Encrypted self-canning canned thermometer. I say thermometer because everybody thinks it’s a can opener, but nobody understands what it does.
I am still trying to understand the concepts of bitcoin, so my answer may not be exactly accurate.
You do not have to process the entire blockchain. It is there only to verify the transactions; you need only last couple of blocks to gain reasonable certainty. You can technically work with only the latest block and add to that one, with the risk of the transaction being later rejected by the system if the block used is somewhat invalid. Blockchain forking can happen, but the shorter branches then get cut off (though they apparently remain in the blockchain itself for the purpose of verification?) and recalculated into the longest one over time; a clever scheme for solving timing issues and allowing semi-offline processing of the transactions.
The blocks consist of larger number of individual transactions. These are queued when created, then processed into blocks in quasi-online matter. The blocks are chained in a way that each block refers to the previous block, and records its hash as part of itself. The chain of hashes then can be verified, starting from the initial block.
An important thing is that there is no encryption used in the scheme; only the one-way hash functions.
More data here:
https://en.bitcoin.it/wiki/Block_chain
There are also some blockchain explorers.
Check out this one:
Or this one:
https://www.biteasy.com/ - has even a realtime scrolling of transactions under the query field. Though you may have to wait for a while until something appears there. But then you can click on the transaction and details show up.
Clicking around the links of the blockchain explorers, for the accounts and transactions, together with referencing to the Bitcoin wiki, should make it at least somewhat understandable.
A quite understandable video here:
(todo: watch the other ones too)
For example, you can distribute the big, constant part of the blockchain using a sneakernet with people carrying thumbdrives or BluRay disks, and then broadcast the realtime updates using something slower, e.g. a FM transmitter rigged up from a Raspberry Pi. (Or a million of other ways using software-defined radio. You can even use classical shortwave broadcasts, in the Voice of America way, using a sufficiently strong AM transmitter in a country that has a beef with the other countries who want to keep Bitcoin suppressed.
This is a proof of concept using real-world transmitters, in order to iron out the kinks under peaceful conditions, instead of risking leaving it for later and then doing bugs-prone dev job under adversarial conditions. If it works, more variants in more countries are likely to follow.
That may be somewhat true today but not for tomorrow. History is littered with such certain claims turned into ashes.
It is much easier to implement a low-bandwidth channel than a high-bandwidth one.
Also, in resource-constrained environments the bandwidth can be limited regardless of the wealth of the user. A middle-of-nowhere scenario with a 9600 bps satellite modem can be an example.
Another scenario may involve using ultra-low power communication (QRPp). I can imagine a scenario where e.g. Iran or China or some privately owned island/country is broadcasting the blockchain to the Formerly Free West at couple megawatts of AM power or over a satellite or via Moon bounce, and the individual to-do transactions are sent back via QRPp slowly at few milliwatts to avoid direction-finding by the state police.
I also feel regrets that I did not buy some BTC back when they were a dime a dozen but I don’t feel such schadenfreude over the real-world costs. I feel the same about investing (okay, NOT investing) into copper or gallium.
In turn, I feel happy (and with significant degree of the mentioned schadenfreude) that BTC makes the governments and banks scrambling around with little idea what to do with it.
{FACEPALM}!!! Thanks! You even got exactly the same link that I ended up not pasting into the editor (and not proofreading after myself - never think any kind of mistake is below you).
I don’t feel any schadenfreude over them paying, I just have severe issues with what the inevitable results of Bitcoin are. Some of which we’ve already seen, some of which are clearly on the horizon but haven’t been quite as obvious yet (the amplification of the “rich get richer, poor can’t get a leg up” problem) but will be impossible to ignore in short order.
For the government end of it … *shrugs*
For the bank end, I will never stop laughing.
We will see (already are seeing) some interesting ripples the BTC will cause in the economy in general. Both the good and the bad. But what is certain is that it disrupts the stagnant, putrescent status quo of monetary-government systems. No Visa that can interfere with a transaction for Wikileaks, no official than can prevent a transaction between two consenting users from countries that said official claims are in an enemy relation. So if you have a friend in Cuba, nobody can stop you or him to exchange money. (Full disclosure: I despise general embargos, even more than I despise nation-states and their puny arbitrary borders.)
I was hoping for something like this for ages, since the Cypherpunks laid down the theory, to augment the existing systems for value storage and transfer. Let’s see how it will hold.
Maybe in few years the broadcaster will be paid in BTC instead of EUR.
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