
Bitcoin: How Cryptocurrencies Work - dsr12
https://www.youtube.com/watch?v=kubGCSj5y3k
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runeks
I would argue that the essence of Bitcoin is the monetization of proof-of-
work. Proof-of-work has obvious value, as demonstrated by the fact that it can
prevent spam emails, if emails require a proof-of-work hash over the message.
Bitcoin's value is derived directly from this value, and works by trading
ownership of tokens produced from proof-of-work.

The problem is that not everyone wants to spend energy searching for hashes,
so the solution is to create a database of coin units created from proof-of-
work hashes, where the database itself is protected by proof-of-work. So,
rather than everyone spending energy hashing on their phones, we exchange
ownership of little bits of proof-of-work on the blockchain.

As these proofs exist in limited quantities, they are, effectively, the same
as the proof-of-work hash itself, such that sending someone a bitcoin amounts
to transferring ownership of a small part of the proof-of-work that is the
Bitcoin blockchain.

It's not unlike the difference between a gold nugget and a stamped gold coin.
A gold nugget has obvious value, but a gold coin is money because this value
is easily recognized, by standardizing on coin size/weight/purity. They're the
same thing, essentially -- the gold nugget and the coin -- but the
standardization makes the difference between valuable and money.

