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Bitcoin final
 

Bitcoin final

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  • The Bitcoin paper was published in 2008, by a pseudonymous person (or group) called Satoshi Nakamoto (i.e., the person may or may not be real).The main attractive factor of bitcoin is that its totally anonymous. Any transaction that is made in the bitcoin network will be totally anonymous (i.e., your identity can not be revealed in any of your transaction).
  • Just as similar to mining gold, not everyone can mine gold, and to even those who do mine gold, its not an easy task. It requires heavy machinery. Similarly mining bitcoins requires heavy computational power. And also the number of bitcoins that can be mined is always controlled by the system, and thus it is calculated that all the bitcoins will have been mined approx by 2045.
  • There are sites that pay you in bitcoin, for example Freelancing sitesSites that pay you bitcoins for watching advertisement videos, and reading articlesSites that pay you bitcoins for visiting advertisement websites.There are people that pay you bitcoins for small services.
  • Whenever a transaction is made in the bitcoin network, everyone in the entire network knows about this transaction. And all transactions since the start of bitcoin system is recorded and known by each system in the network.

Bitcoin final Bitcoin final Presentation Transcript

  • Bitcoin (BTC) Varsha Karunakaran Nathestha Kaya 1
  • Introduction • Introduced by an anonymous geek Satoshi Nakamoto, Japan on 3rd January 2009. • Distributed crypto-currency • Decentralized digital currency i.e., no central authority (e.g., RBI , Federal Reserve) • Represented by shorthand BTC just like Rs, $ • It uses open source code (any one can see how it works) • Used internationally • Smallest unit of bitcoin is 0.00,00,00,01 satoshi just like 1 paise in a rupee 2
  • How bitcoins are created called mining • Bitcoins are created through a process (similar to mining gold). • In simple words when a certain complicated mathematical problem is solved on the network bitcoins are rewarded for each block • Currently 25 BTC are generated for every block within 10 minutes (by 2017 it will be 12.5BTC) 3
  • • For every 4 years the reward generated is adjusted i.e from 2009-2012 -10,500,000 coins were generated .In 2012-2016 it will be reduced to 5,250,000 and so on • Thus the total number of bitcoins generated is limited to 21,000,000 i.e controlled currency supply 4
  • • Physical bitcoins – These physical representations of bitcoins have to be broken open to reveal a piece of paper with private key – But in this case there is possibility that the creator can still hold the private keys for it 5
  • Bitcoin address • Bitcoin addresses should be single use • Whenever you want to receive a payment, you should generate a new address • This ensures security of your wallet • It also makes it impossible to know who sent those coins • The most popular site for bitcoin wallets, and transfers is http://blockchain.info (visit to get your own bitcoin wallet) 6
  • Who can own it • Techies can own it by mining on their own (it’s like trying to find gold under your back yard). • For others – Accept as payment from somebody who owns it – Through services which trade bitcoins for your local currency i.e., Rupee – Buy them through bitcoin exchanges – Trade cash for bitcoins in person through local directory as their transactions are made public 7
  • Where to store Just like the one you use to store physical currency, bitcoin system offers a wallet (basically a public key) – Allows to transact – Gives ownership of bitcoin balance – All wallets can interoperate with each other just like your email • Each wallet has its own unique 33 characters and since all of them are synchronized, fraudulent activities are impossible 8
  • • Software wallets o installed in computer, o gives a complete control to protect your money and do backup • Mobile wallets o carry it wherever you want o Pay in stores by scanning a QR code and ‘tap to pay’ • Web wallets o Use bitcoin anywhere you want o Less effort to protect your wallet 9
  • Pros • Easy to send through internet, without third party interference • Irreversible by design • Fast transaction • Costs very less than other payments • Cannot be manipulated by any govt., bank, organization or individual i.e., you can escape tax payments. • It doesn’t have any border limitation, and can be used globally 10
  • Cons • Bitcoins are accepted as exchange for illicit substances and for online gambling • Around 4.5 to 9 % bitcoins transacted for purchases of drugs at a single online market, Silk Road • Gun dealers use it to sell arms without background check • Encourages cyber criminals to move and steal funds • Bot nets are engaged in covert mining of bitcoins by consuming computing cycles, using extra electricity and increasing computer temperature 11
  • Is it a bubble? • Bubble –if suddenly everyone stops accepting a currency (dollar, rupee) its value will drop to zero • Appropriate answers cannot be given but its unlikely to happen • E.g. even when Somalia government collapsed 20 years ago , Somali shillings are still accepted as payment 12
  • India and China bans BTC, because… • It involves risk of money laundering • It volatility( in Jan 2013 one bitcoin valued at 50$ by Dec it hit 1200 $ before softening to about 800 $) and its lack of ‘backing assets’ • Bitcoin’s mobility i.e., its borderless and the Govt cannot control them 13
  • • In china the citizen were forbidden from taking more than 50,000$ out of their country in a year • In 2012 ,17 million Chinese made pilgrimage to Macau for gambling chips which can be converted to foreign currency and sent them abroad • Bitcoin was a way for wealthy Chinese to avoid expenses of a trip to Macau • China’s biggest search engine Baidu stopped accepting bitcoin • Alibaba also stopped accepting bitcoins 14
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  • • In India ,gold imports were slapped with heavy restrictions and capital controls were tightened,preventing money from being sent or invested abroad • Bitcoin was an alternative in this case • On December 24th india warned to suspend bitcoin exchanges • But however this activity requires only computer hardware and a web connection so its beyond the reach of regulators 16
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  • From Newspapers • On dec 5,Business line ‘Bitcoin sets sights in India’-big opportunities for bitcoin in the $70 bn overseas remittance • On Dec 18,Business line ‘Bit of a regulatory dilemma’-it may be a great idea ,but replete with risks and lack controls • Dec 24,The Hindu ‘Digging for virtual gold’-despite its futuristic appeal, what's happening is a determined march to days when money meant stuff you could jingle in your purse 18
  • • Jan 2,business line ‘Bitcoin ,a hitech dinosaur’-it’s headed for extinction like other private currencies earlier • Jan7,The Hindu ‘Bitcoin and its potential to be disruptive’ Enroll for a free course on bitcoin at http://www.udemy.com 19
  • Q &A 20
  • Thanks 21