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 --> 00:17.600 In order for something to replace Bitcoin as a savings mechanism, it would need to provide similar and even better properties. While some 00:17.800 --> 00:24.425 "cryptos" appear to be scarce and easy to transport, none of them have the level of decentralisation of Bitcoin, and that means their rules 00:24.625 --> 00:31.250 could change when under pressure. A focus on decentralisation requires sacrifices in other aspects of the system, and other projects are 00:31.450 --> 00:38.076 not willing to make these sacrifices. 00:38.276 --> 00:45.836 The decentralisation of Bitcoin goes beyond the mere technical and organisational. There is also a culture of decentralisation, which acts 00:46.036 --> 00:53.596 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 00:53.796 --> 01:01.356 and less likely. It is less likely now than it was five years ago, for example. 01:03.100 --> 01:08.452 If Bitcoin is so secure, why are there so many reports about people losing their money? 01:09.651 --> 01:18.037 In order to benefit from Bitcoin's security, you need to follow the five principles of Bitcoin mentioned in an earlier video. Usually, when 01:18.237 --> 01:26.622 you hear about Bitcoins being stolen, the people involved violated principle number two: not your keys, not your coins. They entrusted 01:26.822 --> 01:35.207 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. 01:35.407 --> 01:43.793 It's similar to someone putting a massive lock on their house door, but then leaving the lock open when leaving the house. 01:45.539 --> 01:51.212 If Bitcoin consumes a lot of electricity, do I have to worry about my electricity bill? 01:52.411 --> 02:00.827 When Bitcoin was originally launched in early 2009, there was only one software doing all the work. Gradually, specialised software 02:01.027 --> 02:09.442 developed for the individual activities involved in the network. The, nodes, verify the ledger and enforce the rules. The, wallets, keep 02:09.642 --> 02:18.058 your private keys secure and initiate transfers on your behalf. And finally, miners, which consume elecricity and provide security for 02:18.258 --> 02:26.673 Bitcoin. In the meantime, mining is a business like any other. Miners run in data centers and in special containers which can move to 02:26.873 --> 02:35.289 wherever cheap energy is available. 02:37.019 --> 02:38.436 What is Blockchain? 02:39.636 --> 02:48.763 Blockchain is a special type of database for decentralised systems. Parts of a blockchain can be operated by different organisations, and 02:48.963 --> 02:58.091 don't need a hierarchy of permissions. Bitcoin is a first practical example of a blockchain, and some would argue the only one actually 02:58.291 --> 03:07.420 delivering on its promises. While important for Bitcoin, it is not the only component necessary to achieve decentralisation in practice. 03:07.619 --> 03:16.748 The use of a blockchain in systems which do not need both high security and high decentralisation is of a dubious utility. Traditional 03:16.947 --> 03:26.076 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 --> 03:40.179 Once you send or receive a bitcoin transaction, usually you have to wait for about an hour for the transaction to "confirm". For the 03:40.379 --> 03:48.492 blockchain to do its thing, about an hour needs to pass to ensure there is nothing fishy going on. This is one tradeoff Bitcoin uses for 03:48.691 --> 03:56.803 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 offers 03:57.003 --> 04:05.115 is scaling in layers. You can think of these layers as different forms of Bitcoin. The first layer, which is what we have been talking 04:05.315 --> 04:13.427 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 the most 04:13.627 --> 04:21.739 popular ones is the lightning network, which allows small instant payments.