bitcoin as a cyripto currency

Basics of cyrpto currency explained over bitcoin

Transcript

1. BITCOIN Secure and Decentralised Digital Currency
2. About Bitcoin • Bitcoin is a successful implementation of distributed crypto-currency. • Transactions are peer-to-peer, so no central authority • Supply only regulated by software and agreement of users of system
3. Transactions • Are irreversible by design • Are fast. Funds received are available for spending within minutes. • Cost very little, especially compared to other payment networks.
4. Bitcoin Basics
5. Coin Creation (Miners) • Mining software produces blocks. • Creation of blocks require some solution for mathematically difficult problem. The solution itself is a proof-of-work (PoW) • After every block creation, network creates new coins. Start point is 50 coin for every blocks. It should be halved ever 210,000 blocks.
6. Payments • Uses public key cryptography • Every wallet has an address for payments. • Payments is announced to be recorded in public ledger
7. But how to prevent double-spending and provide anonymity?
8. • Every transaction performed is broadcasted to the system and only valid transactions is accepted by chain. • Blocks are chained that, modifying a block will require modifying of all blocks in that chain. • Receiver can verify transaction by checking whether it takes place in a block.
9. • In Bitcoin ecosystem, there are no email addresses, no names. • Every balance is associated with address and public- private keys. • Every user can have multiple addresses as suggested by bitcoin software itself.
10. Notes from "Satoshi Nakamoto" Paper Bitcoin: A Peer-to-Peer Electronic Cash System
11. • The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power • As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers
12. The steps to run the network are as follows: • New transactions are broadcast to all nodes • Each node collects new transactions into a block. • Each node works on finding a difficult proof-of-work for its block. • When a node finds a proof-of-work, it broadcasts the block to all nodes. • Nodes accept the block only if all transactions in it are valid and not already spent. • Nodes express their acceptance of the block by working on creating the next block in the chain, using the hash of the accepted block as the previous hash.
13. • New transaction broadcasts do not necessarily need to reach all nodes. As long as they reach many nodes, they will get into a block before long. Block broadcasts are also tolerant of dropped messages. If a node does not receive a block, it will request it when it receives the next block and realizes it missed one. • The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended.
14. Proof-of-Work • "c" is our challange string, "p" is our proof(response) • hash these values (for example with SHA-512), output should contain 0 bits to begin with(for example 40) This shows that, "p" value is computed to have corelation with "c" to produce a hash begins with trailing zeros. • Every time the chain grows with proof-of-work applied, an atacker must successfully re-do all the chains back to get "c". • But the output hash is sort of easy to verify but hard to re- produce(re-do).
15. Thanks For more info about practical aspects of bitcoin, visit https://en.bitcoin.it/wiki/Main_Page