Private Key

  

Categories: Tech

When you were a kid, you probably used simple codes to send messages. 1=A, 2=B, and so on. (10/5/14/14/25 19/13/5/12/12/19 12/9/11/5 1 2/21/20/20)

Codes get more complicated when you grow up. A private key comes into play with some of these grown-up, more complicated situations. It makes up part of an encryption process, keeping communications and data safe.

A private key is paired with a public key. Both represent long, random numbers. Everyone in a group can know the public key. But the private key is unique to the individual. The combination of the private and public keys provides a much safer access system than, say, using your birth date as a password, or going with “1...2...3...4...5.”

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Finance: What is Bitcoin?4 Views

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and finance Allah shmoop What is Bitcoin shmoop All right

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people Well for starters it's virtual currency What is that

00:11

like Monopoly money Well kind of Okay but wait So

00:14

wh what's not virtual currency This stuff really Bills coins

00:18

gold A check with your validated signature on it when

00:22

you actually have cash in the bank Money in the

00:24

old world is pretty much anything that everyone agrees is

00:27

valuable Like over the history of civilization People have used

00:30

all sorts of weird items to pay for things like

00:33

shells and cattle heads in whiskey and stuff like that

00:36

Credit cards apple pay in Venmo Yeah way easier to

00:40

buy a lot with then 182 seashells All the above

00:44

are Fiat currency which means they're not backed by any

00:48

specific commodity or thing of value Instead they're backed by

00:52

the government that issues them a handshake and a promise

00:55

and that's pretty much it Well in the old days

00:57

if you had a dollar meant there was a dollars

00:58

worth of gold out there with your name on it

01:01

you could walk into a bank and demand your little

01:03

chunk of the yellow metal in return for that paper

00:53

$20 bill The dollar was worth a dollar because well

01:09

you could change it into that much worth of gold

01:12

What we pretty much gave up on the gold standard

01:14

in America anyway for good around the time of the

01:17

Great Depression and now dollars worth a dollar Because why

01:20

Well we say it is or more precisely because the

01:23

government says it is Yeah the United States right to

01:26

tax its hard working citizens is what backs up that

01:29

promise Well Fiat currencies air printed by a government and

01:32

have value in part Or mostly because while the citizens

01:35

trust in the government and in part well we all

01:38

agree that paper bill has value Okay so now to

01:41

the virtual part of virtual currencies have moved on from

01:44

government participation They have value because well the users of

01:48

them say they have value That's it Not much else

01:51

to it The idea of virtual currencies isn't really all

01:54

that new Ask your parents about these things Yes original

01:58

Disney dollars You'd buy a book of them for like

01:59

20 bucks or so in the A ticket on Lee

02:03

got you into like the garden tour of carefully manicured

02:06

roses is by Carnation Plaza Then you have the e

02:10

ticket at the other end the best one that got

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you into the parts of the Caribbean in the haunted

02:14

house You know when it came out well the Disney

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dollars were a virtual currency on Lee They were on

02:19

paper and well really low tech Yeah And then they

02:21

got wet after you landed through the Matterhorn that get

02:24

all pulped out you have to throw him out Was

02:26

very sad All right Zip forward 1/2 century Nowadays the

02:28

virtual part means the same thing It means when we

02:31

say virtual reality Basically it means that exists in a

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computer It's not riel It's an algorithm somewhere Well some

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clever entrepreneurs decided that the U S greenback didn't offer

02:42

enough flexibility or rough you know anonymity You know if

02:45

you wanted to buy nuclear secrets or child porn or

02:48

illicit drugs or any other ill miserable and awful purchase

02:52

that buyers didn't want anyone around them to know that

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you were buying while then here was your ticket Bitcoin

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is security It comprises a complex system of quote log

03:01

in rappers unquote whereby a user must wrap around content

03:05

all kinds of security codes which protect the valued financial

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nut inside the hard shell Initially the market was seated

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with a kind of financial Easter egg hunt where the

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controller's a Bitcoin buried value nuts all over the web

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Nut hunters had to answer extremely complex math questions in

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order to win their prizes But if they won they

03:24

were worth real cash money Bitcoin is the most famous

03:26

virtual currency but it's far from the on ly one

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e Syria is a big one You've also got light

03:31

Klein Dodge a Coin and Manero There are lots and

03:34

lots of competitors and there's a whole market of people

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looking to make new ones all the time They have

03:38

conventions and workshops and organizations Yeah it's a thing And

03:42

why not If you can get your virtual currency Tio

03:45

take hold while you have an instant fortune literally printing

03:49

your own money but not counterfeit like actually your own

03:52

money like you were the central bank or treasury of

03:55

your own country The trick of course is getting other

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people to come on board and trust you You need

04:00

other people to agree that your virtual currency is actually

04:03

worth something Well a big part of the sell job

04:05

has to do with how the new currency is propagated

04:08

How are more of them made How are they traded

04:11

How do they work You know because it doesn't take

04:13

much to make more virtual currency Like almost literally nothing

04:17

at all Hear it Shmoop Central We started making shmoop

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points Doesn't take much input to make a 10 more

