Original subtitles

We know that banks and credit card companies charge us high fees but they do help us protect the security

of our money again through their high fees.

Now if we're going to invest in and use crypto currencies we need to not only thoroughly understand

crypto currency security concepts but we have to also be willing to spend some money on purchasing devices

that will act as digital wallets because only you can protect your crypto currencies and not the banks

and not the credit card companies.

So we should think about the amount of money that we're going to save in bank and credit card fees in

the long run.

And we should use part of those savings to buy and use what are called cold and hot storage wallets

meaning online and offline security products for your cryptocurrency.

And so we're going to cover wallets in much more detail later on the course in part 3.

But as we build upon the security and other crucial cryptocurrency topics one later at a time we're

in a complete a couple of concepts through exercises Okay which help us understand the marrying of security

and wallets.

Okay.

Especially since half of the word crypto currency is crypto which can mean secret or hidden.

OK so I want to go into a lot of detail and summarize more than 40 years worth of fascinating Kip taught

cryptography events including the NSA fighting cryptocurrency experts going back to the 1970s in this

lesson and through the exercises.

In the next lesson OK this will make much more sense too soon.

Why.

Because we have to thoroughly understand how security has and will continue to change in our lifetime

as I promise you that if we don't stay up to date on security changes over time then our money and privacy

can and will be compromised.

You know big institutions are safe anymore from hacking.

We know that the media covers this in a lot of detail and before learning about wallets and how to use

them and deciding which ones to use I want to introduce you to the concepts of public and private keys

in this lecture through an exercise we'll do together.

I hope you enjoy this.

And on nuclear and nuclear submarines often there's two keys two keys are needed two.

God forbid launch missiles.

One key can go to the captain of the submarine and the other one usually goes to poultice or a top government

official.

Similarly when it comes to crypto currencies two keys are needed to transfer and receive money in cash.

And these keys are called public and private keys.

OK and if you just want to jump in to that to the exercise in this lesson then you can fast forward

me right now to this part in a lecture.

OK I understand that some of you might already understand these concepts but it's fun for me to talk

about and some of you might not know much about this.

OK so the concept of of private and public keys was created in May of 1976 as a brilliant security breakthrough

was discovered by a brilliant man who still lectures here at Stanford named Martin Hellman.

He's a he's a rockstar he's.

And he created public and private key cryptography.

And he did this so that if enemies get their hands on one key.

OK.

They can't decrypt the information because they don't have access to the other key which is private

and not public.

And the NSA actually approached Martin Hellman and told him to be quiet about this for national security

reasons and Hellman thought about this.

He thought it's an ethical issue.

So he did not keep quiet about this and he says in this video here which is an incredible speech which

you can access by clicking this button but he says that he felt that he had an angel on one shoulder

and a devil on the other shoulder and he said that the same thing took place with those that created

the first nuclear bomb as part of the Manhattan Project.

You know yesterday they wanted to beat Hitler of course but they kept working on the nuclear bomb after

World War II ended and things got really contentious for Hellmann as the NSA was on his back.

And he he literally thought the NSA was Darth Vader and he himself was Luke Skywalker.

He actually said that he said it's pretty cool.

OK.

So Helmand is less focused on cybersecurity today and more focused on nuclear security as there are

parallels between between both of them both are related.

So all this stuff is now declassified.

But it's important to discuss this so we can understand how governments react to crypto currencies today

and in the future and governments are constantly fighting companies just like how the FBI is currently

fighting Apple and expect this to continue globally as crypto currencies as we discussed are potentially

the greatest threat to national security and cap and government said look let me just put these down

here.

Back to that minute.

But but governments thought and think that nuclear weapons deterrent deterrence strategies can be applied

to crypto currencies and our crypto cryptography visionaries like Martin Hellman in our space pioneers

like Elon Musk beg to differ.

OK.

Security and cryptography will continue to be decrypted and we need to keep up to date on this so that

our personal cryptocurrency net worth is less likely to be compromised in the future.

And I don't want to jump into discussing wallets or buying crypto currencies or mining until we thoroughly

understand and cover security.

OK let's move on.

A Berkeley student named Ralph Merkle pioneered how to distribute these keys.

And it's important to mention this as we will discuss Merkle concepts later on when we talk about block

chain.

In this lecture here and Merkel's Berkeley professor criticized his work and it's actually ridiculous

and just as ridiculous as as the founder of federal express FedEx writing his business plan at Yale

University and then the teacher told him this.

The concept is interesting and well-informed but in order to earn better than a C grade the idea must

be feasible.

