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Bitcoin meetup @Santiago de Chile
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Bitcoin meetup @Santiago de Chile


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Slides from the bitcoin meetup held in Santiago de Chile on 23rd May 2013.

Slides from the bitcoin meetup held in Santiago de Chile on 23rd May 2013.

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  • 1. Bitcoin Meetup23rd May, Centro Movistar InnovaSkyBulls#SUPbitcoin
  • 2. Agenda 6:00 – 6:05 Introduction Darren Camas 6:05 – 6:10 Intro to the sharing economy Dalma Berkovics 6:10 – 6:20 What is Bitcoin? Adam Stradling 6:20 – 6:30 Technology behind Bitcoin Philippe Camacho 6:30 – 6:40 Bitcoin’s financial implications Uday Bansal 6:40 – 7:00 Q&A Darren CamasBitcoin Meetup#SUPbitcoin
  • 3. By Dalma BerkovicsIntro to the Sharing Economy OuiShare Chile Connector Ex Sustainability consultant @BeCitizen, Paris HEC, Paris 2011 (Master in Management)#SUPbitcoin
  • 4. The Sharing Economya real global trend#SUPbitcoin
  • 5. You don’t want the drill, youjust want that ******* hole!#SUPbitcoin
  • 6. Fueled by the economicdownturn and P2P techWhy is it happening? Economic downturn Environmental concerns Too many stuffs Social benefitsWhat conditions needed? Peer-to-peer technologies Trust between strangers Critical massRachel Botsman- What’s mine is yours#SUPbitcoin
  • 7. OuiShareOpen community to accelerate the shift towards a morecollaborative economy+40 events in Europe since January 2012 |Latin America Tour in July 2013Collaborative onlinemagazine#SUPbitcoin
  • 8. OuiShare looks into a wide range ofconcepts of the Sharing Economy#SUPbitcoin
  • 9. About Adam StradlingWhat is Bitcoin? Co-founder and former COO of Co-founder and Advisor of – Start UpChile, gen 6.2 Founder of – Recruiting and research inbanking, finance, and technology#SUPbitcoin
  • 10. About TradehillWhat is Bitcoin? The first “professional” bitcoin company TH Gained 40k+ users in the first 90 days TH processed tens of millions in transactions in the first 90days TH was featured or mentioned in tens of global tier one newssources (like here: ) TH owned TH just re-launched on March 18th, 2013#SUPbitcoin
  • 11. Money is just data in a databaseWhat is Bitcoin? Your credit card, an encrypted number in the network One big ledger : accounting, audits, IOUs, TRUST! Trust, Trust, Trust – Increases the cost of doing business High barriers to entry in banking, finance, payments What if this “money database” were P2P? Can’t be manipulated, can’t double spend No trust - all accounting is public, open source, P2P#SUPbitcoin
  • 12. Fundamental Usage CasesWhat is Bitcoin? International value transfers: IBAN system – expensive, 3-5 days, multiple banks Other: western union, greendot, paypal – similar issues Highly fragmented global payments network Store of wealth: Volatile to the upside Deflationary currency True supply and demand pricing – i.e. no QE possible#SUPbitcoin
  • 13. Fundamental Usage CasesWhat is Bitcoin? The 2.5 billion “unbanked” (mobile, e-commerce) No TTP – In the network we trust No disputes – Did you send the money? No chargebacks – It’s digital cash Micro transactions – Can you send me a dollar? Gambling - Money in, money out, ten mins Anonymous – Privacy, privacy, privacy#SUPbitcoin
  • 14. Resources for NewcoinersWhat is Bitcoin? Basic: High level, technical:
  • 15. Announcing coin4ce.comWhat is Bitcoin? Adam is Founder and CEO, Philippe is Co-founder and CTO, Jacob Lundberg, Partner and Biz Dev Searching for: Front and back-end developers Marketing, biz dev, support/CS Investors#SUPbitcoin
  • 16. By Philippe CamachoHow to explain Bitcointo your mother? Software Developer PhD student in Cryptology Agile coach Now Bitcoin enthusiast CTO and co-founder at
  • 17. Distributed System,Open Source, DigitalSignatures, Collision-Resistant HashFunctions, Broadcasttransactions, Merkletrees,…Very interesting…I can send bitcoin viaemail right?Me My mother#SUPbitcoin
  • 18. Maybe myexplanationwas not veryclear…#SUPbitcoin
  • 19. (Let’s do it again)What isBitcoin?#SUPbitcoin
  • 20. Bitcoin It’s like gold expect that it’s digital No central authority controls the coins Limited number of bitcoins (btc) You can keep it or transfer it You don’t have to reveal your identity#SUPbitcoin
  • 21. Hum… Looks nice,but how does it work?#SUPbitcoin
  • 22. #SUPbitcoin
  • 23. Solution 0Example: Linden Dollars#SUPbitcoin
  • 24. I control everything.#SUPbitcoin
  • 25. Fix #1Bitcoin is a distributed protocol and is open source.#SUPbitcoin
