How Bitcoin Works Under the Hood 

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

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

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

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.

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: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-t5JGQXCTe3c.html

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.

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

Next time: how Bitcoin works IN the Hood

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!

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

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.

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

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

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

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

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

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.

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

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.

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! ;)

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

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

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.

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.

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.

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

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

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

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.

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

i think my brain broke....

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

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 :)

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

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

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!

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

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.

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.

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

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

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.

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.

My brain hurts, but it is indeed explicative ;)

Thank you for producing such an excellent summary.

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.

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

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

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

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

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

I feel stupid. I watched the video twice and my head is still spinning

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.

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

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

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

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

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

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!

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

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!

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

If you are no longer confused, then you obviously don't understand bitcoins.

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

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

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.

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

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

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

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

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

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

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

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

I think this video is great at explaining Bitcoin and how cryptocurencies work in general (although they have differences from Bitcoin, so not everything has to apply), but I think the video missed one thing: What happens when all blocks are mined out? In Bitcoin there is only limited amount blocks to be mined out and transactions are tied to blocks, but what will happen when blocks no longer generate anything for their miners? We can speculate on how people react to that, but I am more interested about what (if anything) will change on the transactions and blocks when no coins can be mined out of them. Will the only way to gain money from having a miner up be from transactional fees and how is it decided who gets the money from the fees?

Actually one of the best bitcoin movies I've watched. Thank you for explaining this sh*t for me :)

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.

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

this is the best explanation I've found on youtube

Hi, thanks for the video and your time, i have a question - lets say some one is making a transaction with a large amount of Bitcoins for some merchandise that needs to be shipped right away once payment is confirmed. Would the best way to warranty/secure/confirm the funds be to withdraw or transfer the funds to a Bank account ? or exchanging the Bitcoins to a currency ($,£,€,etc)? I understand that by doing that there would be a fee. But at least is confirmed. whats your input on this?

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

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

Amazing description, good job.

You're very good at explaining this kind of stuff, can you please try to explain how i can calculate a public key from a private key? I've read that it has something to do with elliptic curves and that the public key is a coordinate

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

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

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

ITS a great start for a new money. Great video, even if i understood very little of it :)

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

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

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

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

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

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

re: Dan - Thanks for this video, it WAS great! I feel I have good overall concept of bitcoin, while not understanding the math.

CuriousInventor Yeah, one thing that you left out was when the software randomly guesses an address that happens to already be in use. You just say that the chances are very small, but not what happens if that does happen. If this currency is to make it long term doesn't that increase the changes of happening with every guess. There may be a fail safe but you didn't mention it. Maybe you can release a comment about this.

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?

thanks! I added a correction annotation to the video.

Standard behaviour is that value of transaction you enter while sending is the amount that will arrive to the payee. The fee is charged extra. The rules for calculating the fees across the network are not really consistent yet, but there is a plan to standardize the fees based on different properties of the used outputs. Changes will go live after next major Bitcon-qt release.