So don't let teachers tell you that you are wrong and these students are so forward looking.

OK so after Helen Merkel after their discoveries then there's three brilliant man named revulsed Shamir

and Adelman are as they ever seen one of these things are RSA tokens or this.

And they were the first ones to implement public key public key.

Chris cryptosystem.

That's RSA which used to be a publicly traded company ticker r s s until EMC bought them in the summer

of 2006.

I use to cover that stock when I worked at a at a very big tech hedge fund called Set it up.

OK so these three people are and there are mathematical geniuses which is what cryptography is all about.

It's math.

OK moving on

in my hands I'm holding a green key.

It's got a globe on it.

And this is just a prop but we're going to pretend that this is your public key.

OK.

Which many people have access to get theirs.

Anybody can send you money to your public key in your wallet.

I'll talk about that in a minute with a minute to catch this hand it's probably be consistent this way.

In this hand I'm holding a red key which is a private key and it's got the word home written on it you

probably can't see that but OK.

And there's only one copy of this.

But there can be many copies of this public key.

OK.

Great.

So I've got a public key and a private key right here.

Great.

And the person sending money to you.

Right.

The person that's sending Cocteau's or crypto currencies or Bitcoin ether or whatever cryptocurrency

it is to you they need to know where to send it.

OK.

And you need to know how to access the money sent to you.

OK.

So the way that people know how to send crypto currencies to you is knowing what your public key number

is or address.

OK it's it's kind of like an e-mail address to the public key like an e-mail address.

A lot of people can get your e-mail address but the private key like your e-mail password.

I mean people have that.

OK.

OK great.

And if people have your public key they can semis you.

Now in order to access the money in your wallet.

OK.

That was sent to you your public key.

You need to access it using your private key.

OK.

Again it's like a password for them.

Now if you forget your e-mail password you can usually ask the company or person in charge of the e-mail

system to send you a new password.

They like Google does with Gmail for example.

However it's a little bit different with crypto currencies because if you forget this private key then

you can never ever ever ever ever access your money again that's in your wallet OK.

Even if you have the public key doesn't matter.

And this is why we're going to spend a lot of time on many different types of cryptocurrency waltz in

this course and how to secure your private keys and personal data.

OK.

And we're going to make sure that security disasters do not happen to you.

OK so if you lose your if you lose this that's ok because your private key is smart and your private

key can actually tell you what your public key is it's kind of like this.

OK so now try this around.

So I'm going to push this green button here and my private key will tell me my private key Tell me where

I yes.

Right.

That's it.

It's kind of like it's kind of a title anyway so you get the idea and you put those down for now and

we're going to build on this concept soon as well when we talk about block chain or other stuff in mining.

It's going be fun.

Okay great.

And technically I will teach you how to set up wallet's in an exercise in this lesson here.

I just want to introduce you to security concepts in this introduction to security lesson.

And again we're going to build on this now.

Now please note that your public key can never tell you what your private key address is.

OK.

So again never lose your private key.

Also people can find your public key address through using q r codes which some people have on their

crypto wallets.

OK and so in order to explain this concept a little bit what happens is a lot of people have cryptocurrency

wallets that have these little QR codes on them and all that QR code does is it tells you what this

number is here this public key.

That's all it is.

So think of it as a key chain and this is kind of cute but people use this for their dogs now so don't

lose their dogs.

Right.

People scan the QR codes for their dog.

So so public key can can be written as or represented as a QR code.

And the same thing with a private key.

And when we make our wallet very soon together our paper wallet you will see that on one side of our

paper wallet is a public key with this QR code and on the other side of that same wallet is a private

key with this QR code and all that you are code is is a way to scan it with your mobile phone and you

scan the car Colonel tell you what this number is.

And this one as well.

We never show anybody this QR code only this one.

Great.

Will do.

I assume that when you make your first wallet and this will make a lot more sense.

OK.

Great.

And I want to humanize the education process here of security so it's more engaging and so that you

know you'll be more interested in staying up to date with new security and password protocols in the

future.

And I promise you that since there is so much money in this cryptocurrency sector that cyber criminals

will take our money if we're not vigilant and very very careful.

And many many of our brilliant technology visionaries are mindful of the fact that what they create

could have a negative impact on us.

OK so for example we know that Elon Musk makes rockets and he is mindful of the fact that with great

power comes great responsibility.

And many of the people I discuss as we do our security exercises that have contributed so much to enhance

our lives through technology are often the voices of caution when it comes to computer security and

future trends.

So if you want you can follow in Twitter some of the people that I discuss in this lesson and in this

course in general just so you can stay up to date on cryptography and security trends that could impact

your net worth in the future if you invest in the crypto currency markets and I really care.

