We end this lecture with
some concluding remarks.
The success of Bitcoin is
actually quite remarkable if
you consider all the ventures that
failed trying to do what Bitcoin does,
which is create an electronic
payment system.
Of all the unique
contributions of Bitcoin,
the one contribution that is probably
the most useful, not just for Bitcoin, but
it's been ported to other technologies and
alt-coins, is the Blockchain.
No other proposal for e-cash had
a solution like the Blockchain in it.
Another thing that Bitcoin succeeded at,
is they launch with user-to-user
transactions, as well as supporting
user-to-merchant transactions.
The lack of support for
user-to-user transaction is a reason why
a lot of the early e-cash systems failed,
because you needed merchants to
get on board with the system.
You needed the banks to get
on board with the system.
In Bitcoin's case, since it
supported user-to-user transactions,
then in the early days of Bitcoin, when
merchants weren't interested in using it,
there still was a use for Bitcoins.
It was still useful for something and
they acquired a lot of users who formed
a community that would advocate for
merchants to start accepting Bitcoin.
And so by allowing user-to-user
transaction, it allowed them to get
through this transitionary period
where merchants started accepting it.
Another unique aspect of Bitcoin
that no other proposal made,
at least not explicitly, is the idea of
using public keys as peoples' identities,
instead of real names.
In this case,
it maintains a certain level of anonymity.
And in past lectures in this series, we've
looked at the anonymity of Bitcoin and
how much anonymity it actually provides.
But, if you're careful and diligent
about using fresh Bitcoin addresses,
then you can maintain some
aspect of anonymity, okay?
This level of anonymity is In some sense
weaker than a lot of the previous
proposals but in some sense it's stronger.
One of the proposals
that strongly advocated
anonymity was Chaum's E-Cash
which was realized by DigiCash.
But even in that system,
it was only the senders of the money
that maintained their anonymity.
It wasn't the merchants.
In Bitcoin we have pseudonymity but
both the senders and the merchants or
the receivers,
whether their users are merchants, they
maintain the same level of pseudonymity.
Here are some final
lessons that we can learn
from Bitcoin as through the lens of
the previous systems that we've looked at.
The first is to not give up on a problem.
Just because people failed for 15 years or
20 years at developing e-cash systems,
it doesn't mean that there isn't
a solution out there that would work.
Satoshi worked through the fact
that these proposals had failed.
A lot of people didn't take Bitcoin very
seriously in the early days because it
looked just like another proposal to add
to the list of proposals that failed.
But, eventually, he won everyone over
with the ideas and it succeeded.
The second is to be willing to compromise.
If you want perfect anonymity or
perfect decentralization or
if you want to have transactions
that are perfectly offline without
having to broadcast into
some peer to peer network.
If your goal is perfection,
then you're going to have to compromise
in other areas of the protocol and
you probably aren't going to end up
with a very useful protocol in the end.
So, Bitcoin is interesting because
it compromises in the right ways.
It scales back anonymity a little
bit to psuedonimity, and it requires
online transactions, where effectively
you're connected to a peer network.
But with those serve compromises in place,
it allows
Bitcoin to do a lot of other interesting
things that allowed it to succeed.
The final thing I'll say about Bitcoin
is that it has success through numbers.
Bitcoin was able to build up a community.
Both a community of users who were
passionate about Bitcoin, and
developers who were willing to contribute
to the open source technology.
This is a markedly different
approach than previous attempts
at e-cash where they were
usually developed by a company,
and the only advocates for the technology
were the employees of the company itself.
To a large extent, Bitcoin's success
relies on the fact that they had a strong
supporting community who pushed
the technology, got people using it, and
got merchants to adopt it.