Bitcoin Problems - Computerphile
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- เผยแพร่เมื่อ 11 ก.พ. 2016
- Bitcoin may be doomed to failure as the blockchain struggles to scale up; Professor Ross Anderson from the University of Cambridge explains.
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This video was filmed and edited by Sean Riley.
Computer Science at the University of Nottingham: bit.ly/nottscomputer
Computerphile is a sister project to Brady Haran's Numberphile. More at www.bradyharan.com
There are many academics who criticize bitcoin without understanding it.
When there's no more Bitcoins to mine, people will still be able to collect transaction fees through adding to the block chain. That will though be a change in the dynamic and it is a valid question whether or not that will work. The point about Bitcoin's scalability is also a good one. Would be nice if the Bitcoin fanboys would address these points rather than ignorantly dismissing them.
This guy was disengeniune and lier..he totally mised that when hashes wont have value transaction fees will have it
Lightning
and also the asic mining environmental issues.
4:35 Slight correction: you pay money to the _public_ key. You don't (and shouldn't) know the recipient's private key.
+Jan Sten Adámek You pay using the public key, but only the owner of the private key has access to it, so effectively you pay to the private key.
+Jan Sten Adámek I think he just phrased it poorly, see what "vinny142" said, that's how I interpreted it, too, essentially saying the money is accessible if you have the private key.
+vinny142 No you are paying to a public key so you can't say it is private. Not even that any more. It is hash of a public key for years now... Until you use that address used to send bitcoins for the first time even public key is unknown to the world... And then there is a multisig were you are paying to a script hash(P2SH)...
+Jan Sten Adámek If it works like SSL in terms of key usage, you're actually paying to the private key using the public key.
+Skep Heretic Blockchain is only hashes of public addreses that might have a private keys(ones that start with 1) or not(ones with 3 at the start that are pay to hash script). So on that alone you can't say you are paying on a private key. Private key is only used to signed a scrypt what to do with bitcoins. Like send them. But there are alot of other options too...
If this video is left to stand it will end up being the biggest blunder of this man's tenure.
+Brock Wood As far as it stands now, it's not not wrong. I have a small stockpile of mBTC. I never use it for anything. It's far less convenient then my bank's master card. I'm not waiting 5 minutes to order a pizza.
If that gets corrected, and you figure out how to solve the mining issue, then you might get somewhere. That being said, the blockchain cryptographic method has all sorts of uses outside of digital currency in the 'replace fiat' sense.
+Brock Wood You can always tell when someone's wasted - I mean... invested - a lot of money into bitcoin.
+Jo York You are right, I never should have bought those coins at $2, I'm such a jackass what was I thinking..
+Brock Wood Hey Brock! Yea you are so right, this guy is totally just here to bash bitcoin as he's been prompted and most likely paid to by those who despise a free and uncontrollable and un-defraud-able currency! Like those who print up unlimited paper currency and want to continue to be able to do so forever. I first became aware of it when it was at around $14 so not even as early as you, but I didn't have anything to invest into it even though I believed in it and wanted to! Care to send a little something maybe to a fellow bitcoin supporter who missed out on the early adoption? :) 1MmK647mz7YxpqEmkgHXrPpfcbX5cJFHx9
+Jo York Doesn't matter, if you think bitcoin has a future or not, this guy calling himself an expert is clearly not one. Not even close.
He actually sounds pretty pro-cryptocurrency, and calls Bitcoin a wonderful technology. I think his stance is simply that an improvement to Bitcoin (whether that be Bitcoin itself or some other digital currency inspired by or based on Bitcoin) would be required for wider global adoption.
i.e. lightning
You need an ASIC machine to be competitive in bitcoin mining now.
+Kevin J. Dildonik And in that case, you are effecitvly stealing power for personal use. Only thing I can imagine being practical nowadays is also investing in energy yielding devices like solar panels, turbines, wind generators, etc.
+TheSpacecraftX And cooling. And electricity as others have mentioned.
+TheSpacecraftX Whats that?
+Mike Hunt Application Specific IC. A CPU made just for mining bitcoin.
+Mike Hunt A computer which is made to run one script as fast as possible
I'm not sure that this guy has used Bitcoin recently. You don't need to download the entire blockchain any more, and even if your computer is hacked, the hacker would still need to hack your wallet. And if they could do that then the hacker would have better things to do that take just your Bitcoins.
+Sam Scheding "And if they could do that then the hacker would have better things to do that take just your Bitcoins." Wouldn't the veracity of that statement depend heavily on the number of Bitcoins you have?
+Penny Lane Haha, that's true. I mean to say that if a vulnerability was found that allowed a wallet to be hacked, the repercussions reach far beyond just one person.
Hacking the computer is often all that is needed because the biggest vulnerability in the system is the human. They often use the same password for their wallet as for their email. So Hack the email and you hacked the wallet.
+Silentsam7532 This is why most bitcoin users use 2fa , cold storage, and or hardware wallets which aren't vulnerable to hackers or viruses.
+Sam Scheding It is still very much the case that if something goes wrong (maybe you accidentally deleted your bitcoin wallet, or it got corrupted somehow), you have no recourse. There's nobody to phone, you can't reverse what happened. Silentsam also has an excellent point in that many people may use weak or easily guessable passwords for their wallets.
would love an update video on bitcoin problems
There are solutions to the scalability problem being proposed, though right now it is a limiting factor yes. It is possible to use a third party to hold your coins so you have someone to talk to on the phone, but then you have counterparty risk just like traditional banks. Multisig arrangements where you share your money with a third party can increase security. Wallet backups are important to avoid money loss. Transactions are acknowledged almost instantly and the "confirmation" (similar to settlement) should happen within a few hours. This is much faster than banks when sending money abroad, which can take many days to settle transactions. For mining it is expected that transaction fees will support the network.
