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An introduction to Bitcoin I gave at BarCamp Nottingham on 23-July-2011. Blog post here: http://aviewfromafar.net/the-barcampers-guide-to-bitcoin
Note: I've updated this! The new version is just called "Introduction to Bitcoin", and is here: http://www.slideshare.net/ashmoran/introduction-to-bitcoin-30852714
An introduction to Bitcoin I gave at BarCamp Nottingham on 23-July-2011. Blog post here: http://aviewfromafar.net/the-barcampers-guide-to-bitcoin
Note: I've updated this! The new version is just called "Introduction to Bitcoin", and is here: http://www.slideshare.net/ashmoran/introduction-to-bitcoin-30852714
18.
Example: Alice pays Bob
Alice wants to send Bob 2BTC
Bob gives Alice his Bitcoin address
eg 175tWpb8K1S7NmH4Zx6rewF9WQrcZv245W
Alice gives her Bitcoin client the instruction to send
2BTC from her wallet to address
Alice’s Bitcoin client broadcasts the transaction to the
peer-to-peer network
19.
Bitcoin client
The “official” Bitcoin client
Transaction list
23.
Transaction chain
Private keys give the owner the ability to sign
Bitcoins over to another address
24.
Bitcoin Node
T8
T9
Block 1 Block 2 Block 3
TX T2 T3 T5 T6 T7
Block chain
Transactions are grouped into blocks
Clients can download the full block chain
25.
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 B3
Mining
Mining nodes will try to create Block 4 that
contains the new transaction
26.
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 B3
Broadcasting new blocks
Clients that accept the new block will consider
the new transaction valid
27.
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 B4
Network acceptance
Bob sees the network has accepted the payment
28.
What is a Bitcoin?
Bitcoins are address balances
Individual Bitcoins are not identifiable entities
29.
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?
30.
Proving a transaction history
Two parts to the problem:
Proving the sequence of transactions
Making it hard to create a false (fraudulent) sequence
31.
Genesis block
Block chain
We need to make this hard to generate
32.
Timestamp server
The sequence of hashes proves the timeline
33.
Proof of work
Valid hashes must be less than a certain value
34.
Sample Bitcoin block
Notice 0s in the hash indicating bytes of 0-bits
http://blockexplorer.com/
35.
Longest block chain
The network accepts the black chain as the “true
history” because it was the hardest to form
36.
Bitcoin creation
Block generation is called “mining”, because the
winner awards himself Bitcoins
37.
2033 - 21MBTC
Creation halves every
4 years / 210k generations
2011 - 6MBTC
Bitcoin generation rate
Difficulty is adjusted by the network every
2 weeks to keep on target
38.
Compare GBP vs BTC
Which monetary policy do you prefer?
39.
What can you do with
Bitcoin?
A brief tour of the economy
40.
Bitcoin markets
MtGox still largest despite the high-profile hack
http://bitcoincharts.com/markets/
41.
Britcoin exchange
Currently seeing ~1kBTC/day trading volume
http://britcoin.co.uk/
42.
Bitcoin wiki traders list
(Look at the size of the scrollbar)
https://en.bitcoin.it/wiki/Trade
43.
MJB Monetary Metals
Small UK-based precious metal dealer
http://mjbmonetarymetals.co.uk/
44.
In the end though…
It’s all about gold, bitchez! Θ
45.
Like the presentation?
Send me a tip :-)
http://payb.tc/ashmoran
46.
Further Reading
Bitcoin: A Peer-to-Peer Electronic Cash System
Original paper - very accessible
http://www.bitcoin.org/bitcoin.pdf
Bitcoin 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