Bit coin fiat_barcampbangalore BCB11 Feb 2011


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  • Any form of currency accepted by government primarily for taxes is the legal tender, if the legal tender is not backed by any assets then it is a fiat
  • Zimbabwe
  • supply growth is exponential in India
  • Post 2007 it wasn't getting any better. India's growth has never exceeded 10% during the period for a short period of time The real inflation no the one reported “central figures” is closer to 20-30 percent. Go out on streets and see for your selves
  • The “central figures” not only control supply of money but also can choose to block it if they are displeased.
  • Rupay is India's alternative for Visa/MasterCard etc actively encouraged by Indian “central figures” Now I need to find the desi version of Wikileaks exploits
  • Nerds to the rescue of humanity. Social media possibly rescued some of us from the “central” media The structure and character of the internet itself can and should be encouraged SOPA will be an inconvenience at best. We will beat it and keep the structure of internet alive. Using internet as the basis gives all of us an added incentive to protect the internet.
  • It can potentially go beyond internet transaction using portable USBs. So far internet has focussed on solving the information/democracy problems. Bitcoin is another use case of internet which can protect exploitation in democracy
  • Not really anonymous as cash. There are ways to make it harder to trace but not completely eliminate it Transactions are broadcasted and cannot be rolled back. This solves the asymmetric problem of people in power to manipulate the transaction on a backdate There is no central authority deciding on the supply and transaction proactively. Everything is retroactive. No increase in supply no infation. “ Inflation is a product of monetary policy i.e. supply”
  • The way email disrupted postal system i.e. People stopped writing letters. Bitcoin can and will disrupt the banking system. I banks are not needed to transfer money. Banks ability to make money on transactions will be eliminated. We can transfer money to anyone and anywhere at anytime almost instantly(matter of minutes) at almost zero cost and possibly for free unlike banks which are slow and rape us.
  • OMO – Other market operations. RBI by law is has limited powers to interfere in market. The use their liquidity injection i.e. Money printing to manipulate the markets for eg bond yields. As long as the interest yield from banks after taxes is less than real inflation...we are paying the banks and Central governments money directly to store our money. And banks get to charge additional fee for us to access our own money Internet has been a primary source of middle men elimination. How can this be applied to banking i.e. Payment gateways who dictate terms to us banker you rape us We are a bunch of suckers!!!
  • Critics have said Bitcoin is a ponzi scheme or a bubble. The reality is bitcoin is not ponzi scheme. Bitcoin has been in a bubble like any new things. Now it is entering its second phase like any other technology(internet included). This second phase is in a steady growth stage unlike the boom and bust cycles we see with the “real” economy
  • Individuals bitcoins i.e. Currency is stored in an encrypted wallet file. Loss of key and wallet file is loss of money and is not reversible Bitcoin has factored the smallest fraction of its unit aka paise as 10 power -8 of BTC unit Bitcoin gives advantage to ppl operating in black economy to conduct business freely this is definitely not as secure as cash but more secure than online transfers in the current systems which are prone to bribery and manipulations. A group of remote geeks can potentially track large scale black marketeers and their transactions
  • Banks will need to have super computers to have influence the bitcoin network The Bitcoin Mining pools are are already having a dominant computation share which is against the nature of distributed system. The community can use and should sanction DDOS as a legitimate way to keep them in line?
  • One way to keep identity anonymous is by using multiple randomly generated bitcoin addresses As the transaction volume increase the bitcoin network will tend to get more centralized This centralization and ease of use would warrant bitcoin network to be more bank like system This probably is way better than the current alternative as the community would have a chance to fight the bankers who misbehave The current system give us not such means
  • 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 </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.
    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. <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. 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