The problem not mentioned is the problem of power consumption required by the Proof-of-Work system. There is a much more efficient alternative called Proof-of-Stake which is used by coins such as Peercoin.
0 conf transactions can be accepted in some cituations.
You can accept them if there is a trusted signer. And you can also accept them within a few seconds based upon risk analysis by looking at how well the transaction has propagated and if there are any double spends found. That doesn't defend against a Finney attack and is an imperfect risk-based solution, but it is still appropriate in some cases. You may lose some money but you accept this as a risk. The full replace-by-fee proposal would prevent accepting certain transactions this way.
Can the system be changed to a proof of stake system or too late?
POS is centralized, POW is the future. wheres peercoin now? 🤣
@@christythomas231 PoS need not be centralised at all. There are a bunch of premined s**tcoins that are centralised yes.
Question: Is the potentially decreasing incentive for miners to mine due to diminishing returns something that can be solved by the feature that you can offer a portion of the transaction as reward by those who mine, together with the fact that the difficulty will be automatically adjusted downward if there is a significant drop in miners?
Not sure if I am making complete sense as I am a rookie when it comes to this sort of stuff.
How is the size of the blockchain a problem in the 3rd world? Has this guy heard of lightweight wallets, which use a very small amount of bandwidth?
+zaco21 Who or what relies on banks? Certainly not the lightweight wallets.
Bitcoin works absolutely 100% fine on itself, fully independent of any bank or service provider. This goes for lightweight wallets as well as full node wallets.
+zaco21 No they don't. I think you have a misconception of the workings of Bitcoin, especially the various wallet software out there.
Lightweight wallets mean they don't keep the full blockchain, only the fraction that deals with the addresses within the wallet. It can connect to (and depend on nothing else but) the Bitcoin P2P network. Not in ANY way are there banks involved.
+James McKenzie Not only are you correct, lite-clients are about to get even lighter with the integration of segwit!
+Brock Wood All correct, and really all of this blockchain-size stuff relates to Nodes, not just carrying BTC on a mobilephone or bit of paper ?!?
+zaco21 Remember that the growth of computing power is exponential.
"Can't borrow the money from a bank to buy the mining equipment" Oh the irony !
Well, there are just many untrue statements in this video. You don't have to download the whole blockchain, if you want to use bitcoin and there are several ways to secure your bitcoins, Bitcoin Trezor for example. Also you don't have to wait until transaction is verified, some wallets and systems let you spend unconfirmed bitcoins. And yes, I use bitcoin every day.
+Josh Cullen Wikipedia maybe? :-/ I don't want to be rude, Professor Anderson is clearly smart person and I love Computerphile videos, but this video was clearly misleading, it would be better to talk to someone, who really writes software based on blockchain.
+Pavel Ševčík Yes, it seems like he's got a solid understanding of how Bitcoin and the blockchain technically works, but little or no practical experience actually using it. All but one of the problems he describes have already been solved in at least one way, if not several. You don't need to download the entire blockchain (nor was that ever originally intended). We have multi-signature to protect against hacker theft. There are off-blockchain services to cover reversible transactions. Scaling up remains the major unsolved problem, but there are a number of competing plans in motion and I'm optimistic this will be overcome in time as well.
Clearly Dogecoin is superior.
+Quantum Custodian such supremacy, much leadership
+deinemuddaisdoof wow.
+Quantum Custodian TO THE MOON!
+Quantum Custodian Jackson was an asshole towards ppl involved in bitcoin...despite the adoration, he turned on dogecoin users too.
+Quantum Custodian I know you're probably joking, but Dogecoin runs the same cryptographic algorithms and faces all the same problems outlined by the guy in this video.
If I have a dollar and someone knocks me over the head and takes it, I have no recourse, there is no-one to call (I can call the cops but they can't get my dollar back).
Does that mean USD paper money is not a currency?
+Jay Baker -- Absolutely not. The guy in the video has no idea what currency is.
+Tanner M I was being facetious.
I think Prof Anderson brings up some points that are worthy of treatment. That was not one of them. :)
+Jay Baker Yeah, same with physical coins. Can be stolen without a third party recourse. And there are ways of using bitcoin with third parties that give more options as far as security, instant transactions, and such if users want, too.
Abe Dillon On the other side of the first point, if you like bank insurance, just buy insurance. And banks are not without risks, even with (inadequate) insurance. Frozen accounts, bank runs, court orders, etc.
On the second point, markets are the best mechanisms themselves for price discovery and self regulation. Artificial mechanisms distort markets. And, actually, gold is mostly traded in leveraged markets where scarcity is papered over, artificially keeping the price of physical gold down so long as there is no run on reserves. Also, scarcity is not a bad thing. It keeps it real. Without scarcity, there is no link to real production or actual work.
Abe Dillon
Well, your circumstantial evidence is due in large part to your luck. In many parts of the world, past and present, bank holidays, frozen accounts, limits, and worse happen with fiat currencies operating with fractional reserve banks. Your false sense of security is the fairy tale.
About hording, funny thing is everyone should horde a little. It's called savings in other parts of the world. Then if one person does try to squeeze the market, everyone's savings appreciates. For example, jewelry and coins are common in India and China, so a rise in trading value would benefit the common family with gold savings.
And, no, my view is not of a fairy tale because markets can be brutal.