  • 26. Solution 11 BTC2 BTC1 BTC#SUPbitcoin
  • 27. Great!I can spend my bitcoins as many times as I want !(double spending)#SUPbitcoin
  • 28. Fix #2 The network shares a transaction book#SUPbitcoin
  • 29. Solution 2Origin Destination AmountHomer Lisa 1 BTCHomer Bart 2 BTCLisa Bart 1 BTC… … …The network checksthat an account isfunded beforeallowing a newtransfer.#SUPbitcoin
  • 30. As every transaction is public,the identity of user is revealed.Nobody will want to use such a system!#SUPbitcoin
  • 31. Fix #3 Replace user id by some random number.#SUPbitcoin
  • 32. Solution 3Origin Destination AmountHHY67J81 JH89HF8M 1 BTCHHY67J81 LAU4V6UU 2 BTCJH89HF8M LAU4V6UU 1 BTC… … …Note that any usercan create multipleaccounts.#SUPbitcoin
  • 33. Every account id is public, thus I can transfer moneyfrom an account that is not mine.#SUPbitcoin
  • 34. Fix #4: Digital SignaturesPrivate Key Public Key= Bart’s addressSignMessageSignature#SUPbitcoin
  • 35. SignatureFix #4: Digital SignaturesAccept /RejectVerify#SUPbitcoin
  • 36. Fix #4: Digital SignaturesNon-repudiation Unforgeability(You can’t sign in Bart’s name)#SUPbitcoin
  • 37. Solution 4Origin Destination Amount SignatureHHY67J81 JH89HF8M 1 BTC Djsh767HHY67J81 LAU4V6UU 2 BTC 8988ddJH89HF8M LAU4V6UU 1 BTC djDhd7n… … …Every bitcoin addresscorresponds to thepublic key.Message#SUPbitcoin
  • 38. I can still do very bad things…What about publishing a wrong history of transactions…#SUPbitcoin
  • 39. Things get a bit more complicated…Name: Shafi GoldwasserProfession: Computer scientist at MITSpeciality: CryptographyOther: Turing Award (march 2013)Your mother#SUPbitcoin
  • 40. FIX #5: Cryptographic Hash FunctionsH011100011100011101000101010001001000110101010010110011001111000111001000010100010111011011010110100111Huge inputFixed sized output(e.g. 256 bits)#SUPbitcoin
  • 41. FIX #5: Cryptographic Hash Functions Security properties One-way Given the output y it’s hardto compute some input xsuch that H(x) = y Collision-Resistant It’s hard to find two differentvalues x,x’ such thatH(x)=H(x’)#SUPbitcoin
  • 42. Solution 5HH HTx1;Tx2;Tx3…Initial value ofthe chain:coinbaseTx34;Tx35;Tx36…Tx54;Tx55;Tx56…Block oftransactionsBlock chain…#SUPbitcoin
  • 43. Who computes the next block?#SUPbitcoin
  • 44. Proof of work0000000001000100001100100001010011000111010000100101010010110110001101011100111110000100011001010011101001010110110101111100011001110101101111100111011111011111H1001101|| x 000||10Find the nonce x suchthat the output startswith 3 zeros.(*) If you find a better way you may (1) get rich, (2) become famous (Turing award), or (3) both.#SUPbitcoin
  • 45. Solution 5 The first node that manages tosolve the computational puzzle(nonce) wins the block. The network extends the chainfrom the newly computed block. The network always chooses thelargest chain.Damned!I need to control 51%of the network….#SUPbitcoin
  • 46. Nice in theory but why wouldpeople waste their CPU cycles?#SUPbitcoin
  • 47.  The winner of a block is rewarded 25 BTCby the network(BTW, this is how bitcoins are created). This process is called mining.#SUPbitcoin
  • 48. 1 0-#SUPbitcoin
  • 49. By Uday BansalBitcoin’s financial implications Founder and CEO – SkyBulls Certified Derivatives Trader (NSE India) Ex strategy consultant @KPMG Previous clients – Goldman Sachs, JP Morgan, BP,Samsung, Thyssen Krupp, Thomas Cook and others London Business School 2010#SUPbitcoin
  • 50. History of money#SUPbitcoin
  • 51. History of money#SUPbitcoin
  • 52. History of money#SUPbitcoin
  • 53. History of money#SUPbitcoin
  • 54. Fiat money Money creation Fractional Reserve Banking Expansionary monetary policy M0, M1, M2, M3 Government debt Inflation#SUPbitcoin
  • 55. Fiat money#SUPbitcoin
  • 56. Fiat money#SUPbitcoin
  • 57. Bitcoin === Digital gold No central authority Based on mistrust Not a fiat currency Mined --> limited supply#SUPbitcoin
  • 58. Failure of fiat currency No central authority “Let it be” Government debt Failure of a country’s economy Devaluation#SUPbitcoin
  • 59. Failure of fiat currency1 USD equivalentApr 1919: 12 MarksDec 1923: 4.2t Marks#SUPbitcoin
  • 60. Failure of fiat currencyBy late 2008Inflation = 79.6m %$US 1 = $Z 2.6t#SUPbitcoin
  • 61. Failure of fiat currencyMore recent failures Cyprus Freezing bank accounts Argentina Default on debt Inflation of US dollar#SUPbitcoin
  • 62. Is Bitcoin safe?#SUPbitcoin
  • 63. Is Bitcoin better?YES! Non-fiat currency Supply – demand No hyperinflation Low transaction feeNO! Govt. interference. No tax Speculative value Deflation Can’t outsource saving Not traceable#SUPbitcoin
  • 64. Q&A#SUPbitcoin