Hello and welcome back to Dash School
I am your teacher, Amanda B Johnson
And as you'll recall, we last left off talking about
the digital ledger that is called a blockchain
and how it is used to record changes of ownership
among people.
We ended with the questions;
Who gets to make updated entries into our e-Money ledger
When do they get to make them?
And why should anybody trust that the updates that they make
are accurate?
And all of these questions can really be summed up
under one heading.
Security.
What is the security model of a blockchain?
To understand that we first need to conceptualize how
a blockchain is run to begin with.
And that is via a Network.
Using the internet.
The basis of the network is people keeping copies of the
blockchain on their computers
and they are connected to one another via the internet.
Irina in Russa
communicates to Chen in China,
communicates to Joe in Australia
communicates to Harry in Hawaii
communicates to Carrie in California
Marie in Mexico
Larry in London
and hundreds, or thousands more people accross the world.
Looking something like this.
You get the general picture.
And the purpose of this network is for all participants
with a copy of the blockchain to agree on the state of that
blockchain at any given time.
For example, a situation like this, in which Chen's copy
of the blockchain reports that I have e-Moneys
But Marie's copy reports that I have would cause
total chaos and would be of no use to anybody whatsoever.
So the state in which all, or the majority of the network
agrees on the same versions of the blockchain is called......
consensus.
And it's from consensus that a blockchain running network
achieves most of it's security.
So, back to our example of Chen and Marie having
conflicting copies of the blockchain, a big no no
useless for everybody
How do we prevent that from happening and keep
consensus about who owns what?
I'm going to talk a little bit of computer science to you right now
but don't even worry, it's not a big deal.
The mechanism used to maintain consensus on
who owns what at any given time is called
proof of work.
And that just gives us a fancy way of deciding
who gets to make an update to the ledger and when.
See, the primary goal here is to not have both Chen and Marie
broadcasting conflicting versions of our blockchain
at the same time.
We've got to have one or the other
so which is it going to be?
Chen's version? Or Marie's version?
Using what's called proof of work mining,
and I know it's weird that we would use the word mining
but you'll see why in a moment,
we can maintain consensus.
So back to a stripped down basic version of our network, right?
What we don't want is two different people
with copies of the ledger making an update
at the same time.
We want only one update to the ledger being made at a time.
Which everyone else can take a moment to agree with and
incorporate the update into their own copy of the blockchain.
This is achieved using specialized computers called miners.
Here's what one looks like.
Yes, they really are weird looking specialized computers.
The computer code, computer code looking
something like this
that makes our blockchain possible,
contains a math problem to be solved.
Seems kind of silly when I say it out loud,
but I'm not kidding.
The computer code has a self adjusting math problem
that these mining machines are built to solve.
And the difficulty of the math problem is set to
increase as the numbers of miners on our blockchain network
increases.
And all this fancy mumbo jumbo is done to
ensure one thing,
That only one miner solves the math problem at a time
and that it happens consistently every few minutes.
And what happens when a miner solves the math problem?
Well...
two things happen actually.
First is that he gets a reward of newly created coins
on the blockchain.
Yes, I am not kidding, newly created coins on the
blockchain are paid to the miner who solved the
math problem as a reward for proving his work.
And secondly, he is the one who gets to create the next block.
Or in other words, he is the one who gets to publish the
next update to the ledger; containing all the transactions that
happened in the last few minutes.
And thus does our blockchain, which is a chain of blocks,
keep perfect record of every transaction that's made;
the time that the block was published and the total number of
coins that exist - including the increase of coins as the miners
were paid in new coins as their reward.
As an example, onethousand coins, then onethousand five,
then onethousand and ten, and on and on.
in this way our money supply as recorded on the blockchain
can be considered open and honest. In other words, it's viewable
to anybody.
This also means that inflation, AKA, the new money created,
is both transparent and predictable.
(Though currencies like Dash will not be inflated forever)
But that's a topic for another day.
What you need to know now, is these accounts...
They're not actually tied to your name.
That wouldn't work at all.
Accounts on a blockchain actually look something more like this
Long alpha-numeric addresses,
which are actually longer than these, are totally unique
and you can own as many of them as you like
(blah) What does this mean? What is this witchcraft?
Well, it's based on a form of math called cryptography, actually
and you are totally smart enough to understand it.
So hop on over to episode to see how cryptography
allows us all to have accounts on a blockchain.
