How Bitcoin Works Under the Hood

A somewhat technical explanation of how Bitcoin works. Want more? Check out my new in-depth course on the latest in Bitcoin, Blockchain, and a survey of the most exciting projects coming out (Ethereum, etc): app.pluralsight.com/library/c...
Lots of demos on how to buy, send, store (hardware, paper wallet). how to use javascript to send bitcoin. How to create Ethereum Smart Contract, much more.
If you'd like to support the creation of additional content, here's a bitcoin/lightning donation address: bit.ly/2NldSYA
fiat support: / curiousinventor
Shorter 5 min introduction: • The Essence of How Bit...
Written version: www.imponderablethings.com/201...
Arabic translation by Ahmad Alloush
Spanish caption translation by Borja Rodrigo, [e-mail], DFJWgXdBCoQqo4noF4fyVhVp8R6V62XdJx
Russian caption translation by Alexandra Miklyukova
Italian voice over: • Come Funzionano i Bitcoin
Italian captions translated by Simone Falcini, 1H5KdCnBooxfqpXtyQBBAKKRU7MkCZCVCe

[@cyrusadkisson6864]

0:10 overview, 1:38 sending money, 3:45 txns and ledger detail, 6:19 complex txns, 7:40 anonymity, 9:20 txn security, 10:50 ordering of txns, 11:02 blockchain, 12:10 crypto hash, 13:37 end of chain insecurity, 14:05 double spend attacks, 16:00 why double spend is hard to pull off, 17:45 mining, 18:30 txn fees, 19:00 mining pools, 21:11 recap

[@CuriousInventor]

hello "free" bitcoin spammers: I am moderating comments, so why don't we save each other some time? Speaking of saving time, here's a 5 min summary version: kzbin.info/www/bejne/qmateISOeLmYacU

[@mridularul1]

you're the first person to have explained such a complex system in such a simple way .. thankyou for this vid !

[@Ocenteno70]

yeeeeeah......I'm gonna have to watch this again.

[@JanBruunAndersen]

Thank you, thank you, thank you! Finally an explanation of how Bitcoin works that makes sense for paranoid programmer like me. No hand-waving, no vague references to wallets and apps and exchanges. Just the facts with enough detail to make sense, and without drowning in mathematical details.

[@Mellbourn]

Interesting

[@AppliedScience]

Thank you! This is the clearest, most complete overview of how Bitcoin works that I've ever seen. Nice work, indeed!

[@SebastiaanvanderHeide]

Thanks for uploading this, I've been watching quite a bit about Bitcoin and this is the most in depth video I've found yet. Must have taken quite a bit of research to get all of this figured out.

[@CuriousInventor]

months and months :) glad it helped.

[@patrik5123]

Would the successful invention of quantum computing become problematic to bitcoin security?

[@EvilSpeculator]

That was brilliant and in little over 20 minutes answered a ton of questions I couldn't find an answer for in weeks of reading BC related articles/tutorials. Thanks so much for putting this together!

[@relcluse]

Next time: how Bitcoin works IN the Hood

[@Viemexis]

Best explanation of bitcoin I have yet seen. Explanations either tend to be extremely simplistic (which was nice as an introduction) or extremely long and rambling explanations of cryptography.

[@walktothebeach]

Outstanding. So concise. Rapidly presented and without flaws or vocal pauses (the "ums","ahs", and "ers"). Just great.

[@LeakyWicks]

So much packed in 20 minutes yet so well explained. Nicely done.

[@Pedro-un3mk]

Awesome video-lecture! Even after 8 years, for me, at least, is pure gold still! To be able to brilliantly summarize the complexity of the subject in 20 minutes, certainly required some 20 x 10^3 minutes of dedication and love to the matter. Thank you for sharing this masterpiece! Warmest Regards

[@CuriousInventor]

thanks! LOTS of editing and rewriting went into whittling it down to be as concise as possible.

amazing video. very descriptive. The other several videos i saw , gave me more questions , while all answering same questions . Thank you

[@chopcooey]

omg this system is so intelligent and also great explanation; mind = blown

[@matthew9677]

This video is amazing. It answered so many of questions and provides a understandable yet in depth explain of bitcoin. Thank you for this awesome video.