I care and I want to thoroughly.

I want you to thoroughly understand security and cryptography concepts before you buy any crypto currencies.

OK.

And if you're interested in learning more please just click this button here to learn more about Stampfer

professors and the evolution of public key and cryptography as presented by David Hellman here who created

cryptography in the 1970s.

And he battled the NSA who told them to keep quiet about his research.

OK so the title of this optional six minute video here is cyber security nuclear security.

Alan Turing and illogical logic.

And you can access it here.

And the Elvis Presley rock star of the security sector was a brilliant man named Alan Turing.

Kay and I'm sure you've heard of him and he along with his team created this unbelievable machine

to break the the enigma this is a replica.

This is interesting.

So he created this machine with this team in England during World War Two to decrypt this.

Right.

So he could find out you know all about what the Germans were planning and this is a mini replica here

of the Enigma machine.

Right.

So there's a great movie about this called the the the Imitation Game.

But it's kind of interesting.

Alan Turing is a rock star to me.

I respect him.

He's amazing.

OK.

So we should generally expect governments for national security reasons to poor in a lot of money and

resources to break codes.

OK.

All right so when this happens if we find out then we're going to need to change the security measures

that we use in the future.

And I promise you that governments will likely be spending a lot of money on this in the future.

Kelly were the bomb 10 seconds of your day.

Interesting.

I'm the only one who knows where that news is well in that case I'd say you'd better start.

And so if the NSA kind of did a lot of work to pioneer certain security algorithms they also put a lot

of money into try to break them.

And so what is very secure today will not be secure in the future.

And you might say wait a second.

Does that mean that big one is not going to be secure.

It's kind of a different story when I talk about mining.

I'll talk about this more detail but in order to compromise the Bitcoin security algorithms so to speak

you need to be able to take over 50 percent of all computing resources in the world that are currently

working on Bitcoin.

That's called a 51 percent attack.

I'll come back to that later.

OK.

So many non-American companies won't use American cloud computing companies like sales force dot com

Y because they can't be assured that the U.S. government won't hack into the sales force for example

using crypto trapdoors and view confidential information for Swiss bank account holders for example

and I'm not picking on sales force talk commis just a very big successful cloud computing company based

here in San Francisco and the founder Marc Benioff is a brilliant man.

I respect him a lot.

But the point is that a lot of governments don't trust each other's software companies.

OK.

And that's why you're going to have kind of the Balkanization of cloud computing globally.

Right we've got Amazon Web Services in the United States that kind of powers Air B and B and a lot of

great companies uber et cetera.

And there's going to be different versions of that overseas only because other governments don't trust

other government security protocols that sort of thing a little bit off topic I apologize but just something

to be aware of especially since you're going to if you're going to dive into this cryptocurrency market

you're going to have to protect your own assets using your own software and hardware products.

Cold and hot storage which of us soon.

And it's really good to stay up to date on this stuff as well.

OK.

Especially since banks and credit card companies are not going to offer you the benefit of protecting

your money.

You have it yourself.

All right.

So there's something called Shaugh one.

OK Shaw one is a check one.

And this stands for secure hash algorithm one.

OK and this was created for what it's worth by the NSA which is the National Security Agency the United

States in 1995.

And we're it.

We're going to encrypt something using Shaw one.

OK.

Now I don't want to confuse anyone here.

But there is a difference between hashing and encryption.

And I will explain that later once we have laid down the foundations.

OK so just for now assume that they are very similar.

Just for now thanks.

And so we're in a lesson learn by doing in the next lecture which is an exercise on crypto security.

We're going to learn about this soon.

Shaw one is Shaw 256 K invented by the NSA.

And this here is the basis for for encryption algorithm for for Bitcoin it's very important.

We understand this one and every cryptocurrency or most cryptocurrency you have different algorithms

and that matters a lot if you want to mine crypto currencies as well.

Cret So if we go together to finance style yahud account and this security protocol stuff is so important

investors look at it closely too.

OK.

So go to a finance outcome and enter in the ticker for Bitcoin and just enter this ticker entry and

BTC Dasch USD.

That's according to U.S. dollars.

OK.

And we can see here that included in this market data on Yahoo Finance on Bitcoin is the algorithm shot

294 2:56.

It's written there.

And again the next lecture what we're going to do is we're to do a pretty fun exercise where we're going

to encrypt and decrypt data using Schaal one and Shaw 256 which again is the basis for the algorithm.

This one here for for Pick one.

I hope you enjoy it.

Thanks.