WEBVTT 00:01.100 --> 00:04.393 Part 3, Frequently asked questions 00:07.100 --> 00:09.775 Why won't something else replace Bitcoin? 00:10.975 --> 00:17.427 In order for something to replace Bitcoin for saving, it would need to provide similar and even better properties. While some "cryptos" 00:17.627 --> 00:24.079 appear to be scarce and easy to transport, none of them have the level of decentralisation of Bitcoin, and that means their rules could 00:24.279 --> 00:30.730 change when under pressure. A focus on decentralisation requires sacrifices in other aspects of the system, and other projects are not 00:30.931 --> 00:37.383 willing to make these sacrifices. 00:37.583 --> 00:45.143 The decentralisation of Bitcoin goes beyond the mere technical and organisational. There is also a culture of decentralisation, which acts 00:45.343 --> 00:52.903 against attempts to centralise. There could be something else in the future which is better than Bitcoin, but as time goes on it is less 00:53.103 --> 01:00.663 and less likely. It is less likely now than it was five years ago, for example. 01:02.420 --> 01:07.772 If Bitcoin is so secure, why are there so many reports about people losing their money? 01:08.972 --> 01:17.357 In order to benefit from Bitcoin's security, you need to follow the five principles of Bitcoin mentioned in an earlier video. Usually, when 01:17.557 --> 01:25.942 you hear about Bitcoins being stolen, the people involved violated principle number two: not your keys, not your coins. They entrusted 01:26.142 --> 01:34.527 their keys to someone who doesn't know what they are doing, they left it in an unsecured computer, or their keys got damaged beyond repair. 01:34.727 --> 01:43.113 It's similar to someone putting a massive lock on their house door, but then leaving the lock open when leaving the house. 01:44.859 --> 01:50.532 If Bitcoin consumes a lot of electricity, do I have to worry about my electricity bill? 01:51.731 --> 02:00.147 When Bitcoin was originally launched in early 2009, there was only one software doing all the work. Gradually, specialised software 02:00.347 --> 02:08.762 developed for the individual activities involved in the network. The, nodes, verify the ledger and enforce the rules. The, wallets, keep 02:08.962 --> 02:17.378 your private keys secure and initiate transfers on your behalf. And finally, miners, which consume elecricity and provide security for 02:17.578 --> 02:25.993 Bitcoin. In the meantime, mining is a business like any other. Miners run in data centers and in special containers which can move to 02:26.193 --> 02:34.609 wherever cheap energy is available. 02:36.339 --> 02:37.756 What is Blockchain? 02:38.956 --> 02:48.220 Blockchain is a special type of database for decentralised systems. The members of a blockchain can be operated by different organisations, 02:48.420 --> 02:57.685 and don't need a hierarchy of permissions. Bitcoin is a first practical example of a blockchain, and some would argue the only one actually 02:57.885 --> 03:07.149 delivering on its promises. While important for Bitcoin, it is not the only component necessary to achieve decentralisation in practice. 03:07.349 --> 03:16.614 The use of a blockchain in systems which do not need both high security and high decentralisation is a of dubious utility. Traditional 03:16.814 --> 03:26.078 databases or distributed data stores may be a better fit for such projects. Compared to them, a blockchain is slow and expensive. 03:27.819 --> 03:30.867 Why do I have to wait for an hour for a transaction? 03:32.067 --> 03:40.169 Once you send or receive a bitcoin transaction, usually you have to wait for about an hour for the transaction to "confirm". For the 03:40.369 --> 03:48.470 blockchain to do its thing, about an hour needs to pass to ensure there is nothing fishy going on. This is one tradeoffs Bitcoin provides 03:48.670 --> 03:56.772 for its high security. So how can you then use Bitcoin for all kinds of payments if you have to wait for an hour? The solution Bitcoin 03:56.971 --> 04:05.073 offers is scaling in layers. You can think of these layers as different forms of Bitcoin. The first layer, which is what we have been 04:05.273 --> 04:13.374 talking about so far, can be thought of as a settlement layer. On top of it, other layers with different features are being built. One of 04:13.574 --> 04:21.675 the most popular ones is the lightning network, which allows small instant payments.