Main Motivators No-cost anonymous transfer Control of inflation Satoshi Nakamoto Bitcoin: A peer to peer electronic cash system Started working on the idea in 2007, first bitcoin transaction In 2009, left the project in 2010. Bitcoin is currently maintained by a team of volunteer developers
Which copy is the real one? Data represents money Data costs nothing to copy Coins must remain unique
Hash Function Data In: A Ten years ago a crack commando unit was sent to prison by a military court for a crime they didn't commit. These men promptly escaped from a maximum security stockade to the Los Angeles underground. 439879837 439879837 Data In: Knight Rider, a shadowy flight into the dangerous world of a man who does not exist. Michael Knight, a young loner on a crusade to champion the cause of the innocent, the helpless in a world of criminals who operate above the law. 748392050 Data In: J night Rider, a shadowy flight into the dangerous world of a man who does not exist. Michael Knight, a young loner on a crusade to champion the cause of the innocent, the helpless in a world of criminals who operate above the law. 185858585
Public Key Cryptography Relatively Prime Number 987543098750293874509483750927409857094381324 Public Key 987543098750293874509 Private Key 483750927409857094381324 Plain Text Just the good ol' boys, never meanin' no harm. Beats all you've ever saw, been in trouble with the law since the day they was born. Plain Text Whfg gur tbbq by' oblf, arire zrnava' ab unez. Orngf nyy lbh'ir rire fnj, orra va gebhoyr jvgu gur ynj fvapr gur qnl gurl jnf obea. Plain Text Just the good ol' boys, never meanin' no harm. Beats all you've ever saw, been in trouble with the law since the day they was born. Cypher Text Whfg gur tbbq by' oblf, arire zrnava' ab unez. Orngf nyy lbh'ir rire fnj, orra va gebhoyr jvgu gur ynj fvapr gur qnl gurl jnf obea. Public Key 777543098750293874432 Private Key 62215092740985709437432
Digital Signature + Encrypted Hash Hash = Here's the story, Of a lovely lady, Who was bringing up three very lovely girls. All of them had hair of gold, Like their mother, The youngest one in curls. Here's the story, Of a man named Brady, A8uce3uea Public Key 987543098750293874509 Private Key 483750927409857094381324 Sksrcu3s4ruc97ykjqnt cd43cud843890oadnu Here's the story, Of a lovely lady, Who was bringing up three very lovely girls. All of them had hair of gold, Like their mother, The youngest one in curls. Here's the story, Of a man named Brady,
Miners and Users Network User Miner Miner Miner Miner Miner User User User User User User User
Slow down the miners! There is only one winner every 10 minutes yet there is any number of miners packaging up the next block. http://www.flickr.com/photos/peternijenhuis/199670739/ With busywork! Mindless busywork!
“For a block to be Accepted, it must hash To a value with 4 Leading zeros” = + = = Transaction Data Random Number 12345678 Hash 8374923847 Random Number 23456781 Hash 0038274634 Random Number 23456781 Hash 0038274634
Difficulty Exchange Rate Expected payout 4,061,000 Megahashes $19USD/coin Hardware 600 Megahashes Average time to win One block (50 coins) http://www.alloscomp.com/bitcoin/old_calculator.php 47 Days $19USD * 50 / 47 days $20.20USD/day
30-Nov-2010 09:25 <+someone> King is running something like 24 5970s 09:25 < donpdonp> zomg. 09:25 <+someone> he has really cheap electricity 09:25 <+someone> and he's using them to heat his house this winter, basically 09:25 <+someone> he started very early with a custom miner. 09:25 <+someone> and all his equipment is already paid for from selling his btc 09:25 <+someone> he's spent around $12000 now I think 09:25 <+someone> maybe more 09:26 <+someone> he has about 20-30% of the hashes on the network The early days and the king of the miners 2010-Dec-10 15:09 < King> if difficulty keeps rising like this even payoff of a 5970 @ $0.10/kWh is uncertain 15:12 < King> and at $.10/kWh that 5970 costs about $25/month in power 15:12 < King> yeah, I'm down to 1250btc/day 15:12 < King> at least until my next 12 5970s arrive 15:12 < someguy> that's $250 a day 15:13 < King> then I should be back at ~ 2kBTC/day 15:13 < King> well... it's also >$20k in hardware
1250btc * $19 = $23,750/day King> yeah, I'm down to 1250btc/day (Nov 2010) http://www.flickr.com/photos/jeff-godfrey/409532253/
Liberty Dollar Creator found guilty of 'domestic terrorism' for trying To undermine the US Dollar.
Opportunities Arbitrage between markets Avoid the risk of USD by offering real goods and services for BTC (*taxes) Risks Legally untested SHA256 has a lifetime
Zimbabwe Dollar, 1980 - 2009 On 20 February 2008, the Central Statistical Office said that officially, inflation has in January 2008 gone past the 100,000% mark he Central Statistical Offices (CSO) showed that annual inflation rose by 7,336,000 percentage points to 9,030,000% by June 20 (2008) On 16 February 2006, the governor of the Reserve Bank of Zimbabwe , Gideon Gono, announced that the government had printed ZW$20.5 trillion in order to buy foreign currency to pay off IMF arrears .  In early May 2006, Zimbabwe's government announced that they would produce another ZW$60 trillion.  The additional currency was required to finance the recent 300% salary increase for soldiers and policemen and 200% increase for other civil servants.
It isn’t much of a stretch to imagine Zimbabwe in ten years’ time—or a whole group of developing nations with a history of crippling inflation—adopting a new currency that is independent, incorruptible, and anti-inflationary by design. In short, something a whole lot like Bitcoin. No, it isn’t the future, but it just may point the way. http://techcrunch.com/2011/05/21/the-bitcoin-experiment/
http://www.flickr.com/photos/damienclauzel/5798596806/ The End
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