Presentation of Bitcoin

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Presentation of Bitcoin

  1. 1. Current Payment System • Token-based system 1. Paper cash 2. Stamp 3. Gift card • Account-based system 1. Credit card 2. Paypal 3. Bank account
  2. 2. Problems of current payment system Cash: Easy to carry and transact, untraceable... Lose, stolen… Electronic payment system: Reduces the risk to lose, stolen Losing privacy, traceable… Current financial system is controlled by government, may lead to inflation...
  3. 3. Digital Cash Introduced by Chaum in 1982 Features: • security • privacy • transferability • off-line payment • divisibility Problems: Double spending
  4. 4. BitCoin Designed by Satoshi Nakamoto in 2008 •Account •Transaction •Block
  5. 5. BitCoin Account • 19MrhxNSDyMRQ8NXn8BR9kLmntQMEQofNc • Public key & Private key • Wallet file
  6. 6. How it works: Transactions • • • • • • Payer’s account ID Payee’s account ID Amount Payer’s signature Payee’s public key Hash of previous transaction
  7. 7. How it works Blocks: • • • Hash of previous block Transactions happened in last ten minutes A nonce
  8. 8. How does BitCoin solve double spending problem
  9. 9. Problems of BitCoin: Technical bottleneck: • Space: huge disk space will be required for chain of blocks • SHA256: safe for now • Anonymity: Can be analysed by some interested party
  10. 10. Problem of BitCoin Financial problem: Cause deflation Equation of Exchange P*Q=M*V • • • • M, is the total nominal amount of money in circulation on average in an economy. V, the velocity of money, that is the average frequency with which a unit of money is spent. P, is the price level. Q, is an index of real expenditures (on newly produced goods and services). When M * V keeps same or increase in a fixed speed the price of goods and services (P) is inversely proportional to the amount of goods and services in market
  11. 11. Market price of BitCoin http://blockchain.info/charts/market-price
  12. 12. What’s happening now: A story about success Cameron and Tyler Winklevoss, the twins best known for their role in the early days of Facebook, believe the online currency bitcoin is "digital gold."
  13. 13. What’s happening now: A sad story… Homeless, Unemploy ed, and Surviving on Bitcoins http://www.wired.com/wirede nterprise/2013/09/bitcoinhomeless/
  14. 14. Future work for BitCoin 1. Solve technical bottleneck 2. Combine BitCoin with economic activities

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