Bc. Michal Cisárik 	 	 	 	 	 	 	 25.3.2014
Bitcoin
Concepts behind Bitcoin
1. Cryptography
2. Peer to peer network
3. Proof of work
Cryptography
wallet = file (public & private key pair)
address = public key (1FBXz6pKKhdyg5CwT38mFW2oi6xM7uVQe7)
Everyone w...
P2P network
Every node has downloaded every transaction since the
beginning ( ) so that it is easy to check if
that public...
P2P network
New block contain previous block hash,
timestamp, every new transaction and nonce
Block’s hash is then compute...
Proof of work
Creating hashes is computationally trivial, but Bitcoin
requires that the new hash value have to be in
parti...
Proof of work
Right after right hash is computed, “coinbase”
transaction is created and miner is
rewarded by 25 BTC which ...
Mining
25 BTC ~ 300 000 CZK every 10 minutes?
Originally it was 50 BTC (reward is halving)
solo mining
Mining
Solo mining is now impossible so that only option to
mine is by and reward is dividedmining in the pool
51% attack
If bitcoin node (pool) reaches 51% and more hashrate
it can create (and confirm by mining) 2 block in
sequence a...
!
1. Hardware = Infrastructure
	 Blockchain - P2P sharing = secured
!
2. Community = Cryptocurrency
	 BTC - mining, tradin...
3. Protocol
Satoshi Nakamoto?
Paper
November 2008
!
3. Protocol
Bitcoin foundation?
Github repository
January 2009
!
3. Protocol
Security?
Major vulnerability
August 2010
!
Attack can create an indefinite number of bitcoins
184 billion bitc...
3. Protocol - today
Bitcoin foundation?
	 	 8,332 commits made by 221 contributors
	 	 representing 474,151 lines of code :
3. Protocol - today
Satoshi Nakamoto?
Remains anonymous, but we can clearly see that he
has mined BTCs worths ~ 400 000 00...
2. Cryptocurrency
Virtual money?
Reward of the “genesis” block was 50 bitcoins. The
value of the first bitcoin transactions...
2. Cryptocurrency
Trading?
2. Cryptocurrency
Security?
- Heavy DDOS attacks on trading web server due to
poorly coded security - XSS, SQL injection.....
2. Cryptocurrency
Security?
- Multiple malware for stealing BTCs (hidden in cracks)
OSX/CoinThief.A
- Direct hackers attac...
Secure Bitcoins
1. Encrypted backed-up (!!) offline created wallet
2. Printed wallet public & private keys as QR codes
www....
Secure Bitcoin web applications
www.swisscex.com & www.blockchain.info
Altcoins
1. SHA-256:
	 	 - Mazacoin
	 	 - …
!
2. SHA-3:
	 	 - Maxcoin
!
3. Scrypt:
	 	 - Auroracoin
	 	 - Litecoin
	 	 - D...
Mazacoin
First sovereign national crypto coin in history
- based on Zetacoin
- two phase pre-mine
- block reward 5000 MZC
...
Auroracoin
Island inflation is 5215 % in 2014 (CR 94.36%)
Icelandic krona has lost over 99.5% of its value in $
= $85 accor...
Auroracoin
- Based on Litecoin (scrypt)
- 50 % premine
330,000 Icelanders will get 31.8 auroracoin EACH over the
following...
Cryptocurrency 2.0
. Mastercoin - Distributed exchange protocol layer with
network security of Bitcoin, Distributed Applic...
Thank you for your attention
!
Questions?
!
!
Follow me on :
@cisary
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Bitcoin in general - presentation

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Bitcoin in general - presentation

