hello and welcome to explain to me like i'm five but we're making it easy for you
explaining crypto concepts in simple terms and answering the questions that we have all been
asked by family and friends about crypto on today's episode we'll be explaining
everything about blockchain with the help of Scott Stornetta known as one
of the creators of blockchain technology so make sure to like the video right now
well i'm your host Jessica Walker and Scott thank you so much for joining me
i want to jump straight in and ask you how you would define blockchain to your
youngest grandchildren i know they range in ages so we'll start with the five-year-old
grandchild. Sure and of course it is a little bit of a challenge but it's a
great opportunity to think deeply about what's really going on and find an appropriate analogy
if i can i want you to i want to show you a letter that my granddaughter and i
wrote in order to demonstrate the blockchain. yes, please do! And i don't know if anybody can read it
yes do you want me to narrate it are you able to read it yes it says: "grandpa can we record let it
go on youtube next friday at 5 p.m chrissy" right so this uh keyboard in the background
my granddaughter we like to uh she sings and i play the keeper
okay so here's how i would explain it to her let me tell you what blockchain is
blockchain is about making sure that a record is really the original copy and
so we're going to take this letter that we wrote and i'm going to tear it right down the middle
okay i'm going to give you one copy of it and i'll take the other now suppose someone wants to know
whether what we both hold is the original okay how will they tell the real letter from a fake
letter and what you typically can elicit from the child is
because of the random way you did the tear only the two original copies will line up perfectly
okay and that's the same idea that the blockchain has by distributing records but putting a kind
of digital tear into them you can make sure that everybody's holding a copy of the real thing and
that's really interesting because it's unique then like a fingerprint as well so now when we go on to
transactions and records of transactions there's a one analogy that i quite like to use which is the
difference between a microsoft word document that one person's owns and then a blockchain ledger as
a almost a google document where you can see in real time what's been updated and by who
how would you explain how you can look up transactions on the blockchain well i think the
key is to emphasize the distinction between that and how it works with a bank or an atm machine
what i mean by that is i think your average neighbor understands that anything they do with
their bank or an atm is all handled electronically back and forth digital bits of information are
being sent back and forth but the key distinction is that in the case of a regular bank transaction
there must be an intermediary someone that has a privileged position okay and someone that must
be trusted and in and in the case of the example i've given it's the bank with crypto currencies
and i say that specifically because i i really think it's important for people to understand that
bitcoin is simply one example of a cryptocurrency built on the basic blockchain idea and there are
many other different examples that use different methods to build on the basic blockchain idea
um but in all of those cases okay there is no trusted intermediary
the system enforces a kind of self-trust so that every holder of
every pair of people can essentially function as um part of a network that doesn't require a bank
or trusted third party in order to function and just to build on that then so i have
made it my mission to explain to my mother the concept of blockchain and cryptocurrencies
what i would actually like to do now is give you the concept and analogy that i give to my mother
when it comes to blockchains being traceable and get you to review evaluate add anything
if needs be what i normally start with is getting her to imagine a bank vault and there are hundreds
upon thousands of piggy banks that are all stacked on top of each other and each piggy
bank is completely transparent the walls the doors you can see entirely what's inside but not only
that everyone can also access the room so the room which has all of these piggy banks in has security
cameras that anyone can view and every second of recorded footage is also available online forever
and each person get can get into their piggy bank using a specific key so first if we're going to
use transaction example from me to you you tell me which piggy bank is yours i then walk into that
room with a mask on anyone in the world can see me and they can see on the security cameras that i've
entered the room and at what time but they can't see my face and then i can unlock the piggy bank
take some coins out and put them in your locked piggy bank and i'll leave the room so everyone
in the world knows your piggy bank has the coins in that are previously in my piggy bank
what's your take on that analogy is there anything you would add or that you would correct
well i guess the first thing that i have in response to that
um really wonderful description is are you available for hire because
i very much like your idea about the piggy bank and the vault i think if i were to tweak it just
a little bit here's what i'd say imagine that you had a vault just like a regular vault at a bank
but the wall but two things are different one the walls of the vault are glass they're completely
transparent and second everyone that has a piggy bank in that vault is stationed around the vault
all around the perimeter of it and they're constantly looking at the vault to make sure that
nobody can do anything that everyone in the community isn't aware of the mask idea is a
little bit trickier if you haven't disclosed your identity your relationship between samuel clemens
and mark twain then it's like the mass but the moment that you're able to associate mark twain
with samuel clemens it's no longer like a mass and the reason that that is vitally important
if you want to bring it right up to today is that there's legislation now pending
in the united states uh congress and in many other countries and a lot of the legislation
sometimes regrettably hinges on misunderstanding some of the core concepts
and i think anyone would agree almost anyone that if very bad actors were allowed to operate
in complete anonymity okay in defiance of the vast majority of the international community
then that would not necessarily be the best feature to have in a currency but that idea of
operating with complete anonymity is not the case for the vast majority of cryptocurrencies and so
it's important that people get the mask part of the concept a little more precise
lest they be led to try to solve a problem by starting with the wrong diagnosis
so if i do turn then ask you the question of is blockchain anonymous and ask you to
explain that to your grandchildren what would the answer be well you can wear a kind of disguise
okay but the disguise is unique to you that's what i would say so now if we look theoretically
at the grandchildren that you've been explaining blockchain technology to how would you paint in
the picture then 20 years from now they're 25 years old when it comes to blockchain
being used in society it being integrated in our day-to-day lives what picture would that look like
and how would you describe it uh well the answer i'm going to give you is not the one you want
okay and let me tell you why okay there's an old saying that goes something like this um
if you try to ask a fish what water is
it's very hard to describe because they're just living in it okay it's something that
they just take for granted it's simply part of the background and quite frankly
as others have said before the day that you realize that technology is truly successful
is when it becomes invisible and people just take it for granted they take treat it like the air or
the water it's just there and it works so my picture that i paint is gent is truly block chain
simply becoming invisible fantastic well scott thank you so much for joining me and thank you all
so much for watching i'm jessica walker and now i want to pass the challenge on to you all that are
watching at home it is now in your hands to get more people to understand crypto blockchain and
all of its potential make sure to share this video with a friend or with a family member and if you
do have any more questions about crypto you can ask alex on coin market cap it's in the link below
you