[@lucasashbaugh7818]

This was an awesome explanation, you did an excellent job taking my understanding from beginner to intermediate. Thanks!

[@DoubleBob]

One video. Instant subscribed. Awesome. I love the love for detail and the cool examples.

[@Dushku]

Thank you very much for taking the time to explain this. Plus, you did it in a very straightforward, yet understandable way. Back when I first considered getting into BTC, they were worth about $33. I had numerous reasons for "erring on the side of safety" and part of it was a simple lack of understanding of how it could be safe and anonymous.

[@dsloan4242]

This is a great video in regards to bitcoin, He provides a through explanation alongside a good presentation. It's worth watching the full version, but if you are short on time and need the quickie, the summary starts around 21:15.

[@Divinoamor]

Who controls the nodes or upkeeps the nodes? The sun is the worst enemy for bitcoins. Loss of connection between continents seems like a problem. Smart system.

[@CuriousInventor]

Sure, I'll work on that. Until then, the complete text is on the blog link in the description.

[@AllanAquinoVieira]

Thank you for the video, great simplified explanation of several very complex complex subjects involved in Bitcoin. It made my life so much easier in explaining the workings of BTC to my non technological inclined friends, and family.

[@fernandosecchi9716]

Great video. I've been around bitcoin for a long time. took several courses and nothing have been more revealing than this tutorial. Probably I have a background already to fully understand it. Any way, sooner or later this video is a must in the comprehension of bitcoin. My sincere gratitude.

[@mfricke1947]

This is a brilliant exposition-accurate and brief with not a word wasted. Congratulations (and thanks).

[@NoamHalpert]

quality video.. your detail and patience in explaining is tremendous .. its not something many people have

[@xGeeFx]

Just a small nitpicky note: Addresses in Bitcoin are not exactly the public key. They are hashes of the public key of an address in base58

[@iSuperGeek]

Simply the best educational video. I've been referring my friends to this video when they ask what Bitcoins are.

[@imstillw8ing]

This went way over my head. But I kept listening anyways.

[@FurryMurry7]

Thank you for this video! I've been trying to learn what bitcoin is for ever but it was always too difficult to understand. Your video makes it SUPER EASY to understand how bitcoin works!!! Thank you soo much! I love you!!!! :D

[@FakeButt]

Thank you very much! I watched several videos that failed to explain the concept but yours was exceptionally informational and moderately easy to follow and understand. I may re-watch it later to learn more :)

[@UsaqMadiq]

The best explanation I have come across after much searching...Thanks!

[@nicolastaub4593]

As Dan Kaminsky once said: "The first time you think you understand it, you don't". I felt exactly the same way, but after following your explanations for a few time, I finally got the principle idea.. :) Thanks for the good explanation! ;)

[@buschtoens]

Absolutely great and reasonably detailed introduction to Bitcoins. Well done!

[@wenwei-li2668]

Very clear. By the first part of the video, I understand two points about Bitcoin: a. how one transanction is confirmed; b. how one person is trusted to own enough bitcoins for payment; It is a pity that I have no enought time to watch the whole video.Hope I can finish it later.

[@tikkj]

Extremely useful and informative, thank you :). Now I finally know wtf blockchain technology is and how it can apply to areas outside of bitcoin.

[@ciao716]

i'm writing an essay, for my finals, on bitcoin, finally a good resource where all information are gathered, simply, and summarized efficiently :)

[@LibertySpeak]

This is just what I have been looking for, I'm finally wrapping my head around the blockchain. Thanks so much! :)

[@ViceroyoftheDiptera]

This was excellent. Clearest no-nonsense explanation I've seen.

[@hansgoed2]

Great explanation! Bitcoins have been keeping me busy for quite some time now, but I never really understood how they worked under the hood. Thank you very much!

[@ryanwdavies1]

Thank you for producing such an excellent summary.

