#1 - Cryptocurrencies from scratch: databases, the banking world, and distributed systems

The hosts discuss the life cycle of a transaction, including the payment and settlement processes. They explain that payments can vary depending on the type of transaction, such as retail, remittances, or e-commerce. Settlements can be done through ACH or RTGS systems, with the latter involving real-time gross settlement in central bank money. The hosts also touch on the trust issues between banks and the potential risks of bankruptcy. They clarify that money doesn't disappear when a bank goes bankrupt, but rather the government steps in to ensure orderly repayment. The conversation concludes with a discussion on the structure of a bank's balance sheet and the distinction between illiquid assets and liabilities. The conversation delves into the complexities of the life cycle of a transaction, including the role of commercial banks, central banks, and payment infrastructures. It explores the concept of liquidity and the challenges banks face in maintaining sufficient liquidity to meet customer demands. The conversation also touches on the importance of standardization and security in payment systems, with a focus on the role of Swift in facilitating communication between banks. The discussion highlights the need for coordination and cooperation among various actors in the financial system to ensure smooth and efficient transactions. The conversation explores the tension between Swift and Russia, the role of Swift in the global financial system, and the relationship between Swift, Visa, and Mastercard. It also delves into the concepts of clearing and settlement, the potential of cryptocurrencies and stablecoins, and the perception of traditional finance (TradFi) towards crypto. The discussion highlights the need for collaboration and adaptation between traditional finance and crypto technologies. The conversation explores the topics of stablecoins, central bank digital currencies (CBDCs), and the challenges and opportunities they present. It discusses the differences between stablecoins and traditional banks, the potential of stablecoins to disrupt the payment system, and the failures of previous attempts by Facebook to create a payment system. The conversation also delves into the motivations behind the development of CBDCs, the different components of CBDCs, and the potential impact on retail and wholesale payment systems. The challenges of regulating cryptocurrencies and ensuring the security and stability of the financial system are also discussed. keywords: transaction life cycle, payment, settlement, retail, remittances, ACH, RTGS, bankruptcy, trust, money circulation, balance sheet, transaction life cycle, commercial banks, central banks, payment infrastructures, liquidity, standardization, security, Swift, Swift, Russia, global financial system, clearing, settlement, Visa, Mastercard, cryptocurrencies, stablecoins, traditional finance, TradFi, stablecoins, central bank digital currencies, CBDCs, payment system, Facebook, regulation, fraud, transparency, financial stability

Bitcoin was the first decentralized consensus protocol, but it was different from traditional Byzantine fault-tolerant (BFT) protocols. Bitcoin prioritized decentralization and liveness over safety, allowing for forks and probabilistic finality. BFT protocols, on the other hand, prioritize safety and typically stop producing blocks in the event of a network split. Bitcoin's consensus is achieved through mining and the longest chain rule. Safety in consensus means that participants agree on a chain of blocks, while liveness ensures that new blocks can be produced. BFT protocols are of interest in the blockchain context due to Bitcoin's limited transaction capacity. In this part of the conversation, Mathieu explains the security and speed considerations in Bitcoin and BFT protocols. He discusses how increasing the size of blocks in Bitcoin can degrade security and the annoyance of probabilistic finality. He also highlights the high energy consumption of Bitcoin mining. Mathieu then explains the difference between crash-resistant protocols like Paxos and Raft and BFT protocols like PBFT. He discusses the assumptions made in BFT protocols and the trade-offs between safety and liveness. Mathieu also explains the different network models, including asynchronous, synchronous, and partially synchronous, and their impact on the protocols. Finally, he provides an overview of reliable broadcast and consensus protocols, including the role of leaders and the importance of certificates. The conversation explores the complexity of view changes in consensus protocols and the renaissance of asynchronous protocols. It discusses the use of leader rotation and locking values in consensus protocols. The conversation also delves into the concept of user chains and microchains in the Linear framework, highlighting the benefits of parallel chains for scalability and fast reading from the blockchain. It touches on the idea of consensus as a service and the potential applications of Linear as a layer 2 solution. The conversation concludes with a discussion on the need for consensus in blockchains and the use of FastPay for payments and atomic swaps. keywords: Bitcoin, consensus protocol, decentralized, BFT protocols, safety, liveness, mining, longest chain, probabilistic finality, network split, transaction capacity, Bitcoin, BFT protocols, security, speed, block size, probabilistic finality, mining, crash-resistant protocols, Paxos, Raft, BFT, network models, asynchronous, synchronous, partially synchronous, reliable broadcast, consensus protocols, leaders, certificates, view changes, consensus protocols, asynchronous protocols, leader rotation, locking values, user chains, microchains, Linear framework, parallel chains, scalability, fast reading, consensus as a service, layer 2, FastPay, payments, atomic swaps 00:00 Introduction 01:30 Bitcoin: The First Decentralized Consensus Protocol 12:14 Consensus in Bitcoin: Mining and the Longest Chain Rule 18:29 The Trade-Off Between Safety and Liveness in Bitcoin 21:20 Understanding Safety and Liveness in BFT Protocols 24:19 BFT Protocols: A Solution for Blockchain's Transaction Capacity 26:53 The Security Considerations in Bitcoin 31:12 The Difference Between Crash-Resistant and BFT Protocols 37:24 The Impact of Network Models on BFT Protocols 54:36 Reliable Broadcast and Consensus Protocols 01:04:35 The Role of Leaders and View Change in BFT Protocols 01:08:21 Exploring the Complexity of View Changes and Leader Rotation in Consensus Protocols 01:10:20 The Renaissance of Asynchronous Protocols and the Use of Leader Rotation 01:15:05 User Chains and Microchains: Scalability and Fast Reading from the Blockchain 01:17:59 Linear as a Layer 2 Solution and Consensus as a Service 01:24:26 FastPay: A Simple and Decentralized Payment System 01:30:25 Atomic Swaps and Escrowed Assets in Linear

