It’s Just Math(s)! | Bitcoin Education

Video Transcript:

hello there and welcome to the hash power Academy my name is Jake I’m the lead educator here at the Academy and this is a place that we delve into anything about Bitcoin and everything about Bitcoin teaching teaching from a fundamentals first perspective this is to say that we delve into everything of the energy sector the Bitcoin mining compute aspect of things that bridge and Export electricity into the digital world to produce Bitcoin blocks Bitcoin blocks are a database system system of money and those monetary units that are just ones and zeros moving around different wallets that database system is updated by energy and so we have a digital form of money that requires energy to update the database what this does is create a form of money with a direct pricing issuance and settlement from electricity and what this does is directly align our Digital World of money to something physically real which creates perfect alignment with humans because everything in our life costs time and energy to produce you have to eat if you don’t you die and with Bitcoin it’s the same it has to consume energy to issue and update this currency system and as we expand more energy and more compute underneath a fixed supply of 21 million units you gain more purchasing power isn’t that an interesting approach and it’s all hidden in the language because Fiat money has a loss of purchasing power cuz they don’t increase the expansion of productivity in our Fiat monetary system they try to they expand the units at the top when you expand the numerator the value per unit drops and so house prices are not going up the currency is going down and so the topic of today’s video is it’s just math if it’s not quite obvious with all these sorts of weird and wonderful numbers shown here and what I’d like to do is just take you through all of these pieces and how they inter connect together how you can use little tips and tricks to sort of convert different units that you may see and learn in your Bitcoin journey and I hope you know your units Mega Giga Terra kilo all these sorts of scale of different units so we’ll start right at the top but remember it’s energy producing compute producing Bitcoin but we’ll go from top to bottom and so Bitcoin blocks are added to the chain and every block has a number the first block that was ever mined was number one the next block was number two the next block was number three I think you get the gist we are now at block 888,246 blocks the network looks at the time the the time stamps cuz other people refer refer to the blockchain as the time chain because it’s a timestamp server every new block added Issues new Bitcoin and settles transactions of existing Bitcoin trying to circulate in the system it’s a database and it has energy to update it so it’s the all this compute power that’s producing these blocks and right now we have at any moment in time a specific difficulty level this difficulty level is observing how much compute powers in the in the system based on how quickly blocks are mined If This Were to double Bitcoin blocks would would not be mining every 10 minutes approximately they’d be found every 5 minutes and the best analogy for the difficulty adjustment is think of the performance of a car and the speed hash rate in the network is the performance of the network it’s the security budget it’s also the performance performance in the sense of if you’re driving at a certain speed and and in approximately 10 minutes you would reach a certain distance if you increase your speed you would reach that same point in distance much quicker which is similar to how we find blocks much quicker if you slowed down it would take longer if you speed up it much is much quicker if you went twice as fast as in twice as much hash rate we would get blocks as I said every 5 minutes instead of 10 and the network doesn’t want this because that means that all of this Bitcoin being issued per block and settled per block would happen twice as fast it would introduce twice as much inflation into the system and the whole system on the digital site is trying to constrain energy space and time have issued money across compute Space Storage for transaction fees by regulating time with this thing called the difficulty adjustment and all the nodes coordinate together to ensure that they are all synced and synchronized and so right now the difficulty adjustment is 112.1 15 in trillion T and if you ever see this figure I’ll give you a little helpful hand if you want to understand how much hash rate’s in the system just multiply this figure by 7158 27826 recurring if you want to be really specific and you will get the average hash rate this is the network looking there is much more behind this figure but I haven’t shown in this video cuz it’s a bit more complex I’ll do it in a different video but the overall gist is this you can understand the average hash rate of the network by multiplying the difficulty by this number and the difficulty is constantly changing approximately every 2016 blocks this is to say that it’s looking back well it’s intending it to be two weeks but if blocks are found if 20 2016 blocks are found in less than 2 weeks the uh the network makes it more difficult ult if the hash rate has effectively slowed down because blocks have slowed down because it takes more than 2 weeks it makes it less difficult and it’s representative of the amount of hash rate in the system and what is producing hash rate all of this