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Bitcoin

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A Complete History of Bitcoin. Bitcoin is a decentralized cryptocurrency.

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Bitcoin

  1. 1. Bitcoin Open source P2P money By: mahdi ataeyan http://www.ataeyan.com
  2. 2. What is Bitcoin? • no banks • no transaction fees • No real name • consensus network • completely digital money • decentralized peer-to-peer payment • no central authority or middlemen
  3. 3. Money ● a medium of exchange ● a unit of account ● a store of value ● a standard of deferred payment
  4. 4. Money must be: ● Rare ● Non-scarce! ● Strong
  5. 5. Fiat money
  6. 6. Bretton Woods Conference • most countries adopted fiat currencies that were fixed to the U.S. dollar. • The U.S. dollar was in turn fixed to gold.
  7. 7. Nixon Shock
  8. 8. Milton Friedman
  9. 9. Evolutionary economics
  10. 10. history • pseudonymos developer • Satoshi Nakamoto • in april he/she saying he was moving on to other things and he disappeared from the internet. • Cypherpunk
  11. 11. Cypherpunk any activist advocating widespread use of strong cryptography as a route to social and political change
  12. 12. Satoshi Nakamoto?!
  13. 13. Single-entry bookkeeping • one sided accounting entry
  14. 14. Double-entry bookkeeping • debit entry - credit entry • Equity = Assets − Liabilities
  15. 15. triple-entry bookkeeping (momentum) • changes in balances are the recognized events • acceleration in revenue earning • require three entries to implement
  16. 16. Ledger • the principal book or computer file • recording and totaling economic transactions
  17. 17. Accounting (ledger) • payer X sends Y bitcoins to payee Z • public ledger (block chain)
  18. 18. Bitcoin & triple-entry • changes in balances are the recognized events • acceleration in revenue earning • require three entries to implement
  19. 19. Public key crypto Alice 0110101010 1101110100 0011011010 Large Random Number Key Generation Program Public Private An unpredictable (typically large and random) number is used to begin generation of an acceptable pair of keys suitable for use by an asymmetric key algorithm.
  20. 20. Public key encryption Hello Alice! Alice's private key Encrypt 6EB69570 08E03CE4 Hello Alice! Decrypt Alice's public key Bob Alice In an asymmetric key encryption scheme, anyone can encrypt messages using the public key, but only the holder of the paired private key can decrypt. Security depends on the secrecy of the private key.
  21. 21. Zero-knowledge proof
  22. 22. Hash function hash functionkeys John Smith Lisa Smith Sam Doe Sandra Dee hashes 00 01 02 03 04 05 : 15
  23. 23. Who Bitcoin work?
  24. 24. Who Bitcoin work? • Balances - block chain • Transactions - private keys • Processing – mining
  25. 25. Balances - block chain • a shared public ledger. • All confirmed transactions are included in the block chain. • The integrity and the chronological order of the block chain are enforced with cryptography.
  26. 26. Block chanes
  27. 27. Block chanes
  28. 28. Transactions - private keys • a transfer of value between Bitcoin wallets. • private key or seed is used to sign transactions. • All transactions are broadcast between users. • Transactions confirmed by the network in 10 minutes. • Transactions confirmed by a process called mining.
  29. 29. Problem! • Fork • double spend • trust
  30. 30. Proof-of-work system ● requiring some work from the service requester ● usually meaning processing time by a computer ● Asymmetry ● must be moderately hard (but feasible) on the requester side ● easy to check for the service provider ● Challenge-response and Solution-verification
  31. 31. Challenge-response
  32. 32. Solution-verification
  33. 33. Hashcash • X-Hashcash: 1:20:1303030600:adam@cypherspace.org ::McMybZIhxKXu57jd:FOvXX • The sender prepares a header and adds an initial random number • computes the 160 bit SHA-1 hash of the header to first 20 bits of the hash become zeros • The recipient's computer calculates the 160-bit SHA-1 hash of the entire string and compare this hash with sender's hash.
  34. 34. • Integer square root modulo a large prime • Weaken Fiat–Shamir signatures • Ong–Schnorr–Shamir signature broken by Pollard • Partial hash inversion as Hashcash • Hash sequences • Puzzles • Diffie–Hellman-based puzzle • Moderate • Mbound • Hokkaido • Cuckoo Cycle • Merkle tree based • Guided tour puzzle protocol List of proof-of-work functions
  35. 35. Proof-of-stake
  36. 36. Processing – mining • distributed consensus system. • including transactions in the block chain and confirm. • enforces a chronological order in the block chain. • protects the neutrality of the network. • allows different computers to agree on the state of the system. • creates the equivalent of a competitive lottery that prevents any individual from easily adding new blocks consecutively in the block chain.
  37. 37. Create custom address
  38. 38. Crisis
  39. 39. Economic bubble
  40. 40. Greater fool theory
  41. 41. Tulip mania
  42. 42. Financial crisis of 2007–08
  43. 43. Dot-com bubble
  44. 44. wallet • Desktop wallets • Mobile wallets • Online wallets • Hardware wallets • Paper wallets
  45. 45. Security • Unauthorized spending • Double spending • Race attack • History modification • Selfish mining • Deanonymisation of clients
  46. 46. advantages • Payment freedom • Very low fees • Fewer risks for merchants • Security and control • Transparent and neutral
  47. 47. disadvantages • Degree of acceptance • Volatility • Fewer risks for merchants • Ongoing development
  48. 48. legal
  49. 49. litecoin
  50. 50. Peercoin
  51. 51. BlackCoin
  52. 52. Darkcoin
  53. 53. BTM BitAccess Bitocean BitXatm BTCPoint CoinOutlet Diamond Circle General Bytes GenesisCoin InterWallet Lamassu LocalBitcoins Robocoin Numoni Skyhook
  54. 54. BTM
  55. 55. secrecy and money laundering
  56. 56. Drugs • Drugs • Child pornography • Hitman Network • ...
  57. 57. reference • https://www.google.com/finance • https://litecoin.org/ • https://bitcoin.org/en/ • http://bitlegal.io/ • https://bitcoin.org • https://bitcoin.org/bitcoin.pdf

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