[@vandresv]

Thank you very much. From 0 to a pretty good idea of the whole thing. Great video!

[@mfratto]

Very nice explanation. I'm referencing this video and your blog post as required reading for my class. Thanks.

[@TomGeller]

Excellently done! You cleared up some things I wasn't sure of. Thank you. Sending a small tip.

[@JohnS-mq2mu]

Thank you. That was some brilliant and dedicated work putting this video together.

[@gdhorning166]

Very helpful and thorough enough for a serious beginner to understand what is going on.

[@MrAustinValentine]

i think my brain broke....

[@frankkyne8945]

This is by far THE best explanation of how blockchain and bitcoin work. Thank you!

[@TheCrazyInventor]

Very clear explanation, thank you. I'll need to watch it a few more times before I understand how the block chain works, though. Some very complex stuff going on here.

[@RandomBro5]

Thank you so much! :D I'm working on a project for school about Bitcoin, and your video's have been very helpful!

[@aatheus]

Great explanation of the BitCoin system! I had wondered how the transactions actually got bundled up into blocks, and so on.

[@bradr-86]

Best explanation of the system ever. You've done well!

[@NickGore]

I'm still confused but more informed than before lol Thank you for the great, detailed break down!

[@Kei3th1424]

wow.. so many IT terms i didn't understand but somehow i sat watching the whole 22.25 minute. A very good video. Congratulations CuriousInventor. you may have my Like. and a subscriber.

[@CuriousInventor]

Closed Captioning has been setup. Please share if it's helpful!

[@marcostviera]

I have to say that this video is a very amazing piece of wide explanation. There is a few information for begginers that expose the bitcoin system as found in this video.

[@TheChangingWays]

An excellent explanation of how Bitcoin works. Definitely worth watching.

[@bhavikmerchant920]

superb, clear presentation of a complex phenomena. Thanks a lot!

[@Ultramoose]

this actually answered all my questions about bitcoins. and very succinctly.

[@danieljen5672]

Great video. Thanks so much for putting this together. Best explanation I've found to date.

[@davidczu]

Fantastic explanation. Very clear and quite concise. Now it's time to head to the math books to go deeper. Thank you very much!

[@rafacassau]

That's the best technical explanation I ever seen, thank you so much!

[@Seb-de]

Thanks to your video, I finally understood Bitcoins in detail. Very good video.

[@henryp7416]

BEST bit coin tutorial EVER! Well done and perfectly explained. Thank you

[@ShadowJaPa]

Thanks Bro! I'm not well versed in computing so It'd be impossible to fully understand bitcoin. BUT you gave me a hell of a big picture!

[@CuriousInventor]

That's more of a whole series of videos :) The elliptic curve version is a harder-to-understand flavor of RSA cryptography (ie, start there). Elliptic curve version gets away with smaller keys than RSA for same security. In both, public and private keys are generated at the same time. Both are based on math that's easier to do one way than the other. ex: multiplying is easier than factoring. good luck! I do NOT understand either fully.

[@brianb2644]

This is the first video I have watched that helped me actually understand what bitcoin is completely. Extremely helpful. Thank you so much.

[@jedharrisonmoore]

Thank you very much! I will share this with everyone I know interested in bitcoin. To me at least, it was extremely well explained!

[@dragonmining7004]

Fantastic work! Dragon Mining recognizes this as a useful and informative video. 20 minutes worth watching if you're looking for an easy to understand technical explanation of how Bitcoin works.

[@lleuk]

This is a fantastic explanation of what Bitcoin is, and how it works.

[@fredericksetjadiningrat9517]

Excellence video. I gained an insight of the matter. Thanks!

