Cole street presents:  Bitcoin, the future of payment?
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  • Talk: verify file, use size? Not secure.
  • Talk: verify file, use size? Not secure. Hash, create is CPU intensive, verify is cheap.

Transcript

  • 1. PRESENTS “Bitcoin, the future of payment?” By Wessel Kooyman, CEO, Cole Street
  • 2. Currency (n.): Representative currency: deriving its worth from a link to some physical store of value like gold, silver or gemstones. Fiat currency: Derives its value from the fact that a government or central authority guaranteed it.
  • 3. How to build a digital currency? Requirements: - Decentralized (Peer to peer) - As anonymous as possible - Fraud proof: No double spending, no theft - Gradual availability of more currency, effort required
  • 4. What is a hashing algorithm? Hashing d7a8fbb307d7809469ca9abcb0082e4f8d5651e46d3cdb762d02d0bf37c9e592 File length: 12,322 bytes
  • 5. What is a ledger?
  • 6. How to build a digital currency? The block chain: the innovative part of Bitcoin The genesis block Dead branch
  • 7. Bitcoin – How the blocks in the blockchain are created  All transactions are logged in the blockchain (ledger)  All nodes (miners, clients in P2) have the full blockchain  New blocks are mined by the miners, who get a reward (first transaction)  New blocks are verified by all and refused if not valid  If you are miner, you must also process transactions – most earn a small fee
  • 8. Bitcoin – The network  Miners create blocks and process transactions  All the miners are connected to each other peer-to-peer  A Bitcoin client connects to the peer-to-peer network  Transactions are written into the blockchain  Confirmations are sent to the client
  • 9. Bitcoin – Ways to do transactions  Currency exchanges like Mt Gox (EUR to BTC, BTC to EUR)  Local exchange (with other individuals)  Using your mobile phone  Unlimited – after all, you only need to exchange some data to do a transaction
  • 10. Bitcoin - Mining  How it works  Falling reward level  Technology rat race: cpu, gpu, asic  Profitability depends on BTC exchange rate, cost of electricity, cost of hardware investment
  • 11. Bitcoin (n.):  Not a representative currency, because it is not linked to anything physical.  Not a fiat currency, as its supply is actually finite and it lacks any central backing authority.
  • 12. Bitcoin (n.):  Something new, only possible because of the Internet and high-speed processing power of modern hardware  Unforgeable, verifiable, secure, (almost) no transaction fees, quasi-anonymous  Distributed, borderless  No trusted third party needed for transactions (bank)
  • 13. Part two: Bitcoin and society - Impact on government - Context from privacy perspective - Impact from real life events in Bitcoin (Cyprus, Argentine)
  • 14. Government and privacy – a tug of war - Tor, WikiLeaks, Snowden - Cyprus, Argentine
  • 15. Bitcoin - History  Created by “Satoshi Nakamoto”, an alias for the creator(s). Must be mathematician(s) and programmer(s). Released a paper describing the entire protocol in 2008.  2009-2010: First implementations of the miners. First transactions achieved.  2011-2012: Wikileaks, EFF, Silk Road, 1000+ merchants accept BTC.  2013: Accidental fork of the blockchain, government starts regulating, Coinbase and MtGox run out of trading capacity, exchange rate spikes to $266
  • 16. Part three: Bitcoin and money Making money with Bitcoin – how are people doing it today? Mining, rate speculation, currency exchanges, casino’s, crime, payment processing, securities exchanges.
  • 17. Bitcoin – Has its own securities exchanges  MPEx, BitFunder, btct are Bitcoin denominated stock exchanges  Recent acquisition of a casino for 126315 BTC ($12.4 million USD)  Companies on the exchange are mining companies, exchanges, casino’s, etc. All Bitcoin related ventures.  The securities are priced, naturally in Bitcoin.
  • 18. The first exit in Bitcoin SatoshiDice acquired for 126,315 BTC (€8.69 million) on July 18th. Was trading publicly on MPEx, a Romanian Bitcoin securities exchange.
  • 19. Bitcoin – Startup investors are here and ready  Angel network BitAngels put together $7m from 120 angels  Boost VC in San Mateo has a incubator program for Bitcoin startups  VC’s: Liberty City Ventures has $15m Bitcoin fund, Union Square Ventures, Andreessen Horowitz have invested in Bitcoin startups.  French VC’s : on the beach
  • 20. Bitcoin – follow up currencies are “altcoins”  Primecoin: the mining work results in discovery of new prime numbers  PPCoin: Includes “Proof of stake”  Freicoin: Includes exploration of demurrage
  • 21. Bitcoin – Future plans  Easier payment, more secure  Hardware wallets  Faster transactions  Wider main stream adoption