"The growth of the Internet will slow drastically, as the flaw in
“Metcalfe’s law”-which states that the number of potential connections
in a network is proportional to the square of the number of
participants-becomes apparent: most people have nothing to say to each
other! By 2005 or so, it will become clear that the Internet’s impact on
the economy has been no greater than the fax machine’s." - Paul Krugman, professor at MIT 1998
professor may I suggest this free PDF book by a well respected speaker/writer in the bitcoin space Andreas Antonopoulos, Mastering Bitcoin
You know this is gonna be good when the title is red, even half of it
When the number of bitcoins to be mined is significant, there is always tx fees available for miners as an incentive. If bitcoin lasts that long where the number of coins left to be mined is insignificant, then tx fees will be worth mining for.
What is the method to change something in the bitcoin protocol to fix a flaw? It's not as if there is a central authority that can force a software update for all participants, is there?
+foobar201 It has been the miners which have decided the direction of the protocol up to now.
The miners can choose to switch to a competing protocol.
+foobar201 Bitcoin Improvement Protocol (BIP)
bitcoin is not centrally managed and that's the beauty of it. If you can phone central authority to interfere that is the root cause of many financial issues we have with traditional currency. If somebody stolen your wallet that's sad for sure. But I think it's more sad to have with enormous power over the currency.
I just looked up the exchange rate for bitcoins over time and there was an enormous spike in 2013. What's the reason for that? And why didn't I buy a ton of bitcoins before 2013?!
+JimPlaysGames Bitcoin is a disinflationary currency , where limited minting and high adoption rate can cause appreciation bubbles. In reality there are at least 8 bubbles in bitcoins history and likely many more to come because of this. As contrasted with most state fiat currencies which are all inflationary based and slowly(or quickly if you live in countries like Argentina or Venezuela ) lose value over time.
There was also an enormous spike before that (from a few cents per bitcoin to $13 per bitcoin). and there will be an enormous spike in the future, to tens of thousands of dollars per bitcoin. The reason is complex, but it's related to economics and crowd behavior. You can read about it on the Satoshi Nakamoto Institute website.
+JimPlaysGames
Don't worry, it's just a bubble waiting to burst. You're not missing out on anything.
Livid Imp Study up on Maslov's Hierarchy of needs. Many of us really don't care about using bitcoin as a speculative asset. Bitcoin provides us regulatory arbitrage to avoid supporting ongoing crimes against humanity and thus has an important role and isn't going anywhere because there is no good way (Just like the internet) of shutting it down. Fiat isn't going anywhere either , both will coexist much to the chagrin of states and banks. Bitcoin in itself isn't political , but its sovereignty and nature has profound political and social consequences, for good and bad. Pandora's box has opened and we must deal with the consequences and benefits cryptography brings our society.
lol
Extremely interesting bookcase.
you should really look into layer 2 protocols, LN is about to be released and is a very elegant and smart solution to the scaling problem.
its 2023 and I can confirm I love LN. and now with LNURL i don't have to plug in my personal data to validate myself on a website. It also fixes the scaling and privacy issue.
Would a framework like BitMint solve some of these problems?
Isn't the Simplified Payment Verification in the original Bitcoin paper address exactly the client size issue?
Really glad to see you got my advice!! :)
big crypto supporter here. I think its important to not dismiss his concerns, but try to address/solve them. anyways, next topic. Ethereum.
A villager in África does not need to run a full node in order to use the Bitcoin network. Bitcoin does have scaling issues on the long run, but they're being worked out.
+zaco21 6147 full nodes to date, how is that centralized to you?
+zaco21 Centralized compared to what?
+zaco21 As long as there are two node opperators who don't trust each other, both of the nodes will have very high integrity.
+TheIcyStar well the issue with few nodes is that it gets cheaper to attack the network with ddos. 2 nodes is a critically low number, but the current value of about 6 thousands albeit lower than the previous record (8, 10 thousand?) is still a healthy number.
Yes, Five thousand, four hundred, and forty separate computers validating the each and every transaction, while almost anybody, when critically needed and if something were to happen, could start their own node to validate themselves, is *such* a big problem. /s
Yes, it's 5.4k is lower than we had before, but the simple fact that there is more than one entity validating AND *anybody could validate for themselves if they needed to* defeats centralization.
Professor Anderson, what do you think of Iota?
What is your opinion of other cryptocurrencies like ethereum, litecoin, dash and so on?
Correction: It is completely unnecessary to download the entire blockchain to use bitcoin. That is only necessary if you choose to run a full node. Most wallet software (including 100% of the implementations on mobile devices) does no such thing. Google SPV client.
1:47 if someone steals your cash it is irretrievably gone as well, does that then define that cash is no a currency ... also who should I call if i need support with my cash transactions?
*Legendary Channel.* These videos are awesome
Remember, ANY bitcoin software DOES NOT "hold" bitcoins. Rather, they hold your private keys securely and your public keys.
I heard that it adjusts the processing requirements over time, does that only go up, or would it go down if fewer miners were in the system? I could see a problem when the processing power levels off and starts to go down, but the system still requires the same amount of processing power to transfer coins. Money would become untransferable.
Also, what prevents someone from creating a billion bitcoin accounts and then transfers money between them all day? Would that cripple the system?
For those watching in 2022 and later,
The first question is regarding the processing requirements that adjust over time, which is true. Bitcoin works with the proof of work mechanism. Simply said, the average mining process in BTC should take 10 minutes. Imagine everyone bought the fastest mining hardware ever, the average might be able to mine it in 1 minute (figuratively speaking). But the BTC protocol demands it to be around 10 minutes. So what will happen is that your mining task will be made more complex, making it take 10 minutes again. This is also works in reverse, when there is only slower hardware available and it takes with an average of 15 minutes, the complexity will go down so it will have an average of 10 minutes again, which I think is pretty cool.
