Bitcoin is a decentralized digital currency that uses cryptography to secure transactions. It allows for peer-to-peer transactions without intermediaries like banks. Transactions are recorded on a public ledger called the blockchain, which uses mining and proof-of-work to validate transactions and create new blocks. Miners are incentivized by new bitcoins and transaction fees to devote resources to processing transactions and maintaining the blockchain. While it enables censorship-resistant transactions, bitcoin is not legal tender and faces risks from volatility, acceptance, and illicit use.

1. Bitcoin
Open source P2P money
By:
mahdi ataeyan
http://www.ataeyan.com

2. What is Bitcoin?
• no banks
• no transaction fees
• No real name
• consensus network
• completely digital money
• decentralized peer-to-peer payment
• no central authority or middlemen

3. Money
●
a medium of exchange
●
a unit of account
●
a store of value
●
a standard of deferred
payment

4. Money must be:
●
Rare
●
Non-scarce!
●
Strong

5. Fiat money

6. Bretton Woods Conference
• most countries adopted
fiat currencies that were
fixed to the U.S. dollar.
• The U.S. dollar was in
turn fixed to gold.

7. Nixon Shock

8. Milton Friedman

9. Evolutionary economics

10. history
• pseudonymos developer
• Satoshi Nakamoto
• in april he/she saying he was moving on to other things and
he disappeared from the internet.
• Cypherpunk

11. Cypherpunk
any activist advocating
widespread use of strong
cryptography as a route to
social and political change

12. Satoshi Nakamoto?!

13. Single-entry bookkeeping
• one sided accounting entry

14. Double-entry bookkeeping
• debit entry - credit entry
• Equity = Assets − Liabilities

15. triple-entry bookkeeping (momentum)
• changes in balances are the recognized events
• acceleration in revenue earning
• require three entries to implement

16. Ledger
• the principal book or
computer file
• recording and totaling
economic transactions

17. Accounting (ledger)
• payer X sends Y bitcoins to payee Z
• public ledger (block chain)

18. Bitcoin & triple-entry
• changes in balances are the recognized events
• acceleration in revenue earning
• require three entries to implement

19. Public key crypto
Alice
0110101010
1101110100
0011011010
Large
Random
Number
Key
Generation
Program
Public Private
An unpredictable (typically
large and random) number is
used to begin generation of an
acceptable pair of keys
suitable for use by an
asymmetric key algorithm.

20. Public key encryption
Hello
Alice!
Alice's
private key
Encrypt
6EB69570
08E03CE4
Hello
Alice!
Decrypt
Alice's
public key
Bob
Alice
In an asymmetric key
encryption scheme, anyone
can encrypt messages using
the public key, but only the
holder of the paired private
key can decrypt. Security
depends on the secrecy of the
private key.

21. Zero-knowledge proof

22. Hash function
hash
functionkeys
John Smith
Lisa Smith
Sam Doe
Sandra Dee
hashes
00
01
02
03
04
05
:
15

23. Who Bitcoin work?

24. Who Bitcoin work?
• Balances - block chain
• Transactions - private keys
• Processing – mining

25. Balances - block chain
• a shared public ledger.
• All confirmed transactions are included in the block chain.
• The integrity and the chronological order of the block chain
are enforced with cryptography.

26. Block chanes

27. Block chanes

28. Transactions - private keys
• a transfer of value between Bitcoin wallets.
• private key or seed is used to sign transactions.
• All transactions are broadcast between users.
• Transactions confirmed by the network in 10 minutes.
• Transactions confirmed by a process called mining.

29. Problem!
• Fork
• double spend
• trust

30. Proof-of-work system
●
requiring some work from the service requester
●
usually meaning processing time by a computer
●
Asymmetry
●
must be moderately hard (but feasible) on the requester side
●
easy to check for the service provider
●
Challenge-response and Solution-verification

31. Challenge-response

32. Solution-verification

33. Hashcash
• X-Hashcash: 1:20:1303030600:adam@cypherspace.org
::McMybZIhxKXu57jd:FOvXX
• The sender prepares a header and adds an initial random
number
• computes the 160 bit SHA-1 hash of the header to first 20 bits
of the hash become zeros
• The recipient's computer calculates the 160-bit SHA-1 hash of
the entire string and compare this hash with sender's hash.

34. • Integer square root modulo a
large prime
• Weaken Fiat–Shamir
signatures
• Ong–Schnorr–Shamir
signature broken by Pollard
• Partial hash inversion as
Hashcash
• Hash sequences
• Puzzles
• Diffie–Hellman-based puzzle
• Moderate
• Mbound
• Hokkaido
• Cuckoo Cycle
• Merkle tree based
• Guided tour puzzle protocol
List of proof-of-work functions

35. Proof-of-stake

36. Processing – mining
• distributed consensus system.
• including transactions in the block chain and confirm.
• enforces a chronological order in the block chain.
• protects the neutrality of the network.
• allows different computers to agree on the state of the
system.
• creates the equivalent of a competitive lottery that prevents
any individual from easily adding new blocks consecutively in
the block chain.

37. Create custom address

38. Crisis

39. Economic bubble

40. Greater fool theory

41. Tulip mania

42. Financial crisis of 2007–08

43. Dot-com bubble

44. wallet
• Desktop wallets
• Mobile wallets
• Online wallets
• Hardware wallets
• Paper wallets

45. Security
• Unauthorized spending
• Double spending
• Race attack
• History modification
• Selfish mining
• Deanonymisation of clients

46. advantages
• Payment freedom
• Very low fees
• Fewer risks for merchants
• Security and control
• Transparent and neutral

47. disadvantages
• Degree of acceptance
• Volatility
• Fewer risks for merchants
• Ongoing development

48. legal

49. litecoin

50. Peercoin

51. BlackCoin

52. Darkcoin

53. BTM
BitAccess
Bitocean
BitXatm
BTCPoint
CoinOutlet
Diamond Circle
General Bytes
GenesisCoin
InterWallet
Lamassu
LocalBitcoins
Robocoin
Numoni
Skyhook

54. BTM

55. secrecy and money laundering

56. Drugs
• Drugs
• Child pornography
• Hitman Network
• ...

57. reference
• https://www.google.com/finance
• https://litecoin.org/
• https://bitcoin.org/en/
• http://bitlegal.io/
• https://bitcoin.org
• https://bitcoin.org/bitcoin.pdf