Creating Our Own Digital Currency: RainbowCoin

Colt Steele
A free video tutorial from Colt Steele
Developer and Bootcamp Instructor
4.7 instructor rating • 9 courses • 895,305 students

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Bitcoin and Cryptocurrency Bootcamp

From Mining and the Blockchain to Ethereum and Smart Contracts

08:30:23 of on-demand video • Updated June 2018

  • Understand the personal and business applications of Blockchain, Smart Contracts, DApps, and Tokens
  • Explain Bitcoin and Ethereum to your parents/grandparents/dog
  • Purchase your own cryptocurrency (if you want, but no pressure otherwise!)
  • Understand the ins and outs of the culture, concepts, and history behind Bitcoin, Ethereum, and the Blockchain
  • Formulate conspiracy theories about Satoshi Nakamoto
English [Auto] All right. Welcome back. We're going to do a little thought experiment now. Now that we've talked about currencies and digital money we're going to make our own digital money so it's back in 2009 after the crash of 2008. We decided that we are going to start our own currency our own digital money. We don't we don't need government we don't need capital we don't need anything. We're going to start out on our own. Yeah. So we decide we spend most of our time investing actually in designing a logo for our new currency which we're going to call a rainbow called a rainbow coin and ignore the fact that it might look like the built in MAC Rainbows was a little bit OK. Anyway so rainbow coin the way that it works it's very very simple. So in our world there's actually we're not even in it. There's only three people. Yeah. Billy Montana and Kilgore. So the most central thing to our entire currency is what Kevin we have a Ludger. What's the ledger. The Ledger is our central store of books and records of rainbow coin. OK. So a ledger just to be clear is a word that has a meaning outside of currency or outside of digital currencies. When we talk about bitcoin we talk a lot about the ledger but Ledger is just any sort of bookkeeping list I guess is what you would say. Right. And one important trait of a ledger is that it's in order from top to bottom or it has some time ordering. So our ledger is going to be let's say it's an Excel spreadsheet and I've created it and all that I do is basically have a from column A to column and a quantity. So at the beginning I'm just giving out this coin to three people. So there's no from I guess I started out it's from me. But we're just gifting them so Billy gets four coins. Montana gets seven and Killgore gets five. And so I write that down in this spreadsheet and I need to keep the spreadsheet safe of course and that's something we'll talk about later but I'm in charge of it. You know someone has to be it's like a bank there has to be somebody who is who's monitoring things and making sure everything is kosher. So that's me. So supposedly has a hat and Kilger wants to buy it from Billy. And it's a glowing hat. It's a glowing greenhouse less so. Killgore and Billy agree that the price of the hat should be three rainbow coin. So how did the exchange rainbow coin there's no physical commodity that that represents or has or something. There's no token to give them there's no piece of paper like World of Warcraft gold or like Second Life Real Estate It just exists on a computer. So when Kilger wants to buy the hat and Billy agrees on that price. All Kishwar does is tell Colt colt. I'd like to buy this hat. I'm going to transfer three rainbow coin to Billy. And what's that looks like on the ledger. So I add that in. You can send me an e-mail. It can be through text. It's sort of like to go to your bank or you start a wire you have to say who you're sending it to and how much and then your bank take takes care of the rest. They keep track of it. So that's what I do. I write down that Killgore gave Billy three. Now notice that at no point is there a total balance for each user. For example all we have is a list of transactions but that's all that we need to figure out who has what. Yeah we start at the top and work down. Then we can figure out who has what when. So for example we had four. Now Billy has three more. So that means yes. OK. So then what happens next. Well Killgore has that glowing hat looks great in. Now Montana here is that Kilger bought a hat with rainbow coins. She knows that rainbow calling is sort of trustworthy. You can actually buy things with rainbow coin and she decides she wants to buy more of it so she reaches out to Billy. And she knows Billy has rainbow coins as I like to buy some of your rainbow coin. They agree on an exchange rate. In this case I agree $5 for five rainbow coin. Now how do they make that transfer. Montana gives Billy five five dollars. Billy gives Montana 5 rainbow coin. And then what does it mean to actually give it again. If you are talking to me or e-mailing me and saying hey here's the transaction. And I go into my spreadsheet and I'm the bank and I just write down and simple right. I just write down Biley sent Montana 5 rainbowing. Through all of this. This is the weirdest part. I think we're so used to just money and physical objects there is nothing the only value is the spreadsheet. Yeah but this is happening. For example if you use Venmo or Pay-Pal or you look at your your debit card if you look at your bank account a lot of times people are engaging in transactions like this without ever holding a physical representation of the money that they're spending. Right. The only thing is that there is nothing that we're representing here. No they're just call him and it's like it's like a completely at least at the bank there's some reference it's representative currency. You could go exchange it for the dollar. I like it when I Venmo you $15 for example for the really terrible sound bath meditation sunlight's class you made me go to a couple of weeks ago I send you $5000 on Venmo that there's still $15 in the real world that you are going to get eventually I can withdraw it from Venmo rainbow going. It's just word your numbers on a spreadsheet. No but it comes down to Montana ability and Killgore all trust the value of removal involved involvement when they trust me. Well it looks like they are. Well they're spending $5 on real room. So we have our successful para currency. Oh and we have a little animation we forgot about. There we go. I like that. So Montanas total increases to 12. OK. So at the end of the day here's what it looks like now on Tannen's. Killin it. Montana has 12 rainbow coin Billy as to Killgore has two. And again we don't have that written down anywhere. We just have the history but that's all that we need to figure it out. So in the next video we're going to talk about the problems with this because there are quite a there's nothing wrong with this is my perfect currencies rainbow coin and you're such a downer.