The second question is a bit vague, can't answer.
@@bartinos3929 Oh, okay, so it can go down. I was worried that it would only go up and take more and more power. Well, the second question is if someone really hated bitcoin, could they make hundreds of accounts and have computer scripts constantly transferring money between them so that the system was always busy with their transfers and no one else could buy or sell anything because all the servers are busy.
@@musikSkool It will probably only go up as I can't imagine the average computing power going down. Anyway, when making a transaction with BTC, it will be shared across the BTC nodes. Among those nodes, there are these so called miners, which will add those transfers to their mining-task and check if they are possible (can't spend money you don't have). When they are possible, the transactions will get added to the blockchain.
So what can be done is someone spamming a transaction. Imagine one has 10BTC and keeps making a transaction where they pay 100BTC. The transaction will not be valid and thus not added to the blockchain by the miner. Your question would be what happens if the attacker sends so many invalid transactions to the miner. TBH, I would like to know as well, I'm still learning a lot of BTC so if anyone knows, feel free to share!
Btw, I excluded valid transactions as there would not be a big enough benefit for an attacker as they would have to pay fees over them.
@@bartinos3929 I guess the fees would add up. Unless they have a lot of computers mining so the fees get paid to them then they can keep going indefinitely, that is one way someone could DDoS the service.
You say bitcoin is not real money because it is not protected by security services, however regular money bills are not protected as well. It is the service that provides the transaction (i.e bank, paypal) that is responsible for the security. Isn't it??
how is my (BTC Core) wallet connected to my public key? How is the networking aspect?
running core means you are running a full node on the bitcoin peer-to-peer network (maintaining a copy of the full bitcoin blockchain "ledger"). Core also acts as a wallet by generating a private key and a corresponding public key. If you ever have coins sent to your public key, then that transaction will get stored in the bitcoin blockchain on all full nodes on the network. hopefully my explanation made sense.
I am somewhat under-qualified to make the following arguments (I am an electronics engineer, but my focus is telecom, not computer science), and so you can feel free to correct me where I am wrong, but I don't agree with the man in this video -- for the following reasons:
1) The issue with size of the block chain and transaction processing times seems moot to me, since technological growth will quickly outpace these limitations (i.e. Moore's Law).
2) The lack of recourse in terms of Bitcoin being stolen seems to me to be no different than dollar bills or other physical currency being stolen.
3) Regarding the issue of interest in mining going down as the available Bitcoin rewarded to those who mine is reduced -- this will not be an issue for two reasons: First, it is my understanding that if less people are mining and hashes take longer to complete, the algorithm will adjust its self, and so the next hash calculation will be less difficult. Second, as less Bitcoins are rewarded for mining, Bitcoins will become more scarce, and so individual coins will become more valuable. This means that even though less coins come from mining, there will essentially be the same value of coins available, and so it will be no less rewarding to mine.
To your second point, he was discussing the problem of the "next billion users". Namely, people in third world countries who don't have access to digital money. When you do an apples to apples comparison between bitcoin (which is digital) and things like Visa and Mastercard (which can be handled digitally), there is no recourse for people who lose their bitcoin whereas if someone hacks your chrome browser and gets your banking details, there is still some recovery option.
The lack of central authority or 'help desk' is a feature, not a bug.
At about four and a half minutes, Prof. Anderson may have misspoke. Noone can (directly) pay to a private key (because it's private!). I think you'd pay to some public key. Seems it's very much like PGP encryption; you disseminate your public key as widely as possible (and hope noone tries to impersonate you; verifying which key belongs to whom is the biggest problem) and people use that to encrypt messages to you, which is decrypt-able with your private key.
+rchandraonline That's true, you pay to public key. Transaction is signed with your private key, so everyone can verify it was your transaction, using your public key. (very simply said)
yep. correct.
I think bitcoin is great, but I know it's foolish to not recognize valid criticism. He does make some valid points. The size of the blockchain is a barrier for a "pure" bitcoin implementation and it's only getting worse.
There are wallet apps that don't store the blockchain locally though. And the delay is only a factor if you want to be sure nothing fraudulent has taken place - confirmation of payment is almost immediate, but it takes at least 10 minutes to know that no double spending has taken place.
There is no support to call, so disputing a transaction is difficult... It's the same with cash transactions though. Bitcoin does have a system, I hear, that can programmatically reverse a transaction, but this feature is almost never used.
The problem with mining is supposed to be resolved by replacing the newly created bitcoin reward with transaction fees.
I don't see an issue with it scaling to several thousand transactions per second, since, on the mining side of things, the algorithm is self-adjusting so that it will always take about 10 minutes per block, and the computation is not very affected by the size of that block.
Still, I do see the blockchain as being an issue due to its size. Apps that do not store that locally do so at the expense of privacy and security.
The problem with mining is less because of the reward, and more because of the competition. When there were fewer people mining, it required less resources and the money wasn't split amongst a mining "farm."
+Chris Zuber The Blockchain bloat concerns have already been addressed in 0.12.0 core release which allows you to prune the blockchain down to 1-2 GB and still have a fully validating node(non -SPV client). Their still needs to be a few nodes out their that have the full, unpruned blockchain for bootstrap purposes but these can be sharded if necessary or just used as repositories when the blockchain becomes extremely large. Additionally, in April when segregated whiteness is deployed that will split the merkle tree allowing people to prune off older unnecessary signatures and you have to keep in mind most tx's will be handles in caching layers like the lightning network and resolve to the main blockchain acting as a settlement layer so none of these will be adding any bloat to the blockchain.
