Bit coin fiat_barcampbangalore BCB11 Feb 2011

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Bit coin fiat_barcampbangalore BCB11 Feb 2011

  1. 1. About Myself <ul><li>Akhil Kodali (@akhilkodali)
  2. 2. Work for Lexity Labs, Bangalore - Simple advertising for ecommerce. </li></ul>
  3. 3. My Background <ul><li>I am no expert on BitCoins
  4. 4. I am reasonable common sense “expert” on monetary system
  5. 5. Cryptography gives me headache
  6. 6. Like http://www.anti-powerpoint-party.com/ </li></ul>
  7. 7. Some background
  8. 8. Fiat Money Defined <ul><li>any money declared by a government to be legal tender
  9. 9. state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard
  10. 10. money without intrinsic value
  11. 11. -wikipedia </li></ul>
  12. 12. So? <ul>fiat itself is not the problem but people in charge of that fiat money </ul>
  13. 13. Characteristics of Money <ul><li>Durability
  14. 14. Portability
  15. 15. Divisibility
  16. 16. Uniformity
  17. 17. Limited Supply
  18. 18. Acceptability </li></ul>
  19. 19. http://www.flickr.com/photos/sokwanele/2073320987
  20. 21. Recently... The  RBI said year-on-year reserve money growth was 11% in the week to Feb. 3, compared with 24.5% a year earlier. http://economictimes.indiatimes.com/markets/money-markets/january-27-money-supply-grows-14-4-on-year-rbi/articleshow/11806572.cms <ul><li>>30% CAGR 3 year period before that
  21. 22. asset liability mismatch? </li></ul><ul><ul><li>Mother Nature provides real assets all else is ' Maya ' </li></ul></ul>
  22. 23. Remember Remember...
  23. 24. Feeling patriotic !?
  24. 25. Geeks fight back
  25. 26. Why should Indians care? <ul><li>Current perception RBI saved is from the world wide banking crisis...yes true...but
  26. 27. Its has miserably failed to save us from Inflation
  27. 28. It has always favoured the needs of the government of the day rather than save Indians from the monster of Inflation
  28. 29. Look around...significant chunk of the loans are given to entities who can influence the government machinery i.e. Large corporates and realtors
  29. 30. Small businesses still find it extremely hard to raise loans from banks...the reality on the ground and numbers speak for themselves
  30. 31. The banking system is getting more and more derivative based(euphemism for hiding risks) inspite of 2007/08 </li></ul>
  31. 32. Answer is self evident <ul>We need a system where individual liberties are up held <li>No Inflation
  32. 33. No Central Control
  33. 34. Independence form governments and bankers
  34. 35. Low transaction costs
  35. 36. Bankers and financiers should actually “allocate capital” instead of making a killing on transactions </li></ul>
  36. 37. What is Bitcoin? <ul>A digital currency powered by a peer to peer network, used primarily for internet transactions. </ul>
  37. 38. Features <ul><li>Anonymous as Cash...not really but close enough
  38. 39. No rollback
  39. 40. No central control
  40. 41. No Inflation </li></ul>
  41. 42. How does bit coin work <ul>“Owners transfer bitcoins by sending them to another Bitcoin address using a website or program designed for this purpose. Under the hood, the software transfers the coins by generating a digital signature to link the prior transaction with the public key of the next owner. Bitcoin nodes record all data necessary to make any valid transaction in a publicly distributed database called the block chain. Nodes build the block chain using a proof-of-work system that prevents double-spending and confirms transactions” </ul>
  42. 43. Do you see disruption? <ul><ul><li>Postal service – email
  43. 44. Banking system – bitcoin </li></ul></ul>
  44. 45. <ul>Why should I care about banking? </ul><ul><li>Look around </li></ul><ul><ul><li>OMO
  45. 46. Customer Support – seriously?
  46. 47. ... </li></ul></ul><ul><li>Outrageous fees
  47. 48. Pay to store? </li></ul><ul><ul><li>RBI's OMO </li></ul></ul>
  48. 49. Tulip Mania? <ul><li>Govt Vs Math
  49. 50. Rise and fall
  50. 51. Fall and Rise?
  51. 52. Money is information? </li></ul>
  52. 53. <ul><li>Wallet (Desktop and online)
  53. 54. 10 -8
  54. 55. Black economy
  55. 56. Good drive out bad? </li></ul>
  56. 57. Bitcoin Mining <ul>Generating Blocks used to record bitcoin transactions over the network. Blocks are necessary to prevent double spending. Miners are awarded Bitcoins for generating Blocks (Currently 50BTC per Block + Transaction Fees) 1 Block is generated every 10 minutes <li>Bitcoins mining will end at 21 million coins in 2140
  57. 58. The rate of generation is slowing down exponentially </li></ul>
  58. 59. <ul><ul><li>Satoshi Nakamoto – The Mystery? </li></ul></ul><ul><li>Pseudonym, no one knows his/her/their real identity and email address
  59. 60. Started working on it in 2007
  60. 61. Published in 2008
  61. 62. First transaction in 2009 – The Genesis Block
  62. 63. Left the project in 2010
  63. 64. Disappeared in 2011
  64. 65. Team of volunteer developers working now </li></ul>
  65. 66. Risks? <ul><li>No cost transfer (anonymous?)
  66. 67. Control Inflation </li></ul>
  67. 68. Revenge of Geeks <ul><li>Geeks are becoming “Monetary Scientists”
  68. 69. This is a good thing as opposed to government mouth pieces(keyensian economists)
  69. 70. Bitcoin is designed to fight big brother's control on us </li></ul>
  70. 71. <ul><li>Not Anonymous
  71. 72. Does not scale – in the long term </li></ul>
  72. 73. <ul>“Let's assume an average rate of 2000 tps, so just VISA …. Shifting 60 giga bytes of data in, say, 60 seconds means an average rate of 1 giga byte per second, or 8 giga bits per second.” >200MB of history Switches to a banking model as things get big </ul>
  73. 74. Banks Again? <ul><li>Can't Create Money
  74. 75. Can't Steal Money
  75. 76. Can reject blocks though </li></ul>
  76. 77. SHA risk?
  77. 78. I hate banks <ul><li>40 – 200 petaflops </li></ul><ul><ul><li>Several times largest supercomputer </li></ul></ul><ul><li>Pools </li></ul><ul><ul><li>#1 41%
  78. 79. #2 30% </li></ul></ul><ul><li>“Security through ostracism” </li></ul><ul><ul><li>DDOS against #1 </li></ul></ul>
  79. 80. Not banks again <ul><li>Random names equals anonymity
  80. 81. Fights fragmentation
  81. 82. Morphes into a banking system </li></ul>
  82. 83. http://bitcoin.stackexchange.com/ I need to add more sources Most of the content has been picked up from other source. Please let me know so that I can(I need to) acknowledge them
  83. 84. Q & A

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