This unit is Part 7 of the Annotated Princeton Bitcoin Video Course.

Introduction (1 minute)

The word “consensus” was used previously to describe a specific aspect of the Bitcoin protocol. In this series it applies more broadly to the people and systems involved in Bitcoin.

Consensus in Bitcoin (6 minutes)

Consensus in the largest sense of the word is based on agreement about these three key ideas:

• the protocol rules;
• the order of transaction history and coin ownership;
• the value of bitcoin.

Bitcoin Core Software (10 minutes)

Consensus in Bitcoin operates in three main channels:

• a protocol specification: Bitcoin Core is widely-regarded as the protocol specification
• initiatives: Bitcoin Improvement Proposals (BIPs) are the method whereby changes are made to the Bitcoin Core software
• developers: Those individuals who write code and merge it with Bitcoin Core

The discussion about hard forks and establishing the identity of the “real” Bitcoin is especially important today. Bitcoin Cash, a hard fork update released in 2017, is regarded by some users as the real Bitcoin. This ongoing dispute shows no signs of abating.

Stakeholders: Who’s in Charge (9 minutes)

Five groups vie for power in Bitcoin:

• developers
• miners
• investors
• merchants and customers
• payment services

It’s easy on first look to conclude that one group or the other holds the most power. However, the power of each group derives from the consent of the others. No group can forge a path by itself. Consensus is a messy, ongoing process.

Roots of Bitcoin (9 minutes)

The Nakamoto Institute has published a bibliography that puts Bitcoin’s technology and approach into historical context.

Governments Notice of Bitcoin (9 minutes)

Ross Ulbricht was convicted in 2015 of seven counts including narcotics trafficking and money laundering conspiracies.

Anti Money-Laundering (5 minutes)

AML/KYC rules are often cited as reasons for delays in converting local currencies and bitcoin.

Regulation (11 minutes)

Argument in favor of regulation: When markets fail and produce bad outcomes, regulation can address the failure.

Catastrophic losses such as the one that occurred at Mt. Gox have lead to increased calls for Bitcoin regulation.

New York’s BitLicense Proposal (10 minutes)

BitLicense was put into effect in August 2015. As of May 2018, five companies had been issued BitLicenses: Coinbase; Circle; Ripple; Genesis Global Trading; and bitFlyer.

Next Up: Alternative Mining Puzzles