Please give an update on the mentioned or new issues.
@@horica80 if you're interested, you'd do the research yourself. I'm not going to do it for you.
@@shgysk8zer0 that's pity. Anyway..
Is it Safe through Robinhood Stock??
Hm... I like the video but I see some plot holes.
LOL - 1:45 - by his logic if someone steals my wallet on the subway I should be able to phone someone to get my cash back.
Also, because cash (fiat) doesn't have a help desk it isn't a currency? (Watch the video closely and you'll see that is what he is arguing.) Interesting perspective, but if it is applicable to crypto currencies it seems like it would be applicable to fiat currencies too?
Scott Donley - Interesting. I really enjoyed how you label people using the term fiat morons. You must make a lot of friend with that approach. LOL
Which paper currencies are not fiat? Can you share a few so I can check them out? Currently the entire world economic system is built on debt based fiat (legal tender by government decree - not by consensus).
Also, in a world where digital theft is a “thing” it stands to reason that digital crimes will get solved just like physical ones (if you put your outrage away for a moment and think you’ll realize digital crimes have been investigated and solved before and after crypto currencies came into existence - block chain is a perfect paper trail). Additionally, plenty of people have been robbed in the physical world who never saw a dime of their fiat come back to them. IMO, you’re living in a fantasy world if you think otherwise.
I’m curious to know why my comment got you so fired up? What exactly did I bring up here that was so offensive? Clearly my thoughts on this stirred you up. Can you share more than just your outrage with us?
PLEASE WHO CAN HELP? I made a transaction of buying bitcoin with a debit card from blockchain wallet, I bought 300 GBP (pounds) 4 times and then I wasn’t able to buy anymore...I tried Accessing the bitcoin but I couldn’t because it was showing in the trading wallet instead of the normal bitcoin wallet....please how do I rectify this or change it back to normal bitcoin?
This will go over well.
Hi what do you think about XRP...
Because so many people owns large sums in bitcoins. There is a huge intensive to fix technical problems. Bitcoins will most likely still be here in 10 years, but its values could be 100 times more og less of what it is now.
wouldn't it be possible for a country to issue physical currency based on bitcoin? that could solve at least one of the problems mentioned
This video is a bit one-sided, and potentially misleading for anyone not already familiar with bitcoin. For example:
"If something goes wrong, there's nobody to phone". First of all, you always have the option to hire a middle-man to handle your money or your transactions. Pretty much every company that currently accepts bitcoin does so via a third party service that they can "phone".
Secondly, this is a core feature of bitcoin - the fact that you have to option to have complete control and not go through middle-men. This isn't possible with any other form of digital currency.
This guys has a "TEENAGERS"-titled book on his bookshelf. ALSO if you look close enough, you will see a red arrow from a books side cover, pointing to the before mentioned book. That is a funny coincidence.
mining and use of system are not the same. that this is not addressed properly in his first statement makes his analysis dubious on it'd face
So what's keeping bitcoin from dumping the oldest records?
1. Bitcoin lightning solves the scalability issue by allowing off-chain transaction which will reduce the load on the network. It can make it easily possible to have thousands of transactions per second, and pay next to nothing in fees
2. You don't need to download the entire blockchain to use bitcoin, you only need access to the utxo set and even then you don't need to download the utxo set.
3. Use a hierarchal deterministic wallet that encrypts your details. This way you don't need to store a single private key on your computer. You can also keep a small amount of bitcoin in a wallet you spend with and keep the rest in a paper wallet or hardware wallet.
4. You do not pay money to private keys, you send it to the persons public key (technically the address which is a hash of your public key) which then enables them to spend it with that public key's corresponding private key.
5. Lightning will solve the problem of slow transactions
6. You can use escrow services like bitPay to ensure that people won't scam you. Secondly, it is perfectly easy to keep your private keys to yourself as I mentioned earlier.
7. Mining will always be around as they collect transaction fees. Of course, transaction fees may go up as the block reward decreases, but that isn't a problem with lightning, as the only fee you would pay is to close a payment channel
The problems you listed are considered features by many.
So who do i call when my 10 euro billjet is not accepted by the shop? If somebody steels my wallet your money is gone. All the arguments are made from a traditional stand on 'currency'.
+xzaz2 Exactly right, and what if you have 10 million dollars in a bank and it declares bankruptcy? who do you call, to get your money back?
+kelvinhbo You mean like the time 5 different banks in American failed, and the government bailed them out every single time?
+xzaz2
"So who do i call when my 10 euro billjet is not accepted by the shop? "
The bank.
"If somebody steels my wallet your money is gone."
That partion of your money that was in your wallet id gone, the mony in your bankaccount is still there, as is the money you kept in your jam-jar and under your bed.
Doing things electronically gives hackers more ways of getting their hands on it.
+kelvinhbo "Exactly right, and what if you have 10 million dollars in a bank and it
declares bankruptcy? who do you call, to get your money back?"
Here in Holland you would get your money back from the government, they are ultimately responsible for the debts that banks make to customers.
+vinny142 You make a valid point w.r.t. wallet in your pocket versus money in a bank or under a mattress, but to be fair to Bitcoin, you can say the same. I can generate a pair of keys completely offline and keep the private key wherever I think is safe (safe deposit box in a bank for irony points). Money can be deposited to it freely, but not spent. If I ever need to make a withdrawal from that key pair (wallet), I can go and get the private key, create a transaction on an offline machine with that key, then transfer that transaction to an online machine and broadcast it.
I won't say it's perfect, but it does work and is as secure as the place you keep the private key.
