5. Blockchain Basics & Transactions, UTXO and Script Code

MIT 15.S12 Blockchain and Money, Fall 2018
Instructor: Prof. Gary Gensler
View the complete course: ocw.mit.edu/15-S12F18
KZbin Playlist: • MIT 15.S12 Blockchain ...
This session covers design featues of blockchain, like hash functions, append-only timestamped logs, and proof-of-work. The professor also covers unspent transcation output (UTXO).
License: Creative Commons BY-NC-SA
More information at ocw.mit.edu/terms
More courses at ocw.mit.edu

[@Chris-kq3ix]

Class 5 and still going strong, understanding the majority of the concepts!

[@a142294b]

me too buddy #makefriendsinthecommentsection

[@Chris-kq3ix]

@@a142294b Nice! I'm just cracking into lecture 21 now! Can't wait to finish this course and start one through MIT OpenCourseWare on more traditional finance (prob should have started there first haha). It's awesome that this information is available for free though. Anyway, I hope the learning is going well for you Andrew!

[@KenFales]

Same. These classes are great. Best of luck to you.

[@tdaly69]

"I often think of 2 Chainz" - Gary Gensler

[@CH-bp3bj]

hahaha

[@adityaparde2561]

ahahahahaha

[@theSaani]

loving this MIT course. I was really wanting Gary to use the whiteboard though when some of the students were unsure on "forks" and "hashes".

[@adamwhite99]

Was thinking the same thing.

[@andso7068]

Would've made it much more easier to understand.

[@bikeshack8225]

God bless Gary Gensler trying to explain things like hash functions to business students, but its hard to wrap your head around these things in the abstract without having ever having used them.

[@sunriseeternity300]

I've really enjoyed Gary Gensler's teaching style. Thank you MIT for allowing us (the world) to enjoy these classes on youtube. #blockchain #blockchainknowledge #bitcoin #learnbitcoin #learnblockchain #enjoylife

[@therecyclingguy256]

Idk you but, much success to you and all of your endeavors.

[@ReadMr]

This course is top-notch. If I had stumbled across these lectures earlier, then it could have saved me tens of hours of studying. Many thanks, professor Gensler!

[@omogaju]

Prof, Gary comes across as a very decent man. If only I had a professor like him when I was in college. MIT and those students are lucky to have him teach this class.

[@michaelsmith1460]

We will get to your question in a minute Derek.

[@abec8929]

Word on the street is that Derek was not the same after this class 😂

[@ejbully]

This was a great episode. Gensler is a patient individual indeed. Breakdown of hash function sure helped me 🙏🙏

[@HasteDrei]

the explanation of hash functions was horrible. Gensler doesn't actually know anything about crypto.

[@Infinitenothingness180]

what a nice gentlemen Prof. Gary ..My sincere respect to his patience and sensitivity !

[@htaylorja]

I think anyone from the xrp community would beg to differ.

[@raunak5483]

@@htaylorja please elaborate don't just pick a nose and fly away

[@Harold01]

I love listening to Prof. Gensler teach .. He is polite - interesting - and intelligent ! Wish I could take his classes !

[@dadrenpadren2008]

You and me both. I’m fascinated

[@melliotbarrett]

I wish i was as good a teacher!

[@curtistong7539]

You know you're a bad student when you choose to argue with the professor instead of ask questions.

[@VenturiLife]

@Fe Sk8 People do that when they're trying to be "right" in the eyes of others. Does anyone provide a time-stamp?

[@Lala1600MH]

@@VenturiLife 35:52

[@mikemike5452]

@@VenturiLife 35:52

[@therealspleen52]

anyone should be allowed to air greviences or questions in a classroom. judgment free.

[@durgatwitter8450]

He has done the same from class 1. I find it weird. I really don't care if you have PhD when you have no basic manners. People should understand Prof. Gary is not from Computer Science but still he leant the concepts. Block Chain is combo of computer science and economics, so you won't become hero if you have PhD in just CS. Telling this with MS in CS.

[@Dharm1k987]

@45:14 what a class professor. making sure everyone is on the same page instead of just moving forward

[@userwheretogo]

MIT students are not that bright after I see the questions after 45min lol

[@jonathankr]

What a fabulous teacher. At 45:00 he tries to solve a teaching problem

[@danagarnett844]

I’m so very grateful for these courses and for such engaging instruction! Sharing!!!

[@msrvin]

Not only the lecture but the questions asked by these students are 🔥🔥

[@crazyd3uces]

Oh my God. I've never been so excited to learn. Love this course.!!!!

[@MRAREPAMRAREPA]

1rst of all many thanks to MIT for sharing this unique empowering Blockchain courses,my respects and admiration to Professor Gensler.

