Bitcoin Identity• They are not tied to real world identity.• Bitcoin Address:o Example:16pkXDzxokb7D5YCQ9dMniWxByhdvKd8NTo Like email addresso They can be created offlineo They can be used temporaryo Private Key and Public key
Clients• Generates Bitcoin address• Send and receive money• Connect to Bitcoin Network• Update the transactional block chain• Desktop Clients:o Bitcoind, BitcoinQT, MultiBit, Bitcoiner, …• Online Clients:o blockchain.info/walleto coinbase.como walletbit.com
How to Trade Bitcoin?• Exchangeso mtgox.como Btc-e.com• Online websiteso Localbitcoins.como quickbitcoin.co.uko bitbargain.co.uk
Transaction• Digital Signature• Binds the sender’s identity to the transaction• Details of a transaction is broadcasted to allthe nodes of the p2p network.• Receiver can get some mathematicallyassurance about the transaction and payerbefore it gets verified or even payed.• The network stop a bitcoin to be doublespent.
Blocks• Data is permanently recorded in the Bitcoin networkthrough files called blocks.• A block is a record of some or all of the most recentBitcoin transactions that have not yet been recorded inany prior blocks• New blocks are added to the end of the record ( BlockChain) and once written, are never changed or removed.• Contains an encoding of previous transaction block forthe purpose of continuity.• Every 10 Minutes
Block Chain• Share public transaction log• Confirmed transactions are included• Including information about previous blocks,creates a chain of blocks.• Miners broadcast the details of that chain toall the nodes.
Transaction Fee• At the moment transactions are usually free.• Large transactions require paying a fee.• Validating Transactions in the network• You can define a high priority for yourtransaction and reward the miners with asmall fee.* > 10KByte
Cryptography• SHA-256• MD5 ( Message digest 5 )• Digital Signatures• Hash function , takes a particular input andapplies a set of math transformations togenerate a digest.• Collision Resistant• Hide information• Look Random
Digital Signature• Signing Key (Private key), Verification Key(Public key)• Digest (A cryptographic message summary)• It should be hard to come up with signing key ifyou only see the verification key.SignM SKSignatureVerifyM SKSigned or not signedVK
ASIC Miners• Application Specific Integrated Cirtuit• Fast• Expensive• Non programmable500 GH/s5 GH/s65 GH
Mining Pools• Divide probability space• Share the revenueHash RateDistributionBlockChain.info
Developers?• Applications based on Bitcoin• Parallel Programso Optimize until you run out of moneyo Improve Algorithmso Write your own/extend pool• Develop your own FPGA [ ASIC?]• Almost everything is open-source