I think if you live in a place that's this poor you'd have bigger problems than not being able to use the latest meme coin.
And cyprocurrency would make it worse. Lack of access, lack of processing power... It would lead to indefinite totalitarian regimes.
The memecoin is now worth 1t
4:00 a bitcoin wallet is your public key. also called an adress. you can use a software to generate these public private keys or you can generate them throwing dice. it doesnt have to be on your computer. You can even have it in your brain.
I tend to like Computerphile videos, but I think for a video of this nature which one should *expect* is going to be controversial you might consider having more than one person interviewed at the very least, or if possible simply filming a conversation between a proponent and opponent.
You don't need a to download the block chain in order to have a bitcoin wallet... Your wallet is your private key, this can be stored on a piece of paper if you want, you only need a computer to generate your public+private key you don't need it at any point after that besides to make a transaction and I'm pretty sure once the infrastructure improves for bitcoin there will be booths/ATM's that will allow you to print verifiable pieces of paper that can effectively be used as money so even 3rd world countries can make use of the system with relative ease
He's right about one thing : many people, including me, have old computers that can do things like facebook and youtube with no problem but are just too slow to do the crypto hash functions or calculate key pairs in reasonable time. The chain is just getting too big .
Your browser already does this stuff.
Running a youtube video is far more expensive than that.
You aren't forced to mine.
I will recommend you to take a look on DASH which is aim at building a decentralize Paypal Like system.
In the news lately they talked about how big banks would start the use a blockchain to manage the money going between them, and they claimed that the big banks would save millions in costs. I don't get however why. Why would this be cheaper (because you would need massive hashingservers if you want to secure so much money, it would seem to me that conventional end to end encryption would be way cheaper). Why it would be secure (Because if you have only a few participants, you don't need to increase your hashingpower by much to reach 50% and you can steal money from another bank)
+samramdebest You are correct , Private blockchains don't make much sense and negate many of the key benefits of bitcoin that they cannot replicate. Banking Private Blockchains are merely being promoted because of ignorant CEO's who don't understand the tech , for marketing PR to appear hip, or as a means to undermine bitcoin but I'm not worried. As long as you understand that bitcoins key benefits of are gained from the efficiency of removing regulators and accountants and replacing them with ASICs and electricity and serves to act as a sovereign ledger, currency and asset class that key role is regulatory arbitrage than you will understand why it is here to stay and banking blockchains cannot compete directly with the bitcoin blockchain .
"Block chain size": A valid-ish criticism. Can be worked on. See the next item for one of the methods to fix Bitcoin into a completely fungible currency through a vastly shorter block chain through reissue.)
"Delay": The only reason EFT and checks (cheques, if you want) work now (at least in the US) is because of one (or more, I don't know about how checks are handled outside of the US, but I assume it's handled as such) automated clearing houses. This is something that can be done with Bitcoin. So, an invalid criticism.
"lack of recourse": Are the (physical) Pound Sterling, Dollar and Euro not currencies now? Cash has no recourse when someone steals your wallet, either. An invalid criticism.
"Limited Supply": That's not a bug, it's a feature. Just look at how Zimbabwe turned out. Another invalid criticism.
Correct me if I'm wrong, but isn't any currency a "proof of work"? the GDP of a country is not infinite because we humans and our creations (lights-out machining and assembly, FTW!) can only work a limited number of hours in a day due to the need for sleep, food and sometimes recreation. Additionally, the number of people is not infinite, either. (Procreation limits creation of new humans to one per 9 months, by members of only ~50% of a population.)
A bigger structural criticism is this: "The vast majority of people aren't paid their wages in bitcoin. It is at best an adjunct to regular government-backed currencies, and will remain so until such a time that it *is* the predominant method of receiving one's wages."
My economics professor said "you know what's better than Bitcoin.... money."
so what if bitcoin takes up to an hour for a payment to be made, sure credit cards may take seconds to confirm, but direct debits and local bank transfers can still take up to multiple days. Besides most businesses don't pay each other with credit cards and nor do average people.
one of the disadvantages he mentioned is "you cannot call someone once your private key and your btc is hacked". This is an advantage of btc. It is decentralized so only you are in control of it and you own it and not your bank. So you are as well responsible for the security of your holdings. People who are responsible educate themselves about security issues and learn a lot and are willing to take responsibility. This is freedom and not giving the responsibility to someone else. His arguments are quite ignorant and typical for our time.
The Lightning Network is supposed to fix most of it, though. Except the "someone to call in case of problem", which is too my main concern about crypto. You just can't have this along with decentralization.
Which is why I believe that the future is centralized systems that protect you, like Paypal, feeding from all of your assets, whether it's your bank account(s), or your crypto assets.
I think the #1 goal is that no one owns your assets, anyway. That no one owns them, can play with them & lose them, like a bank can. The payment system can be centralized, I don't see the problem with that. Safety requires centralization, and also has a cost.
Can we have the professor weigh in on private blockchain technology?
Because when a criminal breaks into your house and steals your real wallet there's an easy method of recourse to get that cash back... Your reasoning is pretty terrible for such a smart guy.
Esperemos que suba! Bitcoin tiene muchos problemas.
Online merchants could really benefit from accepting crypto. Instead of paying a payment processor, they can just post their wallet address online and code the checkout process to wait for a transaction to come through the blockchain.
can someone poke a hole in this. Hoarding...once there are no more bitcoin to mine won't hoarding become a huge problem? I know they can be infinitely divided but again if a lot of people are hoarding ...which won't they since no one currently accepts bitcoin at the grocery store, for rent etc. So then what? it deflates and we need less and less to buy things? that doesn't sound great when you consider the hoarders will always become more wealthy?
anyone know?