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shmoop points or 1,000,000 or a trillion more shmoop lines

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It all takes the same virtually Neil computing power But

04:28

when people used gold for money well they knew that

04:31

gold supply was limited There was gold mining that brought

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new gold to the surface but the total amount of

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gold was finite and it was really hard to get

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while sometimes it just showed up in a river in

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California or South Dakota or something And people would rush

04:42

there with hands and pick axes But generally speaking globally

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someone couldn't just announced that they now had another 1,000,000

04:49

ounces of gold in their computer deal with it Well

04:51

virtual currencies try to follow this model in their own

04:54

virtual way to the extent that while the process usually

04:57

used to produce more virtual currency is called mining Yes

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from the gold concept new supplies of the currency appear

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using harder and harder math problems done by computers Convincing

05:08

users that this process of making the currency is on

05:11

the up and up is part of the challenge of

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founding a new currency But national currencies have a head

05:16

start in this area right You trust the United States

05:19

more than some kid who was born in 1989 by

05:22

virtue of being sovereign states while recognized by other sovereign

05:26

states at least geographic countries have some credibility but same

05:30

forces come into play Gold needed to be mined and

05:32

there was a finite amount of that on Earth Countries

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could just print all the currency they wanted using higher

05:37

and higher denominations like you know with virtual currencies Well

05:39

there was no practical limit no real cost of production

05:43

But there is a consequence to producing tons of the

05:46

stuff If a country starts printing more and more currency

05:48

it sparks inflation devaluing its own individual currency unit eventually

05:54

maybe getting into hyper inflation territory and people running around

05:57

with wheelbarrows full of cash to buy a carton of

05:59

milk The same supply demand dynamics of basic EQ on

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work for regular currencies and for virtual currencies Think of

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the competing virtual currencies like the different national currencies we

06:10

have in the non virtual world We've got U S

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dollars in British pounds and euros and again in Swedish

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krona and a whole bunch Other stuff right Well these

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currencies worked perfectly in their home countries but out of

06:20

context there value gets a little shaky Try to use

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some Swedish krona to buy a hot dog from a

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New York street cart vendor guy or offer again to

06:27

buy meatballs off a meatball cart in Stockholm That's kind

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of funny but it doesn't work We'll Bitcoin and the

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other Cryptocurrencies have similar problems If you want to buy

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a rocket launcher on the dark Web Bitcoin works great

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But if you want to buy a box of cookies

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from the Girl Scouts standing in front of the grocery

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store well it's not gonna work You'll need some good

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old fashioned US dollars In that way the relationship of

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crypto currencies to the general market is similar to how

06:50

we treat stocks that trade on the stock exchange Their

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recognised to have value sure but the value is often

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tracked by an outside currency like the dollar Well Bitcoins

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and other virtual currencies trade on markets You Khun swap

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them out for real dollars and use those dollars to

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buy Girl Scout cookies or street hot dogs or whatever

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Just like stocks you might hold 100 shares of Google

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but if you want to spend some of their value

07:11

you have to turn them into dollars right like a

07:13

stock or any kind of market Traded anything Bitcoin and

07:16

other virtual currencies or subject to bubbles and bus The

07:19

bubble part happened for Bitcoin in 2017 At start of

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the year one Bitcoin was valued about 900 bucks Then

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it took off sky rocketing through the year it peaked

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in December of that year it just under $20,000 Then

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the bubble burst At the end of well January 2018

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it had fallen back to around 11,000 was below 10,000

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by February and within a year of its peak it

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was in the $3000 range Yeah about 80% off its

07:43

highest value well even off its highest levels The market

07:46

for Bitcoin remains big because of its shifting value The

07:48

size of the Bitcoin market changes is the dollar denominated

07:51

value of the currency moves But as of late 2018

07:55

early 2019 the market cap for Bitcoin has bounced around

07:59

$100,000,000,000 Well the idea behind Bitcoin maybe great get the

08:03

government out of currencies Borderless money for the future But

08:07

their issues One is security Like governments have to fight

08:09

counterfeiters The more valuable of virtual currency becomes well duff

08:13

The more likely there are hackers out there looking to

08:16

crack the code and they don't have to be sinister

08:18

creep working in secret in their mommy's basement Countries can

08:21

fight counterfeiters because they can pass laws making counterfeiting illegal

08:25

Bitcoin can't do that meaning that if Google wanted to

08:28

put its sizable brainpower to work making Bitcoins free for

08:31

anyone well there'd be nothing to stop them along the

08:34

same lines Virtual currencies could end up trading one authority

08:37

like governments for another like corporations like if Google or

08:40

Apple or Disney decided to make their own currencies and

08:43

squeeze out Bitcoin Any theory Um and the others Well

08:46

that happens We're looking at the future when the Girl

08:48

Scout is at the door knocking away and all she

08:50

takes is ah Google coin And you only have Disney

08:53

dollars Three point Oh and your virtual wallet Yeah No 00:08:56.744 --> [endTime] cookies for you Morning

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