1
00:00:01,150 --> 00:00:03,390
We end this lecture with
some concluding remarks.

2
00:00:03,390 --> 00:00:06,784
The success of Bitcoin is
actually quite remarkable if

3
00:00:06,784 --> 00:00:11,358
you consider all the ventures that
failed trying to do what Bitcoin does,

4
00:00:11,358 --> 00:00:14,325
which is create an electronic
payment system.

5
00:00:14,325 --> 00:00:16,662
Of all the unique
contributions of Bitcoin,

6
00:00:16,662 --> 00:00:20,904
the one contribution that is probably
the most useful, not just for Bitcoin, but

7
00:00:20,904 --> 00:00:25,420
it's been ported to other technologies and
alt-coins, is the Blockchain.

8
00:00:25,420 --> 00:00:30,520
No other proposal for e-cash had
a solution like the Blockchain in it.

9
00:00:31,780 --> 00:00:36,701
Another thing that Bitcoin succeeded at,
is they launch with user-to-user

10
00:00:36,701 --> 00:00:41,486
transactions, as well as supporting
user-to-merchant transactions.

11
00:00:41,486 --> 00:00:42,841
The lack of support for

12
00:00:42,841 --> 00:00:48,050
user-to-user transaction is a reason why
a lot of the early e-cash systems failed,

13
00:00:48,050 --> 00:00:51,780
because you needed merchants to
get on board with the system.

14
00:00:51,780 --> 00:00:53,914
You needed the banks to get
on board with the system.

15
00:00:53,914 --> 00:00:57,619
In Bitcoin's case, since it
supported user-to-user transactions,

16
00:00:57,619 --> 00:01:01,859
then in the early days of Bitcoin, when
merchants weren't interested in using it,

17
00:01:01,859 --> 00:01:03,670
there still was a use for Bitcoins.

18
00:01:03,670 --> 00:01:07,930
It was still useful for something and
they acquired a lot of users who formed

19
00:01:07,930 --> 00:01:12,264
a community that would advocate for
merchants to start accepting Bitcoin.

20
00:01:12,264 --> 00:01:15,564
And so by allowing user-to-user
transaction, it allowed them to get

21
00:01:15,564 --> 00:01:19,090
through this transitionary period
where merchants started accepting it.

22
00:01:20,350 --> 00:01:23,270
Another unique aspect of Bitcoin
that no other proposal made,

23
00:01:23,270 --> 00:01:28,890
at least not explicitly, is the idea of
using public keys as peoples' identities,

24
00:01:28,890 --> 00:01:30,630
instead of real names.

25
00:01:30,630 --> 00:01:33,720
In this case,
it maintains a certain level of anonymity.

26
00:01:33,720 --> 00:01:38,530
And in past lectures in this series, we've
looked at the anonymity of Bitcoin and

27
00:01:38,530 --> 00:01:40,200
how much anonymity it actually provides.

28
00:01:40,200 --> 00:01:44,120
But, if you're careful and diligent
about using fresh Bitcoin addresses,

29
00:01:44,120 --> 00:01:47,690
then you can maintain some
aspect of anonymity, okay?

30
00:01:47,690 --> 00:01:50,830
This level of anonymity is In some sense

31
00:01:50,830 --> 00:01:55,570
weaker than a lot of the previous
proposals but in some sense it's stronger.

32
00:01:55,570 --> 00:01:58,530
One of the proposals
that strongly advocated

33
00:01:58,530 --> 00:02:02,930
anonymity was Chaum's E-Cash
which was realized by DigiCash.

34
00:02:02,930 --> 00:02:04,650
But even in that system,

35
00:02:04,650 --> 00:02:08,340
it was only the senders of the money
that maintained their anonymity.

36
00:02:08,340 --> 00:02:09,770
It wasn't the merchants.

37
00:02:09,770 --> 00:02:13,830
In Bitcoin we have pseudonymity but
both the senders and the merchants or

38
00:02:13,830 --> 00:02:14,600
the receivers,

39
00:02:14,600 --> 00:02:18,470
whether their users are merchants, they
maintain the same level of pseudonymity.

40
00:02:21,920 --> 00:02:24,390
Here are some final
lessons that we can learn

41
00:02:24,390 --> 00:02:28,930
from Bitcoin as through the lens of
the previous systems that we've looked at.

42
00:02:28,930 --> 00:02:31,040
The first is to not give up on a problem.

43
00:02:31,040 --> 00:02:35,332
Just because people failed for 15 years or
20 years at developing e-cash systems,

44
00:02:35,332 --> 00:02:38,874
it doesn't mean that there isn't
a solution out there that would work.

45
00:02:38,874 --> 00:02:44,260
Satoshi worked through the fact
that these proposals had failed.

46
00:02:44,260 --> 00:02:47,614
A lot of people didn't take Bitcoin very
seriously in the early days because it

47
00:02:47,614 --> 00:02:51,201
looked just like another proposal to add
to the list of proposals that failed.

48
00:02:51,201 --> 00:02:57,469
But, eventually, he won everyone over
with the ideas and it succeeded.

49
00:02:57,469 --> 00:03:00,300
The second is to be willing to compromise.

50
00:03:00,300 --> 00:03:04,580
If you want perfect anonymity or
perfect decentralization or

51
00:03:04,580 --> 00:03:07,880
if you want to have transactions
that are perfectly offline without

52
00:03:07,880 --> 00:03:10,280
having to broadcast into
some peer to peer network.

53
00:03:10,280 --> 00:03:12,080
If your goal is perfection,

54
00:03:12,080 --> 00:03:14,810
then you're going to have to compromise
in other areas of the protocol and

55
00:03:14,810 --> 00:03:19,080
you probably aren't going to end up
with a very useful protocol in the end.

56
00:03:19,080 --> 00:03:22,750
So, Bitcoin is interesting because
it compromises in the right ways.

57
00:03:22,750 --> 00:03:27,600
It scales back anonymity a little
bit to psuedonimity, and it requires

58
00:03:27,600 --> 00:03:31,230
online transactions, where effectively
you're connected to a peer network.

59
00:03:31,230 --> 00:03:35,210
But with those serve compromises in place,
it allows

60
00:03:35,210 --> 00:03:39,390
Bitcoin to do a lot of other interesting
things that allowed it to succeed.

61
00:03:39,390 --> 00:03:44,320
The final thing I'll say about Bitcoin
is that it has success through numbers.

62
00:03:44,320 --> 00:03:46,320
Bitcoin was able to build up a community.

63
00:03:46,320 --> 00:03:50,460
Both a community of users who were
passionate about Bitcoin, and

64
00:03:50,460 --> 00:03:54,260
developers who were willing to contribute
to the open source technology.

65
00:03:54,260 --> 00:03:57,302
This is a markedly different
approach than previous attempts

66
00:03:57,302 --> 00:04:00,228
at e-cash where they were
usually developed by a company,

67
00:04:00,228 --> 00:04:04,397
and the only advocates for the technology
were the employees of the company itself.

68
00:04:04,397 --> 00:04:09,027
To a large extent, Bitcoin's success
relies on the fact that they had a strong

69
00:04:09,027 --> 00:04:13,516
supporting community who pushed
the technology, got people using it, and

70
00:04:13,516 --> 00:04:15,148
got merchants to adopt it.