Has it changed anyone?
I don't thin he is an expert if this video is updated. I have to believe that this video was recorded long time ago, not the 12 of Feb 2016: a lot of these "problems" are solved using several different ways (SPV/Light wallets, n-of-m keys, or even zero-conf transaction reliable via a 3rd party, "payment bridges" that are a desk/phone/service to ask for support and assistance etc etc etc). Maybe this was registered 2-3 years ago!
Bitcoin doesn't really need to scale if used as collateral, but then it wouldn't be more valuable than any other form of collateral. In fact it might not have any. On the other hand, it can be used to buy the collateral and then that collateral could be the basis for a physical currency. In that way though it's more of a contract than a currency. Not only that though, because it's an extremely innovative contract.
True there is no recourse, bitcoin basically hands the end user both full responsibility and full control over their money, can't really have one without the other.
The thing with bitcoin is, its not only a fantastic piece of technical engineering, its also a marvelous piece of social and economical engineering. And its that latter part that will keep making it more and more relevant until it eventually will start forcibly replacing conventional currencies. The way that it just keep coming back from repeated booms and busts all on its own is proof enough that something has been done very right about it.
Its a very sneaky idea, to make a currency by design increase in value over time and to make it all but impossible to control at the same time. The first part makes it very desirable for an individual, the second part keeps it so. True its all kinds of harmful for the economy as we know it, by design I suspect, but that doesn't prevent it from spreading.
1. Blockchain size is an issue, yes.
2. Broadband connection: no issue, because it is not neccessary.
3. scale (transactions per second): that's a big issue, yes.
4. volumes of money: no issue at all, because a bitcoin can be split down to 1E-8 and the value of bitcoins will increase over time. The limitation to 21 million bitcoins is actually an advantage in the long run.
5. failures: no issue; either a transaction will happen, or it will not happen.
6. get hacked: not an issue, at least not worse compared with other today's payment systems. getting hacke is like being stolen your cash purse, so you must be careful anyway.
This guy doesn't understand economics very well. You can tell he is a computer science professor conjecturing about monetary systems. A currency system is anonymous. It doesn't have an identity that you can call with your phone. A currency system is totally different from a bank. If your wallet is stolen you call your bank because they are the ones who hold your currency credit. His ideas are all over the place and lacks concise reasoning for his ideas.
This professor is a very intelligent man, but clearly Bitcoin is not his strength. He should either do some more research about it or leave it to those who can. Otherwise, he is embarrassing himself by talking about it as an expert!
What did you see him saying wrong? Could you clarify?
You can keep your cyrpto in cold storage or paper wallets , even memorize a phrase to avoid being hack , the scaling problem is true , but there is people already working on scaling. You don't need to download the whole block chain to transact with bitcoin or high speed internet .
Not everyone needs the entire blockchain there are already lightweight clients like Mycelium. Not to mention we will see off blockchain payment systems soon which will allow chargebacks. So that part is not an issue in my view.
Lightning Network solves all the problems he talks about. A curious detail is that the Lightning Network launched in 2016 when he gave the interview.
I wish someone to refute my question. Aren't we going to lose all the coins eventually? Speaking over decades and maybe centuries depending on the safety systems to prevent lost coins. What i mean is over the years of millions of people transacting, aren't many people gonna get scammed or plain make mistakes and forget passes? If even only 1% of the general public were to lose some coins each year, then over time more and more will be lost, right? Eventually having to move over to the Satoshi's until only a small minority owns all the remaining 1 or less Bitcoin.
Only if there was a built in system to recover lost coins safely, or perhaps put back to the system to be mined again.
Nice Al-qaeeda book in the background, SWAT team should be turning up soon xD
In the end he mentioned Monero.
This is going to be a more controversial video than the standard computerphile video, but thank god someone is finally shining a critical light on bitcoin using well thought out arguments.
Some more fun numbers: There are currently around 100 billion credit card transactions per year. If all of those were to become bitcoin transactions, at an average transaction size of 250 bytes, you'd wind up generating around 23 Terrabytes of data per year, or 63 GB per day. And the only truly secure way to make it work is for every user to have a copy of this locally.
+Taylor Wrobel "And the only truly secure way to make it work is for every user to have a copy of this locally." - can't agree with this statement. I think you say it because you fail to acknowledge that bitcoin is evolving and there are/will be new ways of using the blockchain. Have you ever looked at the properties of the "lightening network"? with that, you can have truly secure ways of doing transactions (also extremely fast and extremely cheap) by opening up a channel for your transactions: only the initial anchoring transaction needs to be stored in the blockchain. In other words: not every single transaction needs to be stored on the blockchain to have those transactions secure.
+plasticman2011 Yeahhhhh... I'm frankly not even going to bother looking into that until the "paper" gets peer reviewed and published in a journal, rather than existing purely on some random website and having most references being a combination of github gists and Reddit comments.
Just because you make your crazy ideas look like a scientific paper doesn't make you right. This is my issue with the Bitcoin community, there is so much hand waving around various issues. "Transactions are instant!". Well, they need to show up in a block, which are only made every 10 minutes... Oh, and in order to avoid all the possible double spend scenarios you really need to wait for 6 confirmations. So now we are up to an hour for our "instant transaction".
"Transactions avoid those predatory charges that credit card processors apply!". True, but there is that transaction fee. Especially once the network gets closer to its maximum volume, the mining fees are going to grow drastically.
