Hello, and welcome to Dash School
I am your teacher, Amanda B. Johnson
And this video series is going to provide you
with a complete and basic understanding
of how a blockchain works
As well as how Dash uses one,
and how Dash in general works and
serves as a digital cash.
This series requires no special pre-knowledge
on your part, and is intended for everyone.
With that said, lets get started.
So, speaking of Digital Currency,
How could such a thing exist?
How could I send you some bits
over the internet that would somehow
be interpreted as money?
Well, lets think about something we're all familiar with.
Email.
So how about this?
Could this email, which states that it represents
one e-Money be used to buy things that cost one e-Money?
Technically, it could.
If enough people start passing these around
and accepting them for goods and services.
This would be a primitive sort of digital currency.
It wouldn't be a very good one however, in that I could do this:
If I had sent you this e-Money for say a subscription to your
Weekly blog (Thanks for that!) I could also send that very same email
to my friend Sam, to my cousin Bob and to my neighbor Mary.
Now all of a sudden, where we started out with just one e-Money,
We now have 4.
Poof! New e-Moneies were simply created out of thin air.
And I could technically do this as many times as I wanted.
You can see how this is problematic.
Because it means that our money supply can be rapidly expanded,
in a completely unaccountable way.
If I can create as many money units as I want,
This currency would be what is called "infinitely inflatable".
Why wouldn't we want unlimited, unpredictable inflation?
Lets consider Gold for a moment.
You know, that really valuable metal, shiny rock.
What would happen if say, and Asteroid would hit the Earth
That was made of gold, and suddenly increased the available supply
of gold by .... a Trillion?
So that there were gold coins lying around everywhere you look.
You wouldn't even be able to step out your front door
without kicking over a pile of gold.
If gold were as common as pebbles,
Do you still think people would be willing to trade.... say .... oh
a car? - for an ounce of the stuff?
I don't think so.
In the same way that Gold would be devalued if it's supply were
increased by a Trillion,
same goes for money.
Kind of like this. As the supply of money increases
The purchasing power, or what goods and services
each individual unit of that money will get you,
goes down.
As an example, in the United States, there used to be something
called "Penny Candy".
That was because one penny would buy you a piece of candy.
Now, a lot of people simply throw their pennies away;
in the trash can.
because it will no longer buy them anything.
If any new monetary system is to be considered
worthy of your attention, it's got to not be like that.
So going back to our email example; THAT
How can we be sure that anything digital is not
infinitely inflatable?
Is the digital realm not the land of copy and paste?
Yah, like that.
To prevent the copy and paste problem
"inflation"
from taking place on our special email money,
e-Money, what if we tracked every email that was sent
on a kind of ledger?
Like this.
And what if we built a kind of wallet software
that read this ledger, so if I tried to send you 2 1/2 e-Moneys,
my wallet would know I only have one.
This concept of a digital ledger makes up the entire
foundation of digital currency or as some also call it,
crypto-currency.
And that foundation has a name. A Blockchain.
And now you can be confident that any time someone drops
this fancy word around you, all they're really saying
is Digital Ledger.
But if it's a Digital Ledger, why call it a Blockchain?
What does that mean?
Well, it has to do with how this ledger works.
Going back to this concept of a ledger,
The most important thing we have to make sure of,
to make sure that our monetary supply is open, honest, accountable,
auditable - we have to make sure that the numbers are trustworthy.
How can we make sure, for example, that I won't do something like this:
Wouldn't that be convenient for me?
Or how do we make sure that I don't do something like this:
Alice never should have crossed me.
Well, the answer is that no one gets to change the ledger.
They only get to update it.
Let's shrink this down....
Here's that shrunk down copy of our ledger,
And it's time stamped
If we want to change who owns what,
We have to add an update.
And on and on, so that anytime that I, you, Bob, Alice or anyone
using the e-Money system wants to send e-Money, it gets included
in an update.
After a bit, you get to see where this digital ledger gets it's name.
Each update to the ledger is called a block,
and the cumulative result of this, is a chain.
Hence, Blockchain.
Now you might be thinking to yourself,
hum, that seems like a novel way to try to do money,
but who gets to make entries into the blockchain?
Ah, when do they get to make entries into the blockchain?
Any old time they want?
And why should we trust that people making entries into
the blockchain are making accurate entries?
Well, my friend, that you would even wonder such a thing,
tells me that you are clever enough to have a complete
understanding of all things Blockchain and digital currencies.
So why don't you hop over to episode to find out the answers
to your questions.
