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Blockchains explained visually (part 1 of 2)

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Re: Blockchains explained visually (part 1 of 2)

#31

Post by davidgerard »

k__ wrote: post #28

I always read that crypto currencies will replace money, because they are distributed. But does a blockchain, that is at the core of every(?) crypto currency really scale well? Keeping the whole ledger constantly available seems rather storage and traffic intensive to me.

tl;dr no. Bitcoin has a theoretical limit of 7 transactions/sec (or 4200/10min) for everyone in the world. Ethereum can do up to about 14-16 tx/sec.

There are plans to fix this - sharding on Ethereum, Lightning Network on Bitcoin - but both are largely vaporware at this stage.

In practice, a lot of the transaction action happens inside the individual exchanges, not on the blockchain itself - so we already have a "level 1" and "level 2" system.

Also, there's issues of securing your bitcoins - "be your own bank" means "be your own extremely knowledgeable chief security officer". This is why even a lot of big holders keep a lot of money on exchanges (and lost lots in Mt. Gox). And why losses due to human error are extremely common.

The blockchain is more interesting than useful.

Re: Blockchains explained visually (part 1 of 2)

#32

Post by JudasSicarius »

davidgerard wrote: post #31
k__ wrote: post #28

I always read that crypto currencies will replace money, because they are distributed. But does a blockchain, that is at the core of every(?) crypto currency really scale well? Keeping the whole ledger constantly available seems rather storage and traffic intensive to me.

tl;dr no. Bitcoin has a theoretical limit of 7 transactions/sec (or 4200/10min) for everyone in the world. Ethereum can do up to about 14-16 tx/sec. There are plans to fix this - sharding on Ethereum, Lightning Network on Bitcoin - but both are largely vaporware at this stage. In practice, a lot of the transaction action happens inside the individual exchanges, not on the blockchain itself - so we already have a "lev…

"In practice, a lot of the transaction action happens inside the individual exchanges, not on the blockchain itself - so we already have a "level 1" and "level 2" system."

Can you expand on this a bit? Is it somewhat analogous to the role that dark pools play in the stock market?

Re: Blockchains explained visually (part 1 of 2)

#34

Post by abrkn »

monokh wrote: post #19

> See how the hash-chaining mechanism of a blockchain means that even a single corrupt or tampered-with block will invalidate the entire chain after it. Is that strictly required to understand that the entire chain is invalidated? Since blocks are in order, if block X's previous hash doesn't check out, can't we just assume that every block thereafter is also invalid? Effectively a fork has happened at X-1 block. I'm…

See https://en.bitcoin.it/wiki/Chain_Reorganization

Re: Blockchains explained visually (part 1 of 2)

#37

Post by gtrubetskoy »

ahussain wrote: post #3

The best explanation of blockchain has to be (unsurprisingly) 3Blue1Brown: https://www.youtube.com/watch?v=bBC-nXj3Ng4 Would highly recommend watching this video for anyone who hasn't already.

There's also the oldie but goodie James D'Angelo Bitcoin 101 videos, the blockchain one is https://www.youtube.com/watch?v=gUwXCt1qkBU

The elliptic curve one is fascinating, where he has it implemented in like 30 lines of Python and no outside dependencies: https://www.youtube.com/watch?v=iB3HcPgm_FI

Edit: EC is a 2-part, second part is https://www.youtube.com/watch?v=U2bw_N6kQL8

Re: Blockchains explained visually (part 1 of 2)

#38

Post by clydethefrog »

andreasklinger wrote: post #6
ahussain wrote: post #3

The best explanation of blockchain has to be (unsurprisingly) 3Blue1Brown: https://www.youtube.com/watch?v=bBC-nXj3Ng4 Would highly recommend watching this video for anyone who hasn't already.

My favorite: https://www.youtube.com/watch?v=_160oMzblY8 It explains from ground up without getting complicated - it basically demystifies the whole thing completely i give this to everyone - even to non technical people

What a great video. Explaining the database model of blockchain without all the scripture.

Re: Blockchains explained visually (part 1 of 2)

#39

Post by davidgerard »

JudasSicarius wrote: post #32
davidgerard wrote: post #31

Earlier quoted context omitted.

tl;dr no. Bitcoin has a theoretical limit of 7 transactions/sec (or 4200/10min) for everyone in the world. Ethereum can do up to about 14-16 tx/sec. There are plans to fix this - sharding on Ethereum, Lightning Network on Bitcoin - but both are largely vaporware at this stage. In practice, a lot of the transaction action happens inside the individual exchanges, not on the blockchain itself - so we already have a "lev…

"In practice, a lot of the transaction action happens inside the individual exchanges, not on the blockchain itself - so we already have a "level 1" and "level 2" system." Can you expand on this a bit? Is it somewhat analogous to the role that dark pools play in the stock market?

By quantity a hell of a lot more individual trades happen on the exchanges than on chain. It's not hidden - just not as radically transparent as on-chain transactions. But obviously harder to gather data on, has none of the blockchain's cryptographic guarantees, etc. It turns out the actual traders care more about getting a good price than the ideological basis for the blockchain. And that's even in a situation where you can't really trust the exchanges - rife with insider trading, wash trades, front running, spoofing, whether a Tether can be counted as a dollar, etc., things that are highly illegal in normal security trading. As long as the number keeps going up, everyone seems okay with this.

Re: Blockchains explained visually (part 1 of 2)

#40

Post by doodpants »

zeep wrote: post #35

> hexadecimal notation (that is, using 0-9 and a-z) should be hexadecimal notation (that is, using 0-9 and a-f)

That jumped out at me too. At first I thought, "does the author not understand how hexadecimal works, or is this merely a case of sloppiness or imprecision in his description?" Then I got to the part that said:

> There shouldn't be loads of them that start with an "A", or loads that end with ten "X"s, or anything like that.

This leads me to further doubt about the author's grasp of hexadecimal.

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