What is Bitcoin?


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This is lecture #1 from the course about cryptocurrencies.

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What is Bitcoin?

  1. 1. Revolution in electronic payments: Bitcoin Pavel Kravchenko Lecture 1
  2. 2. Plan What is Bitcoin? What is the difference from PayPal etc? Why is it so popular? How Bitcoin price is set? How emission is implemented? What are the principles of Bitcoin? How does Bitcoin work?
  3. 3. What is Bitcoin? It is like electronic gold: Scarce Hard to find Impossible to copy Nobody controls
  4. 4. Major differences from other e-money Currency but not just a payment system Cannot be “printed” Cannot be destroyed by attack on some server There is no company behind Bitcoin Bitcoin is electronic cash and not debt notes from some issuer Bitcoin is the first system that allows moving value over the internet
  5. 5. Why Bitcoin is so popular? No inflation Decentralized Relatively anonymous You can pay to anybody, anywhere, instantly
  6. 6. How price of Bitcoin is calculated?
  7. 7. Numbers > 3000000 users worldwide ~ 100000 businesses accept Bitcoin $10-100M daily trade volume > $3.3B capitalization (May, 2015)
  8. 8. How emission is set? 1. Maximum amount in circulation: 21 million (by 2140 year) 2. In the beginning there were 0 bitcoins 3. Every ~10 minutes new bitcoins are coming to existence
  9. 9. Principles of Bitcoin Each participant stores all transactions in the system at their own database Order of transactions in this database is fixed Adding new transaction to the chain requires verification and execution of some hard work Everybody should do transaction verification – which is the key to system's stability Transactions are verified every 10 minutes, only one participant becomes the first to do that New coins appear in the system as reward for transaction verification
  10. 10. Principles of Bitcoin Code of Bitcoin is open source Only owner of the private key can spend funds All decisions are made by simple majority Fees are taken by participants and set on their own decision
  11. 11. Questions? kravchenkopo@gmail.com ideateam_macuser ua.linkedin.com/in/pkravchenko/