

we're pushing as fast as we can along that path and so this is the

Gateway to the next net this is it this is the next note

Technically the geeks will always know well. There's multiple layers, and the Internet's still down there at the bottom

Just like it always has been but for the users

What they think of when they think in their mind of what the net is is changing and that's what's going to be different

and a low energy cost ah

Let's talk about energy cost you can run this on your cell phone

Am I correct the processor and a cell phone apps is enough to actually run absolutely hash graph absolutely so

There are systems that would require you to buy a supercomputer. It's called a mining rig

It's a big box full of specially built chips that don't do anything useful humanity

They just mind which means they solve math problems that have no inherent use

The purpose of them is to slow down the network

This isn't this isn't sound good

Just on the face of it. I'm going to spend a lot of money on a supercomputer

and then I'm going to

Use a lot of electricity to run my supercomputer and the whole point of the supercomputer is to slow down the network

But that's what it is and so proof of work systems work that way

Proof of work is really exciting because it was the first to show us all the possibilities of Ledger's

But it's the first generation. We're clearly need to move beyond that and we will I think over time

So with hash breath yeah, you could run a full note on your cell phone

You've accomplished something a tool that is extremely powerful. What are your hopes and dreams?

My hope and dream is that this pushes us forward along this path to an

Internet of shared worlds like we've been talking about

Where anybody can collaborate with anybody and?

The data is stored

You don't have to pay for a server to hold it it is secure. It is private where you have the rules enforced

We could set up an organization and trust that elections aren't being rigged

Because the rules are enforced you don't have to trust any one

Person we could have money and trust that no one's going to inflate the money supply because the rules are enforced and it is

Guaranteed we could store

The deed to your house and at any given moment I could know that we're all seeing the same answer as to who owns it

So that you can't sell it to one person and also sell it to someone else at the same time

you'll get caught because it's a publicly visible thing that everyone knows that everyone else is seeing the same thing I

I vision a world where the whole internet works this way

or we all know that we can all see the same thing and that rules are enforced that we have collaboration and

To do that we need speed we need security we need fairness

And I my goal is that what we're doing?

Pushes us along that path because that's the goal that we need to get to where the nature of the Internet itself is

Different because it has a trust layer

So this has been my three-year journey of discovery from Bitcoin to hash graph and all the promise that they contain

Now when we make a documentary like this

You shoot hours and hours and hours of film and you have to decide what to put in and what to leave out?

many of these guests we interviewed for somewhere between a half an hour to more than two hours and

they said amazing things and stuff that you really do want to learn and

So we're going to make all of this available as bonus footage on hidden secrets of money

Dot-com and so go there if you're interested in any of this, but especially hash graph

You know we wanted to take you on this journey of discovery

to show you these stepping stones along the way and

My hopes and dreams when I first started on this journey

Was that Bitcoin was going to be the technology that was going to help free the world to make a fairer

more prosperous freer planet for all of us by helping to change the monetary system and

it has

Bitcoin is

Extremely important, it's like the very first automobile

It's like the discovery of

Electricity it's like figuring out how to harness fire

It's it's a very very important technology, but no man can

Design something that is supposed to be a free-market

interaction and predict all of the unintended consequences, and what satoshi nakamoto has done here is

beautiful except when he did it

figuring out how to

Incentivize people he over

Incentivized the mining area and what has happened to Bitcoin is it has become this behemoth

That is no longer the promise of a currency

It's not going to replace the world monetary system or the financial markets nobody is actually using it for

transactions they're using it as a

speculation now and

So it isn't living up to the original promise of what bitcoin was supposed to be

Hash graph might we have yet to see right now none of the blockchain

technologies that I know of can run markets where it's got to be absolutely instant and

Absolutely fair hash graph can provide these things you know

The people on Wall Street were sort of like dinosaurs looking up at an asteroid and not realizing

What was coming suddenly?

everybody in the financial sector is scrambling to try and figure out how they can get a cut of this and

One of the things a lot of the Wall Street people don't realize yet, is that a lot of them are already

obsolete now hash graph

Because it's plant patented. There's there's no token that you can buy right now there's

It's a platform. It's just like the blockchain. It's it's something that underlies

Applications that will be built on top of it so but this

The part that underlies those applications. This is a

Revolutionary trust layer that speeds everything up

Conserves energy and turns the Internet into something completely different because it's completely decentralized

As far as government in the financial system

We have seen a tremendous change since the founding of the United States of America

It was founded on freedom and what we've seen is more and more controlled by government and the financial system

inserting themselves more and more and more between

Individuals that want to transact with one another

now the powers that be are not going to want to go down without a fight and

this does have a potential to supplant most of what they do to take away much of the power and

That's really what I would like to see and so this is my great

hope and dream, but we're not out of the woods yet, we have to keep pushing this forward and

Please support it. This is something that

Everybody should get involved with and everybody should spread the news on it if you want it to succeed just

like the beginning of this episode

These technologies really do have the power to enslave or free mankind

It's going to be one or the other there is no middle ground here and right now

We have the opportunity to choose. This is a decisive moment in history the future of mankind

Depends on what you do so learn as much as you can about this space all of it

Visit hidden secrets of money comm and watch the bonus features especially the stuff from Lehmann Baird at hash Graph

share this video with

Everybody that you can and until next time. Thank you very much for watching good luck, and we'll see you next time

but they're actually called ICO initial coin offerings and

Click on any text or timestamp to jump to that moment in the video

Most transcripts ready in under 5 seconds

One-Click Copy125+ LanguagesSearch ContentJump to Timestamps

Paste YouTube URL

Enter any YouTube video link to get the full transcript

Most transcripts ready in under 5 seconds

Get Our Chrome Extension

Get transcripts instantly without leaving YouTube. Install our Chrome extension for one-click access to any video's transcript directly on the watch page.

Add to Chrome — Free

Works with YouTube, Coursera, Udemy and more educational platforms

Get Instant Transcripts: Just Edit the Domain in Your Address Bar!

YouTube

←

→

↻

https://www.youtube.com/watch?v=UF8uR6Z6KLc

YoutubeToText

←

→

↻

https://youtubetotext.net/watch?v=UF8uR6Z6KLc

YouTube TranscriptPreparing your results…

YouTube Transcript:From Bitcoin To HBAR - Hedera Hashgraph Documentary