[@moonstriker7350]

Hi, thanks for the very informative video, and I'v got couple of questions if you don't mind: - Doesn't this mean, that transaction logs keep piling and piling up, which can cause problems as more and more people use it more and more often? Can't the logs expand to an (almost) unmanageable size (andor complexity)? - I might be fundamentally wrong here, but from what I gathered, the operations on the logs (which are formulas for the accounts' worth, right?) are done by people who are rewarded by a number of 'fresh' bitcoins (who often invest in specialized hardware). Since bitcoins are finite, what if there are almost no more to give? Would that mean some kind of rise in the cost of processing transactions? - I actually asked the one above before I watched through to the end, and I see it was adressed in the vid. :) I'll leave it there, for a related question: Lets say bitcoin becomes an integral and large part of the forex market (or anything similar) where there is a huge all-in race for anything that can give you some advantage over others. That's how HFT came about. Could that create an escalation feeding into itself, in lets say, transaction fees, based on what you describe: that the ones with fees (or larger fees?) get processed sooner? Thanks!

[@FaraazSulaiman]

Thank you for your explanation. Very clear and easy to understand :)

[@GuilhermeFurst]

My brain hurts, but it is indeed explicative ;)

[@SpiceAndFox]

Great video! A small correction for 18:23: The last Bitcoin will most likely be mined earlier than 2140 due to the increasing network power and the delay of the difficulty adjustments.

[@aplacefaraway]

this is the best explanation I've found on youtube

[@HiAdrian]

This presentation explains it really well, thanks!

[@CuriousInventor]

if you google "bitcoin scaling" there are lots of articles on this. Some nodes can choose to rely on others to keep a record of every transaction. Also, after a spent txn is far back in the block chain, you can discard the details of it and keep only a summary hash. The orig. bitcoin paper talks about this compression.

[@sunny_disposition]

Hey thanks for your efforts curiousinventor. This was a breakthrough in my understanding of btc.

[@databaseexpert]

The BEST explanation yet! THANK YOU!

[@Hoophy]

great video. very informative and you explain this very well to a noob like me with no background in programming and has trouble counting to 10

[@FreshThreadShop]

Great video, exactly what I have been looking for! Appreciate your time making this!

[@LolFishFail]

I'm extremely new to bitcoins and this pretty much answered my security questions. In reality, it looks like bitcoins are more secure than any other form of transaction, which is pretty neat.

[@Maknopono]

Profile Paper on Bitcoin. Sub Question 1 is just a typed version of this video. Thanks for the information!!!

[@thefarmer4586]

Thank you sir, it's the best most detailed video I've seen about this new world. thanks again. I appreciate your efforts.

[@codediporpal]

Wow, nicely done. This answered a lot of questions that had been bugging me.

[@JaySmith-wk8yq]

Amazing description, good job.

[@aratin8]

Thanks for this good video. Its a shame too many people are so ignorant they think its a ponzi scheme.

[@adriancardona9184]

messages won't affect ledgers if the message is sent by the receiver of the money right?

[@sciencoking]

Very insightful. Thank you for explaining!

[@ReinisLusis]

Hey! Thank you! This is best video and goes into great detail. Good job! :)

[@CuriousInventor]

of course! address is in the desc now.

[@LukasFrimerTholander]

This was so good, and very good explained. Keep up the good work

[@winterbreeze23]

Thanks for the great video! I was a bit lost in the blocks chain part, but I gained much more understanding in general! Does everyone who uses bitcoins understand the concepts? While there is no centralised regulation, there has to be a core group that is in charge of the entire system right? Does bitcoin still stand to appreciate in near future?

[@CuriousInventor]

transactions are shared across the network by copying all the time. Keep in mind that txns contain the address of the receiver, so to steal someone else's money, you'd have to swap out your address for theirs. But once you modified a txn like this, the Digital Signature would no longer be valid. Each txn is identified by its hash, so if you tried to resend the same txn, other nodes would simply say "I already have this txn" and ignore it. Not sure exactly what you're asking, hope this helps.

[@alexmcc89]

This is an awesome video about Bitcoins, thank you for making this! I finally have something to point to when trying to explain it to people in more detail!!

[@leathan7]

Right on, i get it in my head crystal clear and study cryptography but i cant explain it like this guy. Hes a guru.

[@Game4Prestige]

Thanks for teaching me bit coin because I've been hearing about it a lot and I finally understand.

[@sandyeyles]

And when they shut down the electrical grid???????????