+Taylor Wrobel The lightning network doesn't just exist as a whitepaper but already is coded(alpha) and being tested as we speak. Bitcoin has a tremendous amount of daily usage , so your comments that it really isn't secure unless one waits 6 txs is flawed. If this were remotely true than double spends would be rampant where most txs are 0 conf's . Mining fees are going to grow drastically? This is also false. The PoW difficulty target is dynamic and can go up or down. This means that the electricity needed to mine will only increase if the price of bitcoin increases and the miners will always have a small margin of profitability to incentivize their efforts.
Mining fees won't go up because of the electricity required for mining, but because of the throttling, artificially by miners or legitimately by the network's transaction rate limit (determined by block size and frequency), making it so that you need to out-compete other transactions' fees in order to get miners to accept a transaction. This problem will happen at scale.
Really, the transaction fee shouldn't be something that you as a user can set. It should be a mandatory fee, added to each transaction based on the blockchain's current state, such that all transactions are treated equally.
As for the 6 confirmations thing, you're right, saying it isn't secure unless one waits for 6 confirmations is flawed. Even after 6 confirmations it may not be secure - en.bitcoin.it/wiki/Confirmation - "6 blocks are overkill for casual attackers, and at the same time powerless against more dedicated attackers with much more than 10% hashrate"
Bitcoin is a bunch of technologists saying "I'm not an economist, but I play one on the internet"
Also vanillacoin already allows near-instant transactions.
Expert? No. The size of the blockchain doesn't matter to a wallet holder or user. The 10 minute delay is much less than wire transfers, ach, remittances of all kinds. Further this guy doesnt seem to be paying attention to what is going on with side chains, or segregated witness which will trim the size of the blockchain significantly. Yes bitcoin has challenges, especially if you are stuck in the instant payment via trusted 3rd party paradigm, but these are not inherent limitations, just current challenges.
half of the information is wrong . i have a bitcoin wallet on my phone but i don't have to download the whole block chain. the current price of bitcoin does not have any bearing on the value needed to be used as a FEx for an example. so much nonsense . bitcoin at best has only half the problems he stated
Immutability is a key strength of Bitcoin, not a weakness. It is like digital gold now but scaling solutions will become highly developed and make it more of an everyday payment network for smaller transactions. New blockchains will soon have no credibility because all the incumbent mining infrastructure of existing chains will double spend and new competing chains. There is a tiny amount of digital real estate left that'll have the required decentralization to have integrity. BTC, LTC, ETC have the most integrity
But the value of those lesser bitcoins will go up (if everything goes okay)
@2:12 Lemmy paid .041 bitcoin to Ozzy xD
And then some Rolling Stones names. Wonder if that was intentional.
Disappointed in Computerphile to release a video with so many mistakes and misconceptions. I recommend having experts who understand the subject rather than someone who by the sounds of it hasn't even read the white paper for the protocol.
The problem I see in the bitcoins is in fact the uncotroled value of bittcoin....the economical problem...one year ago you bought for one bitcoin a one coffe a year later for the same value, value of one coffe you can buy car...maybe one year later you buy for value of coffe a house...there is no proportion...plus the whole indepence from goverment and bank dont quiet play well, because banks cant twist, change or manipulate with currency they can change, twist, manipulate your vaule you assign to that currency...which If I correctly awera already happened...would apreaciate some in depth comments and arguments thank...and I know the principle and arguments about inflation and panzi bank schceme and gold...
Ethereum sounds like it's going to be the successor to Bitcoin. Will it fail for the same reasons? Or different reasons? Or will it succeed!
I wonder what the timeframe is, for the … lump of history data for all previous transfers of bitcoins … to get too cumbersome to use, is. Will it be ~10 years? Will it be 20, 50, 100 or more years before it becomes impractical to keep using? I wonder if an algorithm for a cryto currency could be made, where a single unit of currency could maybe be consolidated (have one wallet own all pieces of one unique coin), and then have its history reset, making the size of the overall lump of history data smaller, and then start distributing pieces of the single unique coin again, as needed. I'm not really to knowledgeable about the finer details of how these coins are kept secure, and all that, but the way I'm imagining them to work, is like a hard drive that desperately needs to be defragmented.
Are fractions of bitcoins transferred as floating point numbers? If they are … I imagine that it would be difficult to consolidate exactly one unique bitcoin, by shuffling fractions of different unique bitcoins around.
This whole thing seems like a very large, and technical problem.
if you have many transactions sent to you that total 1 bitcoin, you can then simply make a transaction to yourself combining all of them into 1 bitcoin into a new address that you control. Not a big problem, easy to do. As for storing the ever growing blockchain, there are several measures in place (as well as others being developed) that greatly mitigate this issue. will it be too much data in 20 years? maybe if running it on a pc from today, but in 20 years, computers will have become much more powerful too. I think the video tries to make this a bigger issue than it really is.
Gotta explain what block chain is and what hash is
Guys, no disrespect to the gentleman on this video, but I'm afraid he doesn't quite understand Bitcoin. I'll just refute the first thing he said about BTC that was wrong: People in the third world won't be able to store the blockchain on their phones, and therefore won't be able to use Bitcoin. That's incorrect, only the nodes and the miners need to store the whole blockchain. Your mobile phone merely stores the actual Bitcoin (technically your phone doesn't even store the actual Bitcoin, but rather the private key with which you access the Bitcoins on the blockchain). You need very little bandwith and data space to use Bitcoin. A mobile phone and an internet connection is enough.
but when there's nothing left to mine what incentive is there for the miners to store the blockchain?
then whats the point in bitcoin?
Mike Stanis
Decentralization, duh.
More important is Bitcoin standard..
Layers will be there on main net..