  1. 1. Bc. Michal Cisárik 25.3.2014 Bitcoin
  2. 2. Concepts behind Bitcoin 1. Cryptography 2. Peer to peer network 3. Proof of work
  3. 3. Cryptography wallet = file (public & private key pair) address = public key (1FBXz6pKKhdyg5CwT38mFW2oi6xM7uVQe7) Everyone who has private key is owner of the wallet - Bitcoin core wallet www.bitcoin.org - Multibit www.multibit.org - Electum www.electrum.org - Bitcoin Armory www.bitcoinarmory.com
  4. 4. P2P network Every node has downloaded every transaction since the beginning ( ) so that it is easy to check if that public key (address) has amount of bitcoins which user wants to send (by checking all transactions..) ! Once the wallet is created user just need to connect to the network, create a transaction, sign it with his private key (so that everyone can verify its authenticity) and then just broadcast it to the network ! Transaction is then added to the new with all new (unconfirmed) transactions created within 10 minutes Blockchain block nodes = timestamp servers !
  5. 5. P2P network New block contain previous block hash, timestamp, every new transaction and nonce Block’s hash is then computed…
  6. 6. Proof of work Creating hashes is computationally trivial, but Bitcoin requires that the new hash value have to be in particular form: ! It has to start with certain number of zeros by to current adjusted by currentdifficulty hashrate Nodes connected to the network are forced to try as many as it is needed to create right hashnonces => mining
  7. 7. Proof of work Right after right hash is computed, “coinbase” transaction is created and miner is rewarded by 25 BTC which are added to his wallet (after coinbase transaction is confirmed) New transactions are then broadcasted to the network in new block and stored in the blockchain forever ! No additional changes can’t be made because it would change consistency of every block hash
  8. 8. Mining 25 BTC ~ 300 000 CZK every 10 minutes? Originally it was 50 BTC (reward is halving) solo mining
  9. 9. Mining Solo mining is now impossible so that only option to mine is by and reward is dividedmining in the pool
  10. 10. 51% attack If bitcoin node (pool) reaches 51% and more hashrate it can create (and confirm by mining) 2 block in sequence and create transactionsdouble spending Due to the current hash rate it is (almost) impossible
  11. 11. ! 1. Hardware = Infrastructure Blockchain - P2P sharing = secured ! 2. Community = Cryptocurrency BTC - mining, trading, spending = supported ! 3. Software = Protocol : Bitcoin foundation - coding = in development + 3-rd party elements: Websites, services - involving = expanding Bitcoin activities / characteristics
  12. 12. 3. Protocol Satoshi Nakamoto? Paper November 2008 !
  13. 13. 3. Protocol Bitcoin foundation? Github repository January 2009 !
  14. 14. 3. Protocol Security? Major vulnerability August 2010 ! Attack can create an indefinite number of bitcoins 184 billion bitcoins were generated in a transaction, and sent to two addresses on the network => Within hours, the transaction was spotted and erased from the transaction log. The bug was fixed and the network forked (only major security flaw ever found and exploited)
  15. 15. 3. Protocol - today Bitcoin foundation? 8,332 commits made by 221 contributors representing 474,151 lines of code :
  16. 16. 3. Protocol - today Satoshi Nakamoto? Remains anonymous, but we can clearly see that he has mined BTCs worths ~ 400 000 000 $ ! (~7 727 600 000 CZK today) bitcoins are untouched
  17. 17. 2. Cryptocurrency Virtual money? Reward of the “genesis” block was 50 bitcoins. The value of the first bitcoin transactions were negotiated by individuals on the bitcointalk forums with one notable transaction involving a 10 000 BTC pizza (121 167 000 CZK today)
  18. 18. 2. Cryptocurrency Trading?
  19. 19. 2. Cryptocurrency Security? - Heavy DDOS attacks on trading web server due to poorly coded security - XSS, SQL injection.. bitcash.cz mtgox.com bitcurex.com - Succesfull attacks - all BTCs in wallets are gone 11.11.2013 7. 2. 2014 14. 3. 2014
  20. 20. 2. Cryptocurrency Security? - Multiple malware for stealing BTCs (hidden in cracks) OSX/CoinThief.A - Direct hackers attacks ! - Hardware damage / lost notebooks (smartphones)
  21. 21. Secure Bitcoins 1. Encrypted backed-up (!!) offline created wallet 2. Printed wallet public & private keys as QR codes www.truecrypt.org www.bitaddress.org www.blockchain.info - online wallet
  22. 22. Secure Bitcoin web applications www.swisscex.com & www.blockchain.info
  23. 23. Altcoins 1. SHA-256: - Mazacoin - … ! 2. SHA-3: - Maxcoin ! 3. Scrypt: - Auroracoin - Litecoin - Dogecoin - … Crypto 2.0 - Nextcoin - Mastercoin - Ethereum www.altcoincalendar.info/calendar
  24. 24. Mazacoin First sovereign national crypto coin in history - based on Zetacoin - two phase pre-mine - block reward 5000 MZC www.mazacoin.org
  25. 25. Auroracoin Island inflation is 5215 % in 2014 (CR 94.36%) Icelandic krona has lost over 99.5% of its value in $ = $85 according to the Central Bank
  26. 26. Auroracoin - Based on Litecoin (scrypt) - 50 % premine 330,000 Icelanders will get 31.8 auroracoin EACH over the following year by the initiation called “Airdrop” www.auroracoin.org
  27. 27. Cryptocurrency 2.0 . Mastercoin - Distributed exchange protocol layer with network security of Bitcoin, Distributed Applications, Distributed Exchange . Nextcoin - first 100% Proof-of-Stake currency written from scratch, completely decentralized, eliminates risk of a 51% attack, “forging” instead of mining . Ethereum - Decentralized Autonomous Corporations Turing-complete scripting language, user-issued currencies, smart property, smart contracts, decentralized exchange, easy to scale
  28. 28. Thank you for your attention ! Questions? ! ! Follow me on : @cisary

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