 We�re starting a new series on �Advancers� skills in the blockchain. In this video we will be teaching on blockchain basis. Today�s topics are 1. What problems does blockchain solve? 2. Bitcoin gives birth to blockchain. A core characteristic of a traditional database is that it typically has a central authority that governs it. All rights to the database are owned by the organization that creates it. They can decide who has access to it and what types of access they can actually have. They also decide, for example, what is stored in it, what is deleted and what is archived. This design has at least two potential weaknesses to it. First, if a system relies on the central database, this can result in a single point of failure. If either the central authority is compromised, such as hackers getting administrative login names and passwords, or a backdoor is exposed, the database can be subject to all manner of risk. The second potential weakness is that all power is held by the central authority. Now let�s be clear, in computing this is generally being a good thing. For example, if you run an e-commerce website, you probably want total control over it. You as the central authority, perhaps as CEO or CTO, gets to decide all aspects of that environment, including shutting it down if that�s what you decide. However, central authority often requires dedicated personnel with special skills. It also requires, depending on the type of system, many human checks and balances, such as complex approval workflows. These systems are sometimes prone to errors and access delays. Intuitively, this also means that humans remain the final arbiter of who has authority and whether a transaction is valid. We see this in most contract work. A contract between two entities completed over the Internet still requires one or more central authority validators. For example, with a mortgage, banks must validate available funds and approve loans. Title companies must validate properties and legal professionals must be required to validate signatures and other legal requirements. Each of these independent and historically important central authorities has unique power that levies considerable overhead in a mortgage transaction. The transactions written to the relevant databases all take time to process. They also impose costs. Are vulnerable to hacking. Provide limited opportunity for participation from those impacted, requires special skills and can be error-prone. Up until now, we�ve had to accept these overheads and their costs. It�s been this way because of, for example, the high human trust requirements of each transaction and many technological limitations. However, these overheads and limitations become the ideal solution targets for a blockchain system. The novelty of this technology means that Sulfur code can replace traditional human trust mechanisms. It also means that authority over decisions can be distributed across participants, resulting in the elimination of the risks and challenges of central power. Blockchains design also improve security and the integrity of all types of transactions. These qualities give blockchain technology remarkable power in a wide range of applications. How it does this will be the subject of an upcoming video. But first, let�s take a look at how Bitcoin, the popular cryptocurrency gave birth to blockchain technology. Let�s talk about the origin of blockchain. The fact that the blockchain emerges as the �essential supporting mechanism for a new digital currency� will play an important role in our understanding of this technology. The first mention of Bitcoin, a new form of electronic money, showed up in a proposal paper written by Satoshi Nakamoto in 2008. Turns out this was not a real person�s name. Speculation is that it was a group of writers who used the pseudonym. However, to this day, the mystery is still unresolved. At the heart of this proposal was a solution, to the double spend problem. We can all recognize this problem through how easy it is to make unlimited copies, of digital items. If a digital currency can be simply copied, it will. For obvious reasons, it�s never going to be viable as money. Satoshi solved this double spend problem. I�ll describe the basics of how later on. In 2009, the proposal for Bitcoin was built and became real as an open-source software project. Open-source so far permits anyone to inspect, modify and enhance it. This important decision has enabled thousands of other crypto currencies to be created from the original Bitcoin code. Bitcoin enabled a digital currency that could be used person-to-person without the need for any intermediaries. It was the opposite of all other forms of typical currency were used to. Specifically, the currency was built to exist outside the banking system, completely independent and free of any government or regulator and unconcerned with borders and other traditional financial system limitations. As a currency, Bitcoin does not exist in a physical form. There are no coins or paper notes. It�s made of bits, ones and zeros, and resides and operates natively on computer devices and networks. When a transaction takes place, it is recorded in identical copies of a blockchain database that live on computers in a distributed network. These transactions are validated and stored through a set of innovative and unique blockchain processes, which I discuss later. Top of mind for those curious about Bitcoin is how it functions as a currency and how it acquires value. Traditional money, that which is backed and maintained by the government, and we call it fee currency, must meet four criteria to have function and value. Supply, demand, utility and trust. Supply and demand will typically determine value. Utility means it can be used to buy and sell products and services. And trust means having the confidence that it will actually store value and be accepted for transactions. Just look at those dimensions as they relate to Bitcoin. When it was launched in 2009, a finite number of 21 million Bitcoins was established. These Bitcoins are introduced gradually for use via a process of mining. An important concept I�ll explain later. As time passes, mining is becoming increasingly difficult and costly, much like harvesting silver or golden oil. And therefore has limited supply, a cost to mine and a demand that is relative to its market value. Something determined by how much each person is prepared to pay for it. Now can Bitcoin be used to buy anything? Well, absolutely. For example, all types of products and services can be purchased using it. This means it has utility. Finally, over the course of the past 10 years, Bitcoin has gained credibility as more people participate, greater uses have been adopted and the technology has matured. Trust has been established. Bitcoin and the thousands of cryptocurrencies that have followed have succeeded beyond most people�s expectations. They have stunned our global financial systems and perplexed governments and economists. They have become the basis for new innovation in organizations. Acknowledging the incredible achievements of Bitcoin, the underlying blockchain technology, may be an even more surprising success story. Without Bitcoin, blockchain as we know it today would either have never emerged as it has or would have come about later in a completely different way. In this way, we must recognize and give credit to Bitcoin, a project that introduced a viable creep talk currency for giving birth to the version of blockchain we know today.