[@priyakhare9597]

Gary is a good teacher and listener, makes the session very interactive with his cold calls . I have read through bitcoin and blockchain technology , but still find these sessions informative , but i feel few concepts can be explained clearly by using the whiteboard . Thank you MIT for sharing these lectures , feels like a student in the class

[@yogreeni5763]

Last about 40 min of this module is great. Students realized that not all of them had understood all those features very well yet and started asking basic and fundamental questions. They helped deepen my understanding about technical features of Bitcoin.

[@angelaebirim2705]

Prof Gary is a really great lecturer, very engaging, and the topic is fascinating.

[@arrowb3408]

Okey. The Prof needed to read 6 time to understand the overall Bitcoin mechanism, then I felt relief. HAHAHA Will re read this video again.

[@toulasantha]

This lecturer is top class.

[@merrick8000]

Gary heading the SEC in 2021, seems like that one teacher everyone loves!

[@RT-gj5bp]

Thank God for these classes God bless MIT if I had to pay for these courses I wouldn’t be able to eat

[@tubex1300]

clear and concise thanks Sir Gary Gensler

[@chaitanyabhatt7915]

this guy is worth > $100Million and has passion to teach! wow! respect!

[@agambhir3709]

"Genius can be just in bringing together things"

[@yeghor]

1:02:00 The whole consensus mechanism reminds me of notary offices. Nodes are working like a network of notary offices notarizing copies of documents and getting a fee (bitcoin and later what?) for the work done. Then they are collectively bookkeeping the record of the all notarized documents (transactions and balances?) to date. They are in a sense vouching that the transaction indeek took place. Who is then managing the balance in each wallet/private address? The bitcoin script itself? It should be referring to the block number where a certain account/wallet has last been updated for balance to read the (most recent) balance from the record, not necessarily always but whenever a new transaction is going to take place.

[@MYnCOCKLES]

Thank you thoroughly explaining hashing

[@GRNDCOTV]

Honestly. Thank you. I'm learning a lot and I've been messing with bitcoin here and there for years. Gensler 2024.

[@berajpatel8081]

Thank you Prof. Gary Gensler

[@WGchamara]

Thank you MIT & prof. Gary Gensler.

[@cauebraga]

Very fascinating class! Thank you

[@0ne87]

Checks sometimes contain hashes and should be familiar enough to be able to get the concept of hashes across to someone. The way a check uses hashes is by taking all of the relevant information such as the amount, the date, and the account and then hashes that and prints that hash on the bottom of the check. Now if someone were to fraudulently change any of the hashed information, the receiving bank would be able to see that the information was changed without ever communicating with the bank where the check originated. The bank would do this by running the same data through the same hash function and they would see the mismatch if there was any. There are a few key concepts related to hashing. First, hashes should not have any similarity in output even with the most minimal change in input . Second, the input should not be able to be derived from the output, and this is why they are referred to as "one way functions"

[@sameena2800]

Interesting course!! Or may be your way of teaching is giving me food for thought 👍🏻

[@adebimpeadewale827]

Get in touch with Qudhack on ¡G they are the best hacker ever I got my funds instantly

[@afrovarangian]

@@adebimpeadewale827 0

[@TerranVisitor]

I found this series of videos super helpful. However, the description (and clear confusion) of hashes is woeful. Without going into understanding of hashes ... The most important common misconception is that a hash MATCH guarantees EQUALITY - it DOES NOT. The ONLY guarantee is that a hash MISMATCH indicates INEQUALITY.

[@wilhelm.reeves]

16:03 LOL! whenever he says we're at mit, it cracks me real hard 🤣

[@dawei6813]

LOOOL I laughed

[@christophermallory2222]

em eye teeeeaaaaahhhhh

[@michaelphillips5756]

Felt second hand embarrassment for the MIT students not paying attention, and having no clue what hashing is.

[@badgerbox]

Professor Gensler: 43:15 Student: The professor's a fan of 2 Chainz? huh, interesting.

[@mugabiimran]

This is where it gets more interesting, can't wait for Smart Contracts & DApps.

[@crosa1979]

wow this lecture is awesome im learning so much great information

[@halwabakery1190]

finally understood the UTXO model !!

[@824356578]

Matthew should feel ashamed, you have a future SEC chairman giving a lecture and what is so attractive on a Facebook page? If i took the course 2 years ago and invested in bitcoin then, i would be FIRE now!

[@julzrtw]

It’s Adam back!

[@MariaHernandez-lp9dz]

I am totally new to Blockchain Technology, I have grasped more information.

[@yanikq]

Which Noble Prize is Satoshi Nakamoto more likely to win: · Economics · Computer Science · Peace

[@javierchin007]

We are his prize

[@dadanifit]

Why peace?