Bitcoin mining hardware and the network average right now if you compare the amount of hash rate is about 20 jewles per terahash now one ex aash is 1 million terahash but interestingly enough you can multiply the average Jewels per terahash efficiency U by hash rate and you get approximately how much megawatts the Bitcoin network is consuming you could also use this for the Bitcoin miners the public miners who will typically promote their uh Fleet efficiency is what they refer to it as as well so the average efficiency of the total uh amount of machines that they have under management and their conversion from electricity into compute power so this amount of megawatts divided by 22 gets you about 800 xash and what you see here is the entire stack of all the different mathematical layers of bitcoin’s network so we produce power from all different sources whether they emit carbon or not that’s another topic we can delve into and to produce well all of this amount of power which is consumed and converted at a rate of approximately 22 two jws per terahash as a network average into Network hash rate and network difficulty which is trying to understand the rate in which blocks are being mined over a 2016 block period two weeks and this is uh the time aspect of things so you’ve got this aspect of energy space and time so to speak and the Bitcoin blockchain essentially has to invent its own time because we don’t want to trust any any particular one thing person or place or an API because what’s to stop them manipulating time because the reason Bitcoin blocks are every 10 minutes is it creates an order of transactions the transactions are in the right order because the blocks are in the right order and time is is proven through the space between blocks and so you’ve got this incredible system of mathematics but I’ve I’ve taking you through the the the physical side of we produce power we convert it into hash rate hash rate is understood by the network at the rate in which blocks a mind and it creates a Time series of of of time in a sense and this brings uh me to an interesting direction that I’d like to talk about in a different video If Bitcoin blocks preserve a certain amount of data and transactions of all human expressions of trade and and and human activity and you can’t change interestingly enough you cannot change a specific thing about a block without unwinding all blocks ahead of it so if if by this approach that Bitcoin has locked and secured and built blocks on top of each other and you cannot go back in time and change a block because you would alter all blocks from that point it’s almost as if what people discuss in time travel movies you can’t go back in in back in time and change one single thing because it it Alters it Alters the future entirely and so Bitcoin does create this sort of dimensional axis of energy space and time and constrains it in the digital world but imagine this imagine if someone screamed I’m from the future right and they went here I can prove it and they showed a Bitcoin blockchain that’s way ahead of everyone else way ahead in in Block time and and they had a sustained difficulty adjustment because this difficulty figure represents this amount of hash rate which represents this amount of energy being uh consumed underneath so imagine if someone said I can prove that I’m from the future because they showed you a node with a block time that say multiple millions of blocks ahead of everyone else assuming they’re from the future and they can prove it because the difficulty adust adjustment is sustained and it’s because there’s over 17 or 18 nuclear power stations worth of proof uh in any moment in time with what they can show you so what I’m trying to say is uh bitcoin’s blockchain create some aspect of a technology that could be used as a SpaceTime navigation device because if you was to go back in time or ahead in time you would know exactly where you are based in time when you are based in a specific moment of time space and uh it’s all based on the sort of ability to prove that energy has been expended to produce this compute power block these these timestamped blocks of Bitcoin that require energy to produce them it’s a bit of a weird and wonderful approach but I hope you understand what I’m trying to say but I think I’ll leave it there there’s um but yeah final recap we we consume all of this electricity megawatts of power convert it into bit through Bitcoin mining machines which is expended as heat which is an entirely different world as well to produce hash rate Which con constantly adds blocks to the chain in which the network is constraining the rate of time of issuance with the difficulty adjustment and and creating a Time series time series which is numbered uh and manages everything so all of this expands and the Bitcoin blockchain side of things constrains it so it’s like a sign scientific experiment the other way around it’s with science you you don’t change anything but you change one thing Bitcoin does it the other way around everything changes but it constrains one thing the issuance rate so it’s a regulation device to remove issuance power out of the hands of humans and distribute ISS issuance power based on energy and compute efficiency so those most efficient with their energy will account the most SATs that is a Timeless phrase to take away with you in your approach to accumulating Bitcoin I hope this was an interesting video I hope you enjoy like subscribe all that fun stuff and I will see you in the next one goodbye