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
online
online
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?
distributed   intermediaries                  cost?
distributed   intermediaries                  cost
distributed   intermediaries                  cost                  risk?
distributed   intermediaries                  cost                  risk?
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 2:   Decentralizing accounting.
step 2:   Decentralizing accounting.
step 2:   Decentralizing accounting.
step 2:   Decentralizing accounting.
step 2:   Decentralizing accounting.
step 2:   Decentralizing accounting.
step 3:   Decentralizing truth.
step 3:   Decentralizing truth.
A                   Bstep 3:   Decentralizing truth.
B                  B        B                    BB              A                   B       Bstep 3:   Decentralizing tru...
B                  B           B                    BB    A A A AA  A A A AA            A              A    A             ...
B                  B             B                   BB              A                   B            Bstep 3:   Decentral...
B                  B             B                   BB              A                   B            Bstep 3:   Decentral...
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/sthree-day window estimate
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                        ...
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 tr...
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
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•...
identity                 accounting decentralized   truth                 issuance 
applicationsDDNS                                Notarization             Other Currencies                                 ...
applicationsGreat Thing: Shared   Work
thanks!   for listening
questions?
What is Bitcoin? (May 2011)
What is Bitcoin? (May 2011)
What is Bitcoin? (May 2011)
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What is Bitcoin? (May 2011)

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These are the slides from my May 2011 Talk at KPMG Zurich for "Netzzunft.ch".

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What is Bitcoin? (May 2011)

  1. 1. What is Bitcoin?A look at the world’sfirst cryptocurrency.Stefan Thomas • WeUseCoins.com
  2. 2. physical money
  3. 3. (direct transfer) physical money
  4. 4. “peer-to-peer” physical money
  5. 5. online
  6. 6. online
  7. 7. online
  8. 8. online
  9. 9. intermediary
  10. 10. intermediary middle man
  11. 11. intermediary cost middle man =
  12. 12. intermediary cost middle man = risk
  13. 13. intermediary cost middle man = risk no choices
  14. 14. intermediary middle man = problem
  15. 15. intermediary
  16. 16. distributed intermediaries
  17. 17. distributed intermediaries cost?
  18. 18. distributed intermediaries cost?
  19. 19. distributed intermediaries cost?
  20. 20. distributed intermediaries cost?
  21. 21. distributed intermediaries cost
  22. 22. distributed intermediaries cost risk?
  23. 23. distributed intermediaries cost risk?
  24. 24. distributed intermediaries cost risk?
  25. 25. distributed intermediaries cost risk
  26. 26. distributed intermediaries cost risk choices?
  27. 27. distributed intermediaries cost risk choices
  28. 28. semi-distributed intermediaries (current situation)
  29. 29. distributed intermediaries is it possible?
  30. 30. step 1: Decentralizing identity.
  31. 31. 1976Solved.Sincerely,Ralph Merkle Martin Hellman Whitfield Diffie
  32. 32. 1976Solved. (with digital signatures)Sincerely,Ralph Merkle Martin Hellman Whitfield Diffie
  33. 33. step 2: Decentralizing accounting.
  34. 34. step 2: Decentralizing accounting.
  35. 35. step 2: Decentralizing accounting.
  36. 36. step 2: Decentralizing accounting.
  37. 37. step 2: Decentralizing accounting.
  38. 38. step 2: Decentralizing accounting.
  39. 39. step 2: Decentralizing accounting.
  40. 40. step 3: Decentralizing truth.
  41. 41. step 3: Decentralizing truth.
  42. 42. A Bstep 3: Decentralizing truth.
  43. 43. B B B BB A B Bstep 3: Decentralizing truth. Voting?
  44. 44. 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!
  45. 45. B B B BB A B Bstep 3: Decentralizing truth. Bitcoin’s most important idea:
  46. 46. B B B BB A B Bstep 3: Decentralizing truth. Bitcoin’s most important idea: “1 CPU, 1 Vote”
  47. 47. so... how much would it take?
  48. 48. hashing power
  49. 49. hashing powerDisclaimer: FLOPS ≠ FLOPS
  50. 50. hashing power
  51. 51. hashing power as of 24/5/20113500 Ghash/sthree-day window estimate
  52. 52. hashing power as of 24/5/20113500 Ghash/sthree-day window estimate
  53. 53. hashing power as of 24/5/20113500 Ghash/sthree-day window estimate
  54. 54. hashing power as of 24/5/20113500 Ghash/s = 29.05 PFLOPSthree-day window estimate
  55. 55. 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
  56. 56. hashing power
  57. 57. hashing powerA realistic view of hashing attacks against Bitcoin.
  58. 58. hashing powerA realistic view of hashing attacks against Bitcoin.Capital: ~ 8000 Radeon 5870 GPUs
  59. 59. hashing powerA realistic view of hashing attacks against Bitcoin.Capital: ~ 8000 * 250$
  60. 60. hashing powerA realistic view of hashing attacks against Bitcoin.Capital: ~ 2 000 000$
  61. 61. hashing powerA realistic view of hashing attacks against Bitcoin.Capital: ~ 2 000 000$Power: ~ 220W * 8000
  62. 62. hashing powerA realistic view of hashing attacks against Bitcoin.Capital: ~ 2 000 000$Power: ~ 1.76 MWBenefit: Stopping transactions/Double spends
  63. 63. step 4: Decentralizing issuance.
  64. 64. step 4: Decentralizing issuance. Who gets to spend new coins?
  65. 65. step 4: Decentralizing issuance. M F M ... Money awarded F ... Work provided
  66. 66. money supply21 million max.15 mil.10 mil.5 mil.
  67. 67. money supplyCurrently:6.28 mio
  68. 68. identity  accounting decentralized truth  issuance 
  69. 69. decentralized currency 
  70. 70. economy
  71. 71. economy
  72. 72. economySource:BitcoinCharts.com
  73. 73. economyExcerpt:Design & WebhostingSource:https://en.bitcoin.it/wiki/Trade
  74. 74. economySource:https://en.bitcoin.it/wiki/Bitcoin_Maphttp://www.weusecoins.com/globe-bitcoin/
  75. 75. 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...
  76. 76. identity  accounting decentralized truth  issuance 
  77. 77. applicationsDDNS Notarization Other Currencies Deeds Web-of-trust eVoting DPKI
  78. 78. applicationsGreat Thing: Shared Work
  79. 79. thanks! for listening
  80. 80. questions?
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