Bitcoin and Ethereum smart contracts…

Bitcoin and Ethereum smart contracts…

Hi it’s Keir Finlow-Bates here, and today
a short piece on smart contracts. Now, not many people know that Bitcoin nodes
actually contain a little program interpreter and that when you are
transferring Bitcoin from one address to another, it’s not done in the obvious way
of having a balance associated with one account, and then reducing it by, say, five
bitcoins and then upping another accounts balance by five to make sure
that the total number of bitcoins stays constant – instead you submit scripts,
little programs that are run in order to verify that you are allowed indeed to
transfer the amount that you want to transfer, and these little scripts are
run in something known as a stack machine that is inside every single
Bitcoin node. Now, a stack machine is a limited kind of program interpreter,
whereas when you go across to Ethereum , in that the machine, the virtual machine
that’s running inside Ethereum, is actually Turing-complete, which means
that you can run proper fully-fledged programs in it, and for those of you who
are interested you can go and look up Chomsky’s hierarchy of formal grammars
in order to understand the difference between a Turing-complete machine and a
stack machine, but for those of you who aren’t interested in reading up on
computer science, I have a little analogy here which is: a stack machine is like
going on vacation to a foreign country and taking a phrase book with you, and
having a phrase book means that you can do simple things like order a taxi or
find a restaurant or where the railway station is or stuff like that, but your
options are fairly limited, and a Turing-complete machine on the other
hand is like going to a foreign country and being able to speak the language
fluently, and that means that when you go there you are able to have endless
discussions about politics and religion and philosophy – the kind of stuff that
you can’t do with a stack machine. So that’s the difference really between
Bitcoin and Ethereum, and the Bitcoin scripts are, I suppose,
technically smart contracts. It’s just that they are these very limited kinds
of smart contracts and Ethereum opens up the possibility for many many more
different kinds of implementation. So I hope that helped clear things up a bit.
And see you in the next video soon. Bye for now!

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