How does Bitcoin System Operate? – William Gaithersworth
The analysis of the analogy
In the falling-piano analogy, the “bystanders” who agree on blockchain events are actually different computing peers, geographically isolated from each other. For the lie-detector test, they show a “proof of work” — a sort of vetting process for proving that the computer arrived at the correct outcome in the correct way.
To falsify a ledger entry would need getting more than half of the people (peers) who saw the piano fall to all lie in the exact same way, at the exact same time, without any ability to coordinate beforehand. In short, it can’t be done. This is why people are getting excited. It’s not just about bitcoin and cryptocurrencies.
It’s about the technology behind it and the many ways it will be used to change how we do things in society. What if you could have found out about Microsoft when it was in its development phase and invested in it before everyone else found out about it? What about Amazon, or Facebook back in the early stages? Would you have invested in them? Every investor and entrepreneur knows that millionaires are made before the masses figure out what is going on.
They get to the investment spot before everyone one else and wait for the tidal wave to come. In other words, timing is crucial!
Now I hope that you understand it at a level that you will take action. Blockchain will not only be the internet of digital currencies but of anything that has been centrally located and needed third parties for verification and trust of information.
Blockchain is a type of communication protocol that removes the need for centrally trusted 3rd parties like banks. Everyone on the network guarantees the integrity of the network and the information.
Trust doesn’t scale. In other words, you can do business and transactions face to face with cash. You hand someone your money and they give you the product or service. But on the internet, you might not know the person and they can be on the other side of the world.
Therefore, what works face to face doesn’t work in the digital world. Because of the way a blockchain works the records are public and can’t be changed. It is a network that no longer needs to trust individuals or institutions. However, you are trusting the integrity of mathematics and the network that has been proven many times over.
Like you trust that on a two-lane highway the other person will stay in their lane and not come head-on into your lane. No need to trust a middleman or central agency that keeps and verifies all the records who you must also trust that they are doing what they say they are doing. In a way, trust means that you choose to remain in the dark about something.
Because all the transactions in a blockchain ledger are public there is no need to remain in the dark. Trust is no longer a necessary component of the transaction. The currency in the blockchain cannot be seized or held up because everyone agrees on who owns what.
Because the information is decentralized and public, you no longer have to go to the one person or institution with all the knowledge and ask them how much money does this person has in their bank account.
For example, if someone writes you a check for your goods or service, you have to trust that they have the funds in their account. Not only that the bank charges you a fee for trusting their check if they lie and the check bounces. The bank will verify all that information for you.
It may take several days to go through the process but you really don’t know until all the check is verified by your bank and their bank. You had to blindly trust the whole process.
With blockchain technology, this antiquated process will be obsolete! It blows centralized banking system out of the water because it is much more efficient and private in that identity and ownership are separated within the blockchain.
Blockchain will do to banking what email did to the postal service. It’s going to obliterate it! Transactions are simple and cheap! For example, credit cards can take 3 to 5 percent of transactions in fees. Blockchain with cryptocurrencies takes way less than that.
Usually, when you charge something on a credit card you must make a minimum purchase amount because of the fees. Because of the efficiency of digital ledger technology there little to no fees involved in the transaction. Blockchain has been used to create cryptocurrencies, but it can be used to track any type of assets.
Published at Thu, 06 Feb 2020 09:08:11 +0000
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