[@therecyclingguy256]

If Bitcoin ultimately makes war unaffordable, (long shot theory) he should get it for all 3 absolutely 100%

[@na......124]

@@torahtorahtorah he keeps a check on the sovereign's ability to fund wars

[@bobsondugnutt7526]

@@dadanifit If the world converted from an actor-involved financial network to an open-source computer-based financial network, bad faith actors wouldn't have the ability to take advantage of the network.

[@sarveshanand505]

For aviva's question can we store data as a hash in cloud. In storage there is a technology called deduplication, where hash is primiary component which helps in reduction of storage size by discarding duplicate block of data.

[@julkiewicz]

Hash function is a computation that transforms arbitrary length data into a fixed length output (the hash). E.g. for SHA256 the output is 256 bits of length. Goes without saying that if you hash the exact same thing twice you will get exactly the same hash (it's a function after all). However what hash functions also satisfy is that a small change to the input data (e.g. changing just one bit) should change the output in an unpredictable way. In other words hashing two similar inputs will not produce two similar hashes. If you have two inputs and you compute their hashes and then compare them: 1) if hashes are different, you know for sure the inputs are different as well 2) if the hashes are equal, there is a very high chance the inputs are the same as well. For instance, in case of a 256-bit hash, there should be roughly 1/ 2^256 chance for an accidental hash conflict. A good hash function should also be irreversible, meaning it shouldn't be possible to draw any conclusions about the input based on the hash output for that input. That last property is key for proof of work. If it wasn't satisfied, it would be possible to compute solutions faster than by blind trial and error.

[@schmetterling4477]

That's the theory anyway. To the best of my knowledge (and I don't know much), the irreversibility of most hash functions is an assumption, not a mathematically proven result. This is also the case for the security of most ciphers.

[@gujabber2582]

my thoughts are Prof.Gary is also in a learning process of this "blockchain stuff" and he is expert in finance, so by listening through this course, i may learn with him also like Alin and students who want a better comprehensive understanding the Blockchain geeky words reflects to our real life is. Bcz Prof.Gary is better than me, so just absorb, maybe Patric's explanation shows he(Patric) even has a better understanding than Prof.Gary. Anyway, i will go through this course even i know nothing.

[@gujabber2582]

and you want to know Proof of Work, you can refer to this, kzbin.info/www/bejne/sIrddqB4oa9qbdU, maybe these two courses can be done both to help understand each other.

[@mujjestreams]

Let's keep going by Gods grace I will understand more

[@thinkmakedecisions39]

Thank you very much 🙏

[@JoshuaGayman_SedonaCreekFund]

Great lecture good Summary of course so far, you get a view of the full room and a fun way to end class. And some enlightenment on who tf Larry is #Contractscholar

[@bigonesnft]

Great insight!

[@jennachang3269]

Awesome! Thank you :)

[@davidpessina6563]

🌜✨🌛 THANKYOU Very professional and informative ⭐⭐⭐⭐⭐

[@mohammadrahmaty521]

No one mentioned Adam Back at the end of the class!

[@dawei6813]

Where?

[@josephstarbuck1421]

Thank You!

[@dadrenpadren2008]

Thank god for the internet

[@marleyzlegacy9208]

thank you!

[@tekaligngelan1318]

The last statement Gary at the end of this lecture made me think he might know who Satoshi is.

[@jackpitts5561]

If he didn't know then, he should by now-- or else he's not very good at doing research. He could simply call up his superfriends who know Tether's lawyer and ask to hear about the documents submitted to the Peter McCormack libel case and he'd know for sure. So if he has a good network at all, he knows.

[@astroNexx]

its not unlikely that only Satoshi knows who Satoshi is and a lot of people have a very educated guess

[@anvoquoc3716]

We're in the Blockchain Course view's halfing guys

[@dadrenpadren2008]

There’s so much that goes into this I would love to dive in and learn more about every topic he covered in this lecture can anyone recommend any good books or readings I could indulge in?

[@dadrenpadren2008]

@@iagocadavid thank you

[@notyourmomyousnowflake3533]

all you need to understand it is public key cryptography

[@GTL5427]

You can go to the course notes in the description

[@callmesidds1]

What a wonderful lecture on blockchain and bitcoin. I have a question though, when it is said that the transactions have been spent does it mean the coins in circulation? It cant vanish.

[@schmetterling4477]

Bitcoins vanish all the time. People lose their wallets, either because they lose passwords or because digital media with the files get lost. It is estimated that 20% of all tokens are gone, already. These are believed to be unrecoverable. Since bitcoin can be divided this is not much of a problem, except of course for the people who have lost this value and that the division mechanism undermines the claim that bitcoin is somehow a "limited currency".

