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06-34 Digital Cash

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    When we think about the money is it's really a promise from a trusted bank.
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    If the promise it says if someone brings this money to the bank,
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    the bank will exchange it for something of real value.
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    Today, we think of the paper itself as having real value.
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    But in the early days, what the paper meant was you could go to the bank
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    and exchange it for something that everyone would recognize as real value,
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    say a bar of gold--almost as valuable as a gold star.
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    If that's what money means, well then we should be able to do the same thing with cryptography.
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    Let's see how that would work.
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    Alice would go to Indivisible Prime Bank, which everyone knows is very trustworthy,
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    and she would give to the bank a $100 in some other currency,
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    let's assume the bank to take US dollars.
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    The bank will read the message that says, "The bank owes the bearer of this note $100."
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    The bank will send Alice a signed version of that message.
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    The message, along with its signature, which is signed by the bank using the bank's private key,
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    signing a hash of that message.
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    This signature proves that it is a valid IOU from this bank,
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    and now Alice has something representing currency.
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    Now Alice could spend the currency. She could buy some tacos from Bob's Taco Emporium.
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    Give him the currency. Pretty expensive tacos.
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    And Bob could take the note--this signed message from the bank--
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    and give it to the bank and ask the bank to deposit into his account.
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    Now the question is how well would the scheme that I've described work?
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    Let's assume that everyone in the universe trusts Indivisible Primes
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    and knows that bank's public key.
Title:
06-34 Digital Cash
Description:

Other units in this course below:
Unit 1:http://www.youtube.com/playlist?list=PLAA92F9967A520440
Unit 2:http://www.youtube.com/playlist?list=PL82ECFBA355C2D7AC
Unit 3:http://www.youtube.com/playlist?list=PLEA779BF14BC54A1F
Unit 4:http://www.youtube.com/playlist?list=PL70C88B4299F00842
Unit 5:http://www.youtube.com/playlist?list=PL29E48E3B5FD7A2FA
Unit 6:http://www.youtube.com/playlist?list=PL146831BEFADFE152
QA: http://www.youtube.com/playlist?list=PL54A10DB39F3EF17B

To gain access to interactive quizzes, homework, programming assignments and a helpful community, join the class at http://www.udacity.com

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Team:
Udacity
Project:
CS387 - Applied Cryptography
Duration:
01:38
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