>>How important is cryptography or encryption to this Blockchain world? >>I think, most importantly it helps us to address the trust problem and help us to eliminate the role of a central clearinghouse or government too >>So, is that why Blockchain is a disruptive technology is because it eliminates the third party? >>That's the innovation that Blockchain point has >>Okay. So, we can do banking before we can do a lot of these things before Blockchain eliminates the need for a central bank or a government, or a large institution We can have trust with people we've never met >>Right >>That's cool. And so, that's undue innovation One of the criticisms is efficiency is that it's kind of slow sometimes to update Is that an inherent problem to Blockchain or is that a problem of Bitcoin? >>It is by design for Blockchain Because we want the mining of each block to be computationally demanding so that the transaction cannot be easily modified What if I had information that only a central clearing group would know so that I could make the mining easy but only if you knew a secret code? >>Right >>That you could do fast, right? >>Yes >>But you'd have to have a secret code that only a few people knew? >>Yes >>That won't work with Bitcoin? >>That won't work with Bitcoin >>But it might work for a government issue of a registry of deeds for land? >>Exactly >>Okay. So Blockchain is more than Bitcoin it could be different than Bitcoin we can use it in many different ways Bitcoin is simply one way of using Blockchain for cryptocurrency? >>Right, it's just one special case of it >>Okay, one special case But all of these cases have hash functions? >>Yes >>And that's essentially encryption in action? How does that work? What's this hash? >>So, hash function in short terms it means that we take the input of any lengths but gives the output of a fixed length It is a one-way function which means that it is easy to go one way to the other but hard to go the other directions We can take the modular function as an example So, for example, what 2010 mult 36 will give us 30 which we can calculate easily But, given the result of 30 there will be unlimited possibilities that concludes to 30 more than 36 that's what we meant by that >>And if I make a small change or even a tiny bit of data? >>It's going to look entirely different >>It's a totally new hash? >>Totally new >>So, it's clearly wrong, you changed it? >>Even a tiny bit >>even a penny change? >>Yes >>It's all wrong? >>And that the entire nose on this network will detect this change >>And if I change something in history every block thereafter is invalid? >>Right >>That's a problem. So it breaks the whole chain, so I can't do that? >>Right >>But it's easy to compute we could just do that on our PC we can compute the hash? >>With a blink of time >>But it's hard to find the right one? >>Right >>Okay. All right, so it's a complicated function So, you've got an example here of a hash function, how does that work? >>So, if you hash the input of a letter A this long string is what we are going to get as the hash function of it >>I would like to enter that into my phone >>Right >>So, how do I deal with the long hash like that? With long hash like this one we don't need to remember the whole thing >>Oh, good. Okay >>Yeah. As customers, we can only remember our original password or original code >>Okay >>Like letter A >>Or we can also use a QR a code to be able to be recognized by the computer interface but a lot of data really easily with our phone Okay. So, what do we do with the hash function how does it help us? >>One important application can be commitment Commitment allows one to commit to why aren't you always out revealing the why to others >>Like what? >>Say that Alice and Bob both participate in a mathematics contest and Alice got her answer first But she doesn't want to reveal >>Obviously, she's smarter >>Alice will be happy to hear that >>Yes. Okay, but Bob is a little slow? >>Bob is a little slow >>Okay >>But Alice doesn't want to give the answer to Bob because Bob can claim that he got the same answer, right? >>Of course, that's what guys do >>Bob says not really >>Not really. Okay. So, but Alice is concerned he would copy and say that he was first but even he's lying >>Yeah >>So, now she can say "Bob here's my hash." >>Yes, exactly >>And he can say, "Oh, I don't have that same hash. I better work on it some more." Okay >>Also, he can check Alice's answer to see if it really gives the same hash to see if Alice's lying >>Oh, but he can also check and see if he has the same answer as Alice to see if he's right? >>Yeah >>Without being given the answer you're giving the key to grade your own problem without knowing the answer >>Right >>Okay. All right So, document integrity, how does this help? >>So when we download a file from website the website can provide a hash value But once we have this file we can compute the hash and then we can compare those two hash values If they are consistent with each other we can be confident to say that the file has not been compromised yet >>Okay. So my video is what I think it is my program is what I think it is This is not just data this could be a whole program, right? >>Right. Yes >>Yeah. So it can be any link of things that can have a hash? >>Videos, photos, whatever, to validate >>Yeah. Okay. And you said password storage also works? >>Many websites now store passwords of clients in the hashed forms So when customers input their password the hash of it got to be compared with the stored hash >>Okay. So you can indeed validate like if I call up and say I can't remember my password and they say, "Well, I can't tell you what it is because it's saved in the hash form." But I could say, "Well, could I try a couple of versions" and you said, "No, that's not it That's not it. Yep, that's the one." So, I could check it I'm not sure I want to give customer service my password but I might be able to type it in and the bank could say, "That's the one." >>Right >>Without seeing it? >>Yeah, bank won't have any idea what your possible combinations are >>Right. So they can't recreate my password but they could tell me, "You got the hash right." Okay. So that's cool All right, well thank you very much Now, the bottom line on this, DLT is more than Blockchain Blockchain is more than Bitcoin Bitcoin is an application DLT and encryption are critical to many aspects of FinTech Not just Blockchain, many other areas use encryption use distributed ledger, but Blockchain clearly demonstrated DLT works >>Right >>So it's a powerful technology that opens up the door to many many new ways of doing business inventory Okay, thank you very much for your time >>Thank you, Ted Okay