[@Leeviiii758]

I think he is suggesting that the spent transaction is a transaction that has gone through or has been verified.

[@whatsup7184]

Hahaha... Good question, Prof at 3:25. Give me Five. Hahaha... At that time it was at the early stage of TRADING.

[@zholdaskades9139]

To his question initially about centralized banking system vs bitcoin fees - wasn't there another point mentioned in the bitcoin paper about reversibility of transactions under the banking system? i.e. that inevitable banks can step in and reverse a transaction compared to blockchain always being irreversible? i felt like that was satoshi's bigger point rather than the system being more secure...or am I misunderstanding the paper

[@AIGeneratedSongs1]

I like this video

[@campusseoul]

I am looking forward to hearing Gary Gensler's thoughts on the identity of Satoshi Nakamoto.

[@garyshamell5917]

Don't you lie to me... if you love me PROVE IT!

[@brendansullivan4872]

I would like to hear his opinion on whether making crypto more friendly for accredited investors over retail is a good idea.

[@kristinakristinaite2584]

thanks for asking what is fork !

[@AmitGupta-by3kr]

The question asked at 1:08:00 is nothing but NFT!

[@dovaz0x]

So, as I can understand, UTXO is dust of bitcoins, let's called a few satoshis that were awarded on coinbase or fees, that are so miniscule that are not worth spent them until they have some value in the future, and this UTXO, that are transactions outputs are stored in a seperate database in the bitcoin blockchain. What else did I miss ?? I might read further later.

[@luvpreetsingh8020]

At 41:46, Transaction sent to Hash of Bitcoin Address - Pay-to-PubKeyHash is 81%. But isn't a bitcoin address already a hash of the public-key? why would you hash that again?

[@magellanjimenez8238]

Gensler put on his good shirt for this lecture

[@dovaz0x]

What if consensus is wrong, how do you realize, then how to revert, and finally does this lead to forks??

[@emesesche1241]

I would like to estimate the I/O (Input/Output) and network resource requirements for blockchain. Where do I find related resources?

[@user-dc6tr3qe3w]

does locktime affect the mempool?

[@basedxrp]

Craig Wright

[@mikestaub]

The 100 extra bytes are a much bigger deal than he alludes to here. This is the first and only truly incorruptible database.

[@KM-mv1ho]

I love broccoli!

[@javierchin007]

Satoshi Nakamoto is an influential Anunnaki. It is obvious. Gold is getting invisible. Bitcoin is a distraction. GCB.

[@hiendinh3871]

I'm here at class 5 :)

[@quocphantruong]

What happens if the NONCE cannot be found within a 10-minute window?

[@Hawking1969]

I'm starting to be lost. Still going through it though!

[@yoshnaka9430]

it's Craig.

[@Unidentifying]

broccoli soup is fantastic

[@mphat10]

43:19 Holochain, Dag will be the future after blockchain

[@dadanifit]

Hice. Hedera too.

[@alexalston3240]

End of 45 into 46 he GETS SO ANNOYED that they don't understand hash functions lmaooo RIP to the kid on facebook, matthew, wow!

[@benshaw7993]

It's funny they mention cryptopunks but not in reference to the NFTs. If only they knew.

[@astroNexx]

if only they know what a charade it would become

[@HODLGENG]

This is like a course from the future?!

[@goksuokar288]

So are the coinbase and fee different things? do both of them go to the miners?

[@eperdo1]

I believe so. Coinbase is the generation of newly minted BTC. In the miner's case, that would be the block reward they receive on a successfully mined block. This is the reward that gets cut in half every 4 years (every 210,000 blocks) during the the block reward halving. The fee goes to the miner as well but it is market based.

[@tonycycoroy]

Fortran for the win, haha!

[@gawiga]

16:03 I'm so smart! I answered that before everyone! lol

[@pembadorji5445]

Who knew one day Gary would be approving spot Bitcoin ETF

[@ketonesnotglucose4978]

It's Craig Wright and it's freakin obvious!

[@ashtravelerr.3895]

He knows who Satoshi is.

[@bariswheel]

Can someone link the Clark paper please? Thank you

[@bariswheel]

Was listening to this saw the slides and found it !

[@Pavle_Savkovic]

@@bariswheel can you post the link here please and thank you

[@raimondoghiglieri5721]

HOW NEVER DO THE ITALIAN SUBTITLES COME OUT? UNTIL YESTERDAY THEY WERE OUT ..

[@Birdpoo777]

Gary is very good with names; unless they have name tags

[@jaredmbennett]

So is hash basically like a bar code?

[@jamesevangelista6460]

Yes

[@anubanai2]

nope that can decode it like checksum