But how does bitcoin actually work?

> As someone that works in the crypto industry, I feel this every time I see the news or articles report on it, or comments here talking about it. It was the same way during the 90's Dot-Com era, journalists would explain the World Wide Web with word salad, e.g., the "Graphical portion of the Internet". With regard to Crypto, I decline to discuss it without mentioning the 3Blue1Brown video, sometimes the gambit works and triggers a better discussion: ▶ this video And I love the comments in that video about being "Confused, but on a higher level".

this video is the best explanation for how mining and blockchains work IMO: ▶ this video It's long but very clear and thorough.

The best explanation of blockchain has to be (unsurprisingly) 3Blue1Brown: ▶ this video Would highly recommend watching this video for anyone who hasn't already.

For a quick video intro I recommend this video from 3Blue1Brown ("youtube mathematician") ▶ this video IMHO the best intro to Bitcoin and cryptocurrencies in general.

It depends on the specific protocol (aka blockchain or token) you're using. For instance, bitcoin is very simply publicly visible, each transaction is broadcast in the clear and you can trace inputs and outputs online [0] Other protocols, such as zcash, specifically obfuscate the inputs and outputs using cryptography, in ways that I'm not specifically sure how to explain, but are supposed to work. In some ways to me this is unsurprising in a way different from the ponzi nature of crypto. I can't explain Ed25519 either, and I'd also get bogged down reading a paper explaining it. I can get my head around the basics of btc and pre-proof-of-stake ethereum though, this[1] 3Blue1Brown video went a long way. Definitely not going to disagree that lots of tokens are ponzis, and lots of the tech and promises are imaginary vaporware. But there are some real pieces of tech in the mix too. [0] link [1] ▶ this video

Here is a good video that basically explains everything: ▶ this video This is not a very good explanation, but basically, you can have a "currency" using just asymmetric key cryptography: users simply sign "transactions". The problem is that you need a central authority to confirm the order of transactions, otherwise the recipient of a "transaction" will not know if the funds associated with that transaction have already been spent to someone else ("double spending"). You can solve this using hashcash to make the transaction order hard to reverse- creating a "proof-of-work" by doing something that is easy to verify but hard to determine (like reversing a hash function). Another method is "proof-of-stake" wherein transaction order is not signed by a central authority but instead general users that are guided by some internal incentive structure. Cryptocurrency is often expensive to run or use because a cryptocurrency transaction has to be synchronized across the entire network of that cryptocurrency, and there are incentive structures like fees to prevent people from spamming the network. There is also tech like zero-knowlege-proofs, multisig, etc. that can do interesting stuff. But this is the basic concept.

>transaction fees will prop miners up (though it hasn't happened yet so it's valid to be doubtful this'll happen in practice) No, they won't. This is a common talking point, but it is rarely accompanied by facts. Consider that fees currently amount to about about a percent of the total miner payout. There is some research that indicates that bitcoin is vulnerable to a class of double-spending attacks known as selfish mining: link link >And also depends what you mean by securing. All clients, miners and not, are capable of checking transaction and discarding "insecure" and invalid chains. I don't need a miner to tell me if your transaction is valid or not. No they aren't. You misunderstand the fundamental design of bitcoin. The problem is not that the non-mining nodes cannot verify signatures or something, the problem is that these non-mining nodes will not be able prove to each other that the signatures to not refer to already spent funds. The non-mining nodes cannot conclusively prevent reorgs that can be used for double-spend attacks. >All clients, miners and not, are capable of checking transaction and discarding "insecure" and invalid chains. They do this by selecting the chain with the highest amount of PoW associated with it. If the network hashrate is low relative to an attacker, then any attacker will be able to easily overpower the network and decide which chains are invalid. If you are new, I recommend this video on bitcoin's design: ▶ this video

>If the majority of miners agree to it then the rest of the network either goes along with it, or they're forced to do a hard fork themselves. The only the hashrate attacks can do is alter the order of transactions (for example allowing them to replace their past transactions and double-spend). They cannot change the way in which users interpret blocks (for example, they cannot spend another user's outputs, change the value of a given output such as a coinbase output, or otherwise alter the tokenomics). I recommend watching 3blue1brown's video: ▶ this video >For the end user just trying to make a payment, it's irrelevant whether it's intentional or not, either way he is now faced with the spitting of his coins and the resulting chaos. Any reasonable vendor will wait for X amount of blocks to pass before accepting a transaction. You're describing a well known vector called a "Finney Attack", which becomes exponentially less likely for every block you wait. >What's the actual value of a bitcoin? There just isn't one. Take the number of pizzas that are being sold for bitcoins, and divide that by the number of bitcoins in circulation. I think you may find that the value of BTC/Pizza has not changed much over the last decade. I mean, what is the actual value of a dollar. It is not like we use the gold standard anymore. The dollar is valuable because it is a connected to a useful payment system. You don't mind holding some liquidity in US Dollars because you have an expectation that you

If you're interested, watch a youtube video or two about it (e.g. ▶ this video ). You don't need to get super deep or spend too much time on it.

What exactly isn't clear? How cryptography works / benefits people? How applying cryptography to ledgers and ownership databases works? Or how it's all going to be enforced? By the way I'm not pro crypto in that I'm not trying to convince people to put money into it. I think the energy costs of all crypto token systems are prohibitively high right now. That, and the deflation problem I personally think are the biggest unsolved problems in Bitcoin right now.. But somehow I can't even get past what a cryptographic ledger is and how it's beneficial on this forum, of all forums. Yikes. I've been patiently explaining my understanding of the ideas behind crypto. 3Blue1Brown seems to be favorably received on this forum, so maybe this will help educate you: ▶ this video NFTs are a natural extension of a cryptographic ledger as it's explained in that video. It's just adding non fungible tokens to the otherwise fungible bitcoin tokens being exchanged on the blockchain, and we'd like those non fungible tokens to represent real world objects, rather than just USD. Aside: I feel like we're in the dark age of cryptocurrencies right now. People are just incredibly unimaginable. I imagine 7,000 years ago there was a guy named Bob who wanted to trade his apples for some oranges. A girl named Alice wanted some apples but didn't have any oranges so instead she offers a piece of gold jewelry. Most of the Bob's on this forum would tell her to ** off. But there was some Bob who accepted the gold jewelr

I really liked this video by 3Blue1Brown explaining how blockchain works: ▶ this video Things that I didn't realize until I watched the video: * "Mining" bitcoin means processing transactions for other people. Miners do time consuming operations to process transactions. I had never heard of 3Blue1Brown before someone showed me that video, but he has a bunch of other good math videos. I liked the one about pi showing up in weird places.

This video does a very good job explaining what exact problems you would face if you tried to create a decentralized payment system and how bitcoin solved these problems. ▶ this video