Bitcoin Level 2

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John Mardlin of Coin Forest, and Gareth MacLeod of Tinkercoin's presentation on why Bitcoin is important, and explain the concepts of the proof of work, and block chain technology that make it …

John Mardlin of Coin Forest, and Gareth MacLeod of Tinkercoin's presentation on why Bitcoin is important, and explain the concepts of the proof of work, and block chain technology that make it revolutionary.

Regardless of what happens to Bitcoin Itself, crypto currencies are here to stay, and will have immense and unforeseen impacts in the near future.

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  • 1. Bitcoin Level 2
  • 2. “We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers. As a medium of exchange, Bitcoin has clear potential for growth, in our view.” - Bank of America Report, Dec. 5, 2013
  • 3. The point: Bitcoin lets us build a better financial system
  • 4. Primary Characteristics ● Peer-to-peer ● Decentralized ● Open Source
  • 5. Bitcoin makes it better ● Remittances ● Escape bad currencies ● Microtransactions
  • 6. The Technology of Bitcoin
  • 7. The Blockchain ● A global log of every bitcoin transaction that ever takes place ● Bitcoins exist only as account balances in the blockchain ● Adding a transaction to the blockchain is the action of sending that money
  • 8. The Network ● Bitcoin is a peer-to-peer network ● You join the network by running a program called a Bitcoin Client ● The computers in the network relay transactions to each other and build the blockchain
  • 9. Transactions ● To send bitcoins, your client announces the transaction over the network ● The nodes that hear it verify it and then repeat it to their neighbours
  • 10. Transactions ● Transactions are composed of inputs and outputs ● The inputs to a transaction are the outputs from a previous transaction ● “Owning bitcoins” is having the key which allows you to spend an output
  • 11. Transactions
  • 12. This is a big Breakthrough ● The entire network is able to come to an agreement ● Malicious entities in the network cannot do evil
  • 13. Bitcoin Ecosystem
  • 14. Places you can spend Bitcoin 20,000+ online retailers, including:
  • 15. It’s easy to accept Bitcoins online 16tN2C5GvUhERbLxe9oC3GseaJvBXiQCq2
  • 16. Ways to get Bitcoins ● Exchanges: CaVirtex, Bitstamp ● Brokerages: Coinbase, Tinkercoin ● In person sales: Localbitcoins, DVLB
  • 17. Bitcoin and Governments Three case studies
  • 18. United States ● March 2013 FinCen guidance document is very harsh on Bitcoin businesses ● June 2013, Regulators cease-and-desist the nonprofit Bitcoin Foundation for unlicensed money transmission
  • 19. United States ● October 2013, FBI Investigation shuts down Silk Road and arrests it’s owner on charges of drug trafficking and money laundering. ● Important: the indictment acknowledged his use of Bitcoin, but did not condemn it except the purposes for which he used it
  • 20. United States “There are plenty of opportunities for digital currencies to operate within existing laws and regulations.” - U.S Secret Service, November 2013 ● FEC says Bitcoin can be accepted as political donations
  • 21. China ● December 2013, Companies can’t price products in Bitcoin or buy or sell Bitcoin ● Private use and ownership of Bitcoins is perfectly legal
  • 22. Canada ● Canada has the most liberal Bitcoin regulation in the world
  • 23. Canada “Your [exchange] is not, at this time, engaged as a Money Services Business in Canada.” - Letter from FinTRAC to the operator of a Canadian exchange
  • 24. Bitcoin is not finished
  • 25. Engineering Hurdles ● Scale Bitcoin from 1 transaction per second to 1000s per second ● The Blockchain and Tragedy of the Commons ● Increase privacy while not encouraging illegal use
  • 26. Adoption Hurdles ● It’s still too hard for many people to use ● Missing killer-application for Bitcoin in the first world ● Price volatility makes people nervous to hold bitcoins
  • 27. What are the downsides to Bitcoin? ● Deflationary monetary policy ● Anonymous, but not ● Difficult to regulate and tax
  • 28. Crazy ideas ● contracts inside the blockchain ● blockchain as copyright protection ● Alternative cryptocurrency explosion
  • 29. Mining Pool Network Share