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presented atThe BarCamper’sGuide to Bitcoin Ash Moran @wisemonkeyashCreative Commons Attribution-ShareAlike 3.0 Unported License ash@ashleymoran.net

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DisclaimersI am not a Bitcoin expertI am not a financial adviserThis is not financial advice!

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This is beerWho likes beer?

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This is moneyWho likes money?

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The problem(one of them)

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Who has noticed the priceof beer has gone from this…

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…to this…

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…and one day maybe tothis?

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The causeInflating the money supplymakes it worth lesswhich makes prices rise

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UK money supplySource: Wikipedia

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The bankersare stealingyour beerThis is not good

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Economic Bullshit Bingo 101This one is worth 10 points

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What is money?Here are two more examples

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This is also moneyIt is a different kind of money (bank debt)Who likes bank debt?

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This is money tooIt has been for 6000 yearsNo modern currency is still backed by gold

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Good moneyWe need to decide what qualities we want in ourmoney

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BitcoinWhat and how

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Example: Alice pays BobAlice wants to send Bob 2BTCBob gives Alice his Bitcoin address eg 175tWpb8K1S7NmH4Zx6rewF9WQrcZv245WAlice gives her Bitcoin client the instruction to send2BTC from her wallet to addressAlice’s Bitcoin client broadcasts the transaction to thepeer-to-peer network

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Bitcoin clientThe “official” Bitcoin clientTransaction list

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Bitcoin clientPayment screen

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Alice (Node) TX TX message Node 1 TX Amount: 2 Node 4 To: 175tWpb8… TX Node 3 TX Node 2 TX Bob (Node) TX Node 5 TX Node 6Payment is broadcastMessages are broadcast on a best-effort basis

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Inputs Outputs From: 16fMXaUy… Amount: 1.5 To: 134nwkgU… Amount: 200 From: 1K1hoWtp… Amount: 230 To: 1CkjeUts… Amount: 31.5015 From: 1Ltvsdrh… Amount: 0.0015Bitcoin transaction(Simplified)

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Transaction chainPrivate keys give the owner the ability to signBitcoins over to another address

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Bitcoin Node T8 T9 Block 1 Block 2 Block 3 TX T2 T3 T5 T6 T7Block chainTransactions are grouped into blocksClients can download the full block chain

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Alice (Node) TX Node 1 TX Node 4 B1 B2 B3 B1 B2 B3 TX B1 B2 B3 Node 2 TX Node 3 (miner) B1 B2 B3 B4 B1 B2 B3 TX TX Node 5 Node 6 (miner) TX Bob (Node) B1 B2 B3 B1 B2 B3 B4 TX B1 B2 B3MiningMining nodes will try to create Block 4 thatcontains the new transaction

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Alice (Node) B4 Node 1 Node 4 B1 B2 B3 B1 B2 B3 B1 B2 B3 B4 B4 B4 Node 2 Node 3 (miner) B4 TX B1 B2 B3 B4 B1 B2 B3 B4 B4 B4 B4 Node 5 Node 6 (miner) Bob (Node) B1 B2 B3 B1 B2 B3 B1 B2 B3Broadcasting new blocksClients that accept the new block will considerthe new transaction valid

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Alice (Node) Node 1 Node 4 B1 B2 B3 B4 B1 B2 B3 B4 B1 B2 B3 B4 Node 2 Node 3 (miner) B1 B2 B3 B4 B1 B2 B3 B4 Node 5 Node 6 (miner) B1 B2 B3 B4 Bob (Node) B1 B2 B3 B4 B1 B2 B3 B4Network acceptanceBob sees the network has accepted the payment

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What is a Bitcoin?Bitcoins are address balancesIndividual Bitcoins are not identifiable entities

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Alice turns evil Bitcoins are digital, like MP3s and movies What stops Alice sending the same money to Charlie? “Double-spending” How does the network agree on the “true” history of transactions?

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Proving a transaction history Two parts to the problem: Proving the sequence of transactions Making it hard to create a false (fraudulent) sequence

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Genesis blockBlock chainWe need to make this hard to generate

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Timestamp serverThe sequence of hashes proves the timeline

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Proof of workValid hashes must be less than a certain value

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Sample Bitcoin blockNotice 0s in the hash indicating bytes of 0-bitshttp://blockexplorer.com/

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Longest block chainThe network accepts the black chain as the “truehistory” because it was the hardest to form

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Bitcoin creationBlock generation is called “mining”, because thewinner awards himself Bitcoins

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2033 - 21MBTC Creation halves every 4 years / 210k generations 2011 - 6MBTCBitcoin generation rateDifficulty is adjusted by the network every2 weeks to keep on target

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Compare GBP vs BTCWhich monetary policy do you prefer?

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What can you do withBitcoin?A brief tour of the economy

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Bitcoin marketsMtGox still largest despite the high-profile hackhttp://bitcoincharts.com/markets/

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Britcoin exchangeCurrently seeing ~1kBTC/day trading volumehttp://britcoin.co.uk/

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Bitcoin wiki traders list(Look at the size of the scrollbar)https://en.bitcoin.it/wiki/Trade

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MJB Monetary MetalsSmall UK-based precious metal dealerhttp://mjbmonetarymetals.co.uk/

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In the end though…It’s all about gold, bitchez! Θ

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Like the presentation?Send me a tip :-)http://payb.tc/ashmoran

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Further ReadingBitcoin: A Peer-to-Peer Electronic Cash System Original paper - very accessible http://www.bitcoin.org/bitcoin.pdfBitcoin wiki: https://en.bitcoin.it/wiki/Money as Debt (video by Paul Grignon) Explains the history of our monetary system Highly recommended http://bit.ly/moneyasdebt-full