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Bitcoin p2p money


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Short description of Bitcoin functionality

Published in: Technology, Economy & Finance
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Bitcoin p2p money

  1. 1. Bitcoin first decentralized digital currency
  2. 2. Bitcoin philosophy Bitcoin - is building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context.
  3. 3. Bitcoin features 1. Bitcoins can be transferred between arbitrary nodes on the network. 2. Transactions are irreversible. 3. Double spending is prevented by using a block chain. 4. Transactions are broadcasted within seconds and verified within 10 to 60 minutes. 5. Transactions can be received at any time regardless of whether your computer is turned on or off.
  4. 4. Bitcoin economic 1. Hard limit of about 21 million Bitcoins. 2. Bitcoins are divisible to 8 decimal places yielding a total of approx. 21×1014 currency units. 3. Emission is programmed: every 10 min. 50 coins are created. It number decrease twice every 4 year 4. Transactions are cheap, and mostly free. 1 BTC = 1 bitcoin 0.01 BTC = 1 cBTC (bitcent) 0.001 BTC = 1 mBTC (millibit or mbit) 0.0001 BTC = 1 uBTC (microbit or ubit) 0.00000001 BTC = 1 satoshi
  5. 5. Bitcoin as gold 1. Definite owner at time 2. Hard to mine 3. Limited resource 4. Can't be copied 1. Definite owner at time 2. Hard to mine 3. Limited resource 4. Can't be copied
  6. 6. How to mine bitcoins? Solve a "problem" using CPU or GPU. In case your PC (node) solve it - you earn 50 bitcoins. Mining rules: 1. Every node participate in solving 2. Chance to solve = your-node-power / all-nodes-power 3. Participate in pools of PC's Problem is to find a "pretty" hash of transactions block header: 00000000000001c21dbf4715d5da1a288061faa21e950dd8df6ae25c8b55d868
  7. 7. How to mine bitcoins? If you have any unused GPU or CPU resources you should try to earn bitcoins himself via participating in one of the mining pools (e.g.
  8. 8. How to mine bitcoins? Buy it at specialized online market (e.g.
  9. 9. Bitcoin: technical details ● Technical and economic principles was described by Satoshi Nakamoto in 2009. ● Bitcoin wallet is developed under MIT license (open-source) ● Bitcoin network is peer-to-peer ● Every user of network has wallet with some secret key pairs (public and private) ● Public key - identify target of transaction, private - identify owner. Public key has no information about owner. ● Only public information for everyone is hash (SHA-256) of public key. ● During every transaction owner describe amount of coins, public key hash of new owner and sign it by private key. Then all the users check validity of transaction. ● To prevent double-spending any transaction broadcast to other nodes does not become confirmed until the network acknowledges it in a collectively maintained timestamped-list of all known transactions, the block chain. ● Every generating node collect all the unconfirmed transactions, add reference to previous valid block, add nonce value and try to compute hash of new block with value less than specified target. In moment of successful block generating all the included transactions change it status to confirmed. So user can't use the same bitcoins twice, because all the attendees of network has history of all transactions. ● All transactions are stored in decentralized database (in April 2012, this database is approximately 1.2 gigabytes (raw block data without any indexing or optimization) )
  10. 10. Bitcoin: pros and cons Pros 1. decentralized 2. anonymous 3. independet 4. fixed inflation 5. convenient Cons 1. hard to mine bitcoins nowadays 2. hasn't granted funds 3. long transaction 4. splurge resources for self-serving