Presentation of Bitcoin
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  • 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. 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. Digital Cash Introduced by Chaum in 1982 Features: • security • privacy • transferability • off-line payment • divisibility Problems: Double spending
  • 4. BitCoin Designed by Satoshi Nakamoto in 2008 •Account •Transaction •Block
  • 5. BitCoin Account • 19MrhxNSDyMRQ8NXn8BR9kLmntQMEQofNc • Public key & Private key • Wallet file
  • 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. How it works Blocks: • • • Hash of previous block Transactions happened in last ten minutes A nonce
  • 8. How does BitCoin solve double spending problem
  • 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. 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. Market price of BitCoin
  • 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. What’s happening now: A sad story… Homeless, Unemploy ed, and Surviving on Bitcoins nterprise/2013/09/bitcoinhomeless/
  • 14. Future work for BitCoin 1. Solve technical bottleneck 2. Combine BitCoin with economic activities