Bitcoin Abhay Rana 09118001 

First Decentralized Digital Currency 

Value of Bitcoin As of 29/Sep/14 

Is Bitcoin Money? A commodity, asset or bill that may be exchanged for goods and services and serves some special requirements or functions: 1. Medium of exchange 2. Measure of value 3. Standard of deferred payment 4. Store of value Currency != Money 

Why Bitcoin? - Decentralized - Secure - Anonymous - Open Source 

Decentralized No Banks No Governments No Regulations 

Secure by Cryptography - Avoids Double Spending - Proof of Work - Attacks require massive compute power 

Who created Bitcoin? Satoshi Nakamoto [email protected] 

How to get Bitcoins? - via a bitcoin exchange - like Coinbase.com - sell something for bitcoins 

Bitcoin Jargon - Wallet - Bitcoin Address - Mining - Blockchain - Transaction - Digital Signing - P2P (peer-to-peer) - Proof-of-work - Hash Function 

Faking Bitcoin Knowledge - Bitcoins are speculative. - I made money mining Bitcoins. - Bitcoin isn’t anonymous because its all public - NSA = Satoshi - I buy stuff with Bitcoins - RBI won’t ever succeed in regulating Bitcoins 

How would you create a Digital Currency? - decentralized - hard to attack - avoids double spending 

Double Spending Alice sends a coin (signs a transaction) to Bob and Charlie at the exact same time. How to prevent: 1. Shared Public Ledger of all transactions 2. Wait for transaction to be confirmed 

Proof of work 1 node = 1 vote is not reliable ( Alice could create fake identities and swarm the network by fake nodes) Make it hard to verify a transaction. Verification = Solve a hard mathematical problem 1 CPU = 1 Vote 

The hard problem Generate the transaction hash in such a way that it contains an arbitrary number ( = difficulty) of zeroes at start of the hash. h("Hello, world!0") = 1312af178c253f84028d480a6adc1e25e81caa44c749ec81976192e2ec934c64 h("Hello, world!1") = e9afc424b79e4f6ab42d99c81156d3a17228d6e1eef4139be78e948a9332a7d8 … h("Hello, world!4250") = 0000c3af42fc31103f1fdc0151fa747ff87349a4714df7cc52ea464e12dcd4e9 

Reward Mining is computationally expensive, and not cheap (electricity costs). Give reward to Miners who verify the transaction. Current reward = 25 BTC = 589860.95 INR As of 17 October 2014 

Whats next? - Bitcoin was just the first digital currency. - Bitcoin = Internet in 1990s - Need for security - Awareness - Money of the Future?