Bitcoin is a decentralized digital currency introduced in 2009 by an anonymous person named Satoshi Nakamoto. Bitcoins are created through mining, where solving complex math problems rewards miners with bitcoins. The total number of bitcoins that can ever be created is limited to 21 million. Bitcoins can be stored in digital wallets and spent using private keys. While bitcoin provides benefits like low fees and accessibility anywhere, it also has risks like use for illicit activities and price volatility. Some countries have banned bitcoin due to these risks and inability to control or track bitcoin transactions.

1. Bitcoin (BTC)
Varsha Karunakaran
Nathestha Kaya 1

2. Introduction
• Introduced by an anonymous geek Satoshi Nakamoto, Japan
on 3rd January 2009.
• Distributed crypto-currency
• Decentralized digital currency i.e., no central authority (e.g.,
RBI , Federal Reserve)
• Represented by shorthand BTC just like Rs, $
• It uses open source code (any one can see how it works)
• Used internationally
• Smallest unit of bitcoin is 0.00,00,00,01 satoshi just like 1
paise in a rupee
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3. How bitcoins are
created called mining
• Bitcoins are created through a process
(similar to mining gold).
• In simple words when a certain complicated
mathematical problem is solved on the network
bitcoins are rewarded for each block
• Currently 25 BTC are generated for every block
within 10 minutes (by 2017 it will be 12.5BTC)
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4. • For every 4 years the reward generated is
adjusted i.e from 2009-2012 -10,500,000 coins
were generated .In 2012-2016 it will be
reduced to 5,250,000 and so on
• Thus the total number of bitcoins generated is
limited to 21,000,000 i.e controlled currency
supply
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5. • Physical bitcoins
– These physical representations of bitcoins have to
be broken open to reveal a piece of paper with
private key
– But in this case there is possibility that the creator
can still hold the private keys for it
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6. Bitcoin address
• Bitcoin addresses should be single use
• Whenever you want to receive a payment, you
should generate a new address
• This ensures security of your wallet
• It also makes it impossible to know who sent those
coins
• The most popular site for bitcoin wallets, and
transfers is http://blockchain.info (visit to get your
own bitcoin wallet)
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7. Who can own it
• Techies can own it by mining on their own (it’s
like trying to find gold under your back yard).
• For others
– Accept as payment from somebody who owns it
– Through services which trade bitcoins for your local
currency i.e., Rupee
– Buy them through bitcoin exchanges
– Trade cash for bitcoins in person through local
directory as their transactions are made public
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8. Where to store
Just like the one you use to store physical currency,
bitcoin system offers a wallet (basically a public key)
– Allows to transact
– Gives ownership of bitcoin balance
– All wallets can interoperate with each other just like your
email
• Each wallet has its own unique 33 characters and since
all of them are synchronized, fraudulent activities are
impossible
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9. • Software wallets
o installed in computer,
o gives a complete control to protect your money and
do backup
• Mobile wallets
o carry it wherever you want
o Pay in stores by scanning a QR code and ‘tap to pay’
• Web wallets
o Use bitcoin anywhere you want
o Less effort to protect your wallet
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10. Pros
• Easy to send through internet, without third party
interference
• Irreversible by design
• Fast transaction
• Costs very less than other payments
• Cannot be manipulated by any govt., bank, organization or
individual i.e., you can escape tax payments.
• It doesn’t have any border limitation, and can be used
globally
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11. Cons
• Bitcoins are accepted as exchange for illicit substances and
for online gambling
• Around 4.5 to 9 % bitcoins transacted for purchases of
drugs at a single online market, Silk Road
• Gun dealers use it to sell arms without background check
• Encourages cyber criminals to move and steal funds
• Bot nets are engaged in covert mining of bitcoins by
consuming computing cycles, using extra electricity and
increasing computer temperature
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12. Is it a bubble?
• Bubble –if suddenly everyone stops accepting
a currency (dollar, rupee) its value will drop to
zero
• Appropriate answers cannot be given but its
unlikely to happen
• E.g. even when Somalia government collapsed
20 years ago , Somali shillings are still
accepted as payment
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13. India and China bans BTC,
because…
• It involves risk of money laundering
• It volatility( in Jan 2013 one bitcoin valued at 50$ by
Dec it hit 1200 $ before softening to about 800 $)
and its lack of ‘backing assets’
• Bitcoin’s mobility i.e., its borderless and the Govt
cannot control them
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14. • In china the citizen were forbidden from taking
more than 50,000$ out of their country in a year
• In 2012 ,17 million Chinese made pilgrimage to
Macau for gambling chips which can be
converted to foreign currency and sent them
abroad
• Bitcoin was a way for wealthy Chinese to avoid
expenses of a trip to Macau
• China’s biggest search engine Baidu stopped
accepting bitcoin
• Alibaba also stopped accepting bitcoins
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16. • In India ,gold imports were slapped with
heavy restrictions and capital controls were
tightened,preventing money from being sent
or invested abroad
• Bitcoin was an alternative in this case
• On December 24th india warned to suspend
bitcoin exchanges
• But however this activity requires only
computer hardware and a web connection so
its beyond the reach of regulators
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18. From Newspapers
• On dec 5,Business line
‘Bitcoin sets sights in India’-big opportunities for bitcoin in
the $70 bn overseas remittance
• On Dec 18,Business line
‘Bit of a regulatory dilemma’-it may be a great idea ,but
replete with risks and lack controls
• Dec 24,The Hindu
‘Digging for virtual gold’-despite its futuristic appeal, what's
happening is a determined march to days when money
meant stuff you could jingle in your purse
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19. • Jan 2,business line
‘Bitcoin ,a hitech dinosaur’-it’s headed for
extinction like other private currencies earlier
• Jan7,The Hindu
‘Bitcoin and its potential to be disruptive’
Enroll for a free course on bitcoin
at http://www.udemy.com
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20. Q &A
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21. Thanks
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