In this episode, David Wong introduces Ethereum and explains its account-based model and the concept of smart contracts. He compares Ethereum to Bitcoin and highlights the advantages of Ethereum's more expressive programming capabilities. He also discusses the execution of transactions and the role of the Ethereum network in maintaining the state of smart contracts. keywords: Ethereum, smart contracts, account-based model, transactions, Ethereum network Chapters 00:00 Introduction to Ethereum and its Importance 02:02 Smart Contracts: Programming Money in Ethereum 03:30 Account-Based Model in Ethereum 11:11 Executing Transactions in Ethereum 14:08 Consensus and the Ethereum Network

In this episode, David Wong interviews Kevin Hurley and Alex Akselrod to discuss layer 2 solutions on Bitcoin. They explain that layer 2 (L2) is a scalability solution that sits on top of the Bitcoin blockchain and adds additional functionality and programmability. They discuss the history of L2s, mentioning Namecoin and colored coins as early examples. They also explore the distinction between L2s and sidechains, with L2s typically allowing for unilateral exits and sidechains relying on federations or merge mining. They mention projects like Blockstream, Stacks, and Rootstock as examples of L2s or sidechains on Bitcoin. The conversation explores the concept of multi-signature (multi-sig) and its role in layer 2 (L2) solutions like Liquid. It also delves into the workings of the Lightning Network, which enables instant and low-cost transactions on Bitcoin. The Lightning Network operates through payment channels, where users can push 'beads' (Satoshi's) back and forth. The conversation also touches on the challenges of centralization in Lightning Network and the role of LightSpark in making Lightning more accessible and user-friendly.

In the 5th episode of this series I interview Arik Sosman (our very first guest!) in order to learn more about Bitcoin transactions. Specifically, how the Bitcoin scripting language works, and what UTXOs are! You can find out more about Arik by following him on twitter: https://twitter.com/arikaleph?lang=en

In this fourth episode I stick with Bitcoin to talk about 51% attacks and double spending in more details. In the second part of the podcast I explain what type of data structure merkle trees are, and why they are used in pretty much all cryptocurrencies.

In this third episode we'll dig more into the tech of Bitcoin. But for that, we'll need to talk briefly about cryptographic hash functions and how they work. Once done, we'll talk about mining, proof of work, chains of blocks, and mining pools!

In the previous episode we briefly talked about what cryptocurrencies fundamentally are, and what problems they attempt to solve. In this episode we'll dig int our very first cryptocurrency: Bitcoin. This will be a high-level overview that will cover what the software looks like, what cryptographic signatures are, and who are these miners who process transactions.

This is the first episode of a series on cryptocurrencies. In this series I will tell you about cryptocurrencies from scratch. This first episode is quite non-technical and should be easy to understand for most folks. I will explain what databases are, how banks around the world move money around, and what cryptocurrencies fundamentally offer. In the next episode I will dig more into the first ever cryptocurrency: Bitcoin.