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Bitcoin & the Blockchain—an Introduction


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A relatively non-technical introduction to Bitcoin and its underlying technology the Blockchain. The opening presentation for summer 2015 Blockchain University courses.

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Bitcoin & the Blockchain—an Introduction

  1. 1. Transcript Bitcoin & the Blockchain An Introduction by Christopher Allen <> June 6, 2015 1
  2. 2. Hidden Transcript What is Bitcoin? 2 Is it a coin?
  3. 3. Hidden Transcript What is Bitcoin? 3 Is it a coin?
  4. 4. Hidden Transcript What is Bitcoin? 4 Is it a coin? Is it a commodity?
  5. 5. Hidden Transcript What is Bitcoin? 5 Is it a coin? Is it a commodity?
  6. 6. Hidden Transcript So what is Bitcoin? 6
  7. 7. Hidden Transcript So what is Bitcoin? 7 Bitcoin is a consensual fantasy!
  8. 8. Hidden Transcript So what is Bitcoin? 8 But so is this!
  9. 9. Hidden Transcript So what is Bitcoin? 9 Both are a consensual reality!
  10. 10. Hidden Transcript This paper is currency because someone stands behind it… 10
  11. 11. Hidden Transcript A community, a consensus of people, decided to believe in it 11
  12. 12. Hidden Transcript These bits are currency because someone bought a pizza… 12 May 22nd 2010, one pizza for 10,000 BTC ($2,249,000 today)
  13. 13. Hidden Transcript A community, a consensus of people, came to believe in Bitcoin 13 May 22nd 2010, one pizza for 10,000 BTC ($2,249,000 today)
  14. 14. Hidden Transcript …and Bitcoin has been a currency ever since. 14
  15. 15. Hidden Transcript Before there was currency ancient cultures could only barter 15
  16. 16. Hidden Transcript But you could only barter if someone wanted your goods 16
  17. 17. Hidden Transcript The invention of currency allowed trade across distance and time 17 North America The Mediterranean
  18. 18. Hidden Transcript These currencies were
 hard to obtain or duplicate 18 North America The Mediterranean
  19. 19. Hidden Transcript So what prevents Bitcoin
 from being duplicated? 19
  20. 20. Hidden Transcript You can't, because the
 secret of Bitcoin is… 20
  21. 21. Hidden Transcript …there is no such thing
 as a Bitcoin! 21
  22. 22. Hidden Transcript The secret of Bitcoin is that it is really only ledger! 22
  23. 23. Hidden Transcript Ledgers are almost as
 old as currency 23
  24. 24. Hidden Transcript But in the 14th-century:
 Double Entry Accounting! 24
  25. 25. Hidden Transcript Invented in 2008: The Blockchain Ledger! 25
  26. 26. Hidden Transcript Bitcoins don't exist, because
 they are just a balance 26
  27. 27. Hidden Transcript In a ledger, all debits
 must equal credits 27 Debits Credits -25 +25 -100 +70
  28. 28. Hidden Transcript If everything must balance, where does the first credit come from? 28 Debits Credits -25 +25 -100 +70
  29. 29. Hidden Transcript via a Tetris-like puzzle game
 called mining 29
  30. 30. Hidden Transcript There is a winner
 every 10 minutes… 30
  31. 31. Hidden Transcript …and the puzzle gets
 harder every two weeks 31
  32. 32. Hidden Transcript This game incentives 5698 players to keep fair copies of the ledger 32
  33. 33. Hidden Transcript Redundantly, all over the world. 33
  34. 34. Hidden Transcript There is no center,
 no controls them—there is no
 “One ring to rule them all” 34
  35. 35. Hidden Transcript Instead, we have have achieved
 a consensus, about a consensual
 currency, where no one can cheat,
 and everyone can participate. 35
  36. 36. Transcript But the Blockchain is not only for Bitcoin… •Self-auditing books •Shares of other kinds of assets (stocks, commodities, etc.) •Financial instruments and insurance •Smart contracts •These consensus techniques can also be used for many other things. Bitcoin is only the first app of the Blockchain 36
  37. 37. Hidden Transcript In some ways, Bitcoin is like this bank of lockers 37
  38. 38. Each locker
 has… •An identifying number •A slot that money can be put in •A window to see inside •A lock that requires a key Hidden Transcript 38
  39. 39. •These lockers are secure •The windows are unbreakable •The metal can't be cut •All the lockers are bolted to the ground •There are almost an infinite number of lockers Hidden Transcript 39
  40. 40. •The lockers are in a public place •Anyone may see what is inside any locker •Anyone can put money in a locker •Anyone can see the identifying number, but not who owns it Hidden Transcript 40
  41. 41. •Each locker is free of charge •Anyone may claim an unused locker, for which they get a key •You may have as lockers as you choose •The keys are unforgeable Hidden Transcript 41
  42. 42. •You many only open the locker with the key •Once you open a locker, you take out the money and throw away the key (the lockers are free!) •If you loose the key, the money is locked away forever Hidden Transcript 42
  43. 43. •Transactions can be done without people meeting in person •No banks or governments are involved •Anyone peeking can only know that a transaction was made Hidden Transcript 43
  44. 44. •As of today, there Bitcoins worth $3,373,831,169 in the lockers •Today, over 130,000 lockers transfered money •There are currently 5687 people guarding these lockers Hidden Transcript 44
  45. 45. Hidden Transcript Questions? 45