Gadgetory

hello there i'm gary sims from andhra thority now if you've ever heard terms like Bitcoin or cryptocurrency I'm sure you've also heard the term blockchain now blockchain technology is something we're gonna hear more and more about over the next few years so what is a blockchain how does it work and what does it mean to people like you and me well let me explain put most simply a blockchain is a list of transactions that is distributed publicly so they can be verified and a level of trust can be created that those transactions actually occurred now the reason why it's called a blockchain is because it is a series of blocks of data and inside those blocks are transactions and they are chained together and it's the chaining of them together that gives the strength of blockchain now before we go on more about how they chain together let's talk about a thing called hashing now hashing is a technology that you find in computers from from way way back now basically there are two types of hashes in computer science you've basically got a non-unique hash and a unique hash now a unique hash is really really interesting what it basically means or whatever data you give the hashing function the hashing algorithm this little machine that creates the hash whatever day to give it the hash that comes out will be guaranteed unique now that's quite amazing because it means if you give it a string or you give it a photo you can get a video file or you give it transactions then it will say this hash is unique and you can compare to hashes very very quickly and if they're the same you know that the transactions are talking about the same block of data to about the same transactions and if they're different then you know they're not the same so you might have let's say you know a gigabyte of data and then you get a hash you might have another gigabyte of data it gives you the hash now rather than trying to compare every single byte in that file if you look at the hashes you can say oh okay these are the same these are not the same so passing the hashes around storing the hashes using the hashes for computations and much much faster than dealing with the actual data itself now the key about hashes is that they have to produce a different unique answer even if one little bit of that day to it difference so if you have a sentence okay and then the sentence changes even by one character then the hash has to be very different now in the blockchain what happens is that there is a particular hash which is called sha-256 which belongs to the secure hashing algorithm family of hashes and sha-1 used to be the darling of the internet there are some weaknesses in it now where you can maybe find paths with the same data different data so we can give you the same hash so now they've moved up to sha-256 which is a form of the sha to hash and basically what happens is is that when you have a block of data you produce a hash for that block you say here's a block give me the hash for that and that hash is unique and then what you do is you embed that hash in the next block so where long comes the next block of translations transactions and inside that block is actually the hash for the one before it and then comes on the next block of transactions and inside that block is the hash for the one before it now what does that mean well first of all it means it produces a chain because you can jump from one block to the next block to the next block to the next block by following the hashes but also what it means is that if you want to change your block remember it if we just change one bit let's say I want to change it to say he sent two bitcoins rather than one Bitcoin okay by changing that it changes the hash which means when you look at the next transaction and it says well the hash of the block before was this when it looks at the block before it goes no it's not it's different it's changed and so what that means is that to actually change any one block inside of the blockchain you have to change the whole chain so do change while even from a two to one inside that transaction you have to change the whole chain now of course the thing about hashes is they're not that difficult to calculate in fact on on a raspberry pi you know which is a tiny tiny little single core computer it calculates one hash in just a fraction of a second so what you actually need to do is you need to make it harder to generate the hash otherwise even if you had a million blocks recoding them wouldn't take very long for a modern computer very tall UV they know here's the real blockchain and actually it's got fraud you know block sins that you have manufactured yourself and then the whole system of trust and transactions and financial transactions just completely falls apart so when you look at these hashes as I've shown you they there's big long sequence of numbers you can actually say well can I have a hash that starts with two zeros please now when I did this on my Raspberry Pi it does take it a bit longer to generate a hash with two zeros on it now hold on a second how can it generate one with two zeros if the hash is always unique for a particular set of data well what you do is you add on the end of the data this thing could announce and what that is is basically you start a counter one two three and you add it onto the end of the string on the end of the data and you keep changing it you keep turning it around until the hacks that you get out follows a particular format now even on my raspberry pi I could actually generate one with sort of three four five leading zeros in just a few seconds so what you have to do on the Bitcoin is actually want one that takes 17 zeros to get it going which means it takes minutes of high-powered computing time to generate that hash to have a hash that's got 17 zeros at the beginning that's or today in 2017 and then and then the data for the transaction and what that means if you wanted to recode the entire block now for a fraudulent transaction then now you have to do kind of ten minutes of work for absolutely every single block in the chain and of course if the chain is thousands and thousands along well that's a lot of minutes okay just to generate one Portland transaction and therefore it becomes computing lis infeasible to do that now we've talked about block chains because they to do with Bitcoin and other cryptocurrencies and the idea is a transaction is sent out there on the internet and the second important thing is that is what they call distributed it's using a peer-to-peer network which means there isn't a centralized server owned by you know a u.s. financial institution or you owned by a financial institution alone by Visa or MasterCard it's transmitted to everybody that's part of the Bitcoin network which means that there are thousands and thousands of copies of the chain or fragments of the chain throughout the entire world and that means that if a part of the Internet becomes unavailable with a server is unavailable if a particular institution is unavailable the the transactions can still keep going on they can still be verified they can still still a level of trust because it's now distributed this is a decentralized view of doing final transaction very different to what we have today where the banks are the centralized authority and Trust source for doing transactions now of course block chains are much more than just what can be done with bitcoins it can be applied to anything where there is a list of transactions for example maybe in most countries I assume the Land Registry is a public record if you want to find out who owns a piece of land you might go to the write-off which you might fill out the right form you submit it and then it comes back maybe days weeks later this is the person that owns this piece of land very important when you're buying property or when you're buying land of course now imagine a world where the Land Registry was Ain a blockchain so it's out there it's distributed it's across anywhere across the internet and when you want to verify who owns a particular piece of land what the last transaction was on a piece of land then of course you just look at the blockchain and it tells you and you know it's secure and you know it's been verified because of that blockchain technology now that would be a great way of having public records available for anybody to verify and check that the transactions are as they say but there is a downside to blockchain technology because those transactions that are put onto the blockchain need to be verified themselves and the way you do that is using private public key cryptography now I've got two videos on one on cryptography in general and one on public key cryptography and I suggest you both you go watch those if you're interested in this kind of thing I'll leave the links in the description here below and basically with public key cryptography I'm able to sign a transaction as the private party I then broadcast that out then using the public part of my key it can be verified that I did in fact sign that transaction I'm agreeing with that transaction and that it is a valid transaction when the key don't match up in this private public setup then you say well hold on this is a false transaction now the problem is is if you ever lose your private key you lose everything so for example if I had a disaster in my house let's say there was a flood and all my documents got destroyed even my Land Registry documents okay I can still get a new driving license I can get a new passport I can get copies of my birth difficut I can go back to the Land Registry and I can get again a copy all those documents to prove that it's me that owns a particular piece of land but if I lose my private key that's it it's gone I've got no way at that point to prove that actually I am the owner of that land and this is what happens in the Bitcoin world when people lose their private key they lose their wallet then of course they can't get those bitcoins back they are gone forever because the key is no longer available now that's a real weakness because at the level we are all used to living in terms of you know identification and how we process things and and when we lose our keys it's weights it's a pain but it's not the end of the world if you lose a key for something like Land Registry or for bitcoins or who owns a house or your medical records or or anything like that then now we're in real trouble because everything is focus on that one point of weakness and that is a problem with the blockchain now there are lots of companies out there that are developing blockchain technology as a general technology and I'm sure we're going to see more and more of it and I hope this video has kind of given you an overview of how it works and how that level of trust in the transactions is developed inside of the blockchain well my name's Gary sim trying to authority I hope you enjoyed this video if you did please do give it a thumbs up also Bev forget to subscribe to the under oath or to YouTube channel hit that Bell notification and also go into Android or thority comm because we are your source for all things Android