What is Bitcoin? (May 2011)

What is Bitcoin?A look at the world’sfirst cryptocurrency.Stefan Thomas • WeUseCoins.com

physical money

(direct transfer) physical money

“peer-to-peer” physical money

online

intermediary

intermediary middle man

intermediary cost middle man =

intermediary cost middle man = risk

intermediary cost middle man = risk no choices

intermediary middle man = problem

intermediary

distributed intermediaries

distributed intermediaries cost?

distributed intermediaries cost

distributed intermediaries cost risk?

distributed intermediaries cost risk

distributed intermediaries cost risk choices?

distributed intermediaries cost risk choices

semi-distributed intermediaries (current situation)

distributed intermediaries is it possible?

step 1: Decentralizing identity.

1976Solved.Sincerely,Ralph Merkle Martin Hellman Whitfield Diffie

1976Solved. (with digital signatures)Sincerely,Ralph Merkle Martin Hellman Whitfield Diffie

step 2: Decentralizing accounting.

step 3: Decentralizing truth.

A Bstep 3: Decentralizing truth.

B B B BB A B Bstep 3: Decentralizing truth. Voting?

B B B BB A A A AA A A A AA A A A A B B AAA A A AA A A A A AA A A A A A A A A AA A A A A A Astep 3: Decentralizing truth. Voting? Problem: Fake nodes!

B B B BB A B Bstep 3: Decentralizing truth. Bitcoin’s most important idea:

B B B BB A B Bstep 3: Decentralizing truth. Bitcoin’s most important idea: “1 CPU, 1 Vote”

so... how much would it take?

hashing power

hashing powerDisclaimer: FLOPS ≠ FLOPS

hashing power

hashing power as of 24/5/20113500 Ghash/sthree-day window estimate

hashing power as of 24/5/20113500 Ghash/s = 29.05 PFLOPSthree-day window estimate

hashing power as of 24/5/2011 29.05 all values are in PFLOPS 4.7 5.14 Sources: bitcoin.sipa.be/speed-lin.png fah-web.stanford.eduTianhe-1A Folding@home Bitcoin jcst.ict.ac.cn

hashing power

hashing powerA realistic view of hashing attacks against Bitcoin.

hashing powerA realistic view of hashing attacks against Bitcoin.Capital: ~ 8000 Radeon 5870 GPUs

hashing powerA realistic view of hashing attacks against Bitcoin.Capital: ~ 8000 * 250$

hashing powerA realistic view of hashing attacks against Bitcoin.Capital: ~ 2 000 000$

hashing powerA realistic view of hashing attacks against Bitcoin.Capital: ~ 2 000 000$Power: ~ 220W * 8000

hashing powerA realistic view of hashing attacks against Bitcoin.Capital: ~ 2 000 000$Power: ~ 1.76 MWBenefit: Stopping transactions/Double spends

step 4: Decentralizing issuance.

step 4: Decentralizing issuance. Who gets to spend new coins?

step 4: Decentralizing issuance. M F M ... Money awarded F ... Work provided

money supply21 million max.15 mil.10 mil.5 mil.

money supplyCurrently:6.28 mio

identity accounting decentralized truth issuance

decentralized currency

economy

economySource:BitcoinCharts.com

economyExcerpt:Design & WebhostingSource:https://en.bitcoin.it/wiki/Trade

economySource:https://en.bitcoin.it/wiki/Bitcoin_Maphttp://www.weusecoins.com/globe-bitcoin/

economyExisting Services• Escrow, e.g. ClearCoin• Online Wallet, e.g. Instawallet.org• Trial Service, e.g. Bitcoin Faucet• Wallet Backup, e.g. Wuala• Press, e.g. Bitcoin Sun• Mining Pools, e.g. DeepbitMany more in the works...

identity accounting decentralized truth issuance

applicationsDDNS Notarization Other Currencies Deeds Web-of-trust eVoting DPKI

applicationsGreat Thing: Shared Work

thanks! for listening

questions?

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What is Bitcoin? (May 2011)

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