Bitcoin uses a decentralized peer-to-peer network and cryptographic proof instead of trust to allow users to transact directly without intermediaries. The network maintains a public distributed ledger called the blockchain that records all transactions. Consensus on the blockchain is reached through proof-of-work mining, where miners validate transactions and are rewarded with new bitcoins. Users can obtain, store, and spend bitcoins using wallets that control private keys to digitally sign transactions on the blockchain.

1. P E R M I S S I O N L E S S
I N N O VAT I O N
B I T C O I N C H A L L E N G E S - T H E D AW N O F T R U S T L E S S C O M P U T I N G
Michele Mostarda <michele.mostarda@inbitcoin.it>
Marco Amadori <marco.amadori@inbitcoin.it>
https://inbitcoin.it/
v1.6_en
cover image source: http://www.goodfon.su

2. D I S C L A I M E R
F O R T H E A U D I E N C E
This presentation is for:
• informational purposes
• people interested in adopting Bitcoin
• people looking for inspiration about the
Blockchain technology

3. O U T L I N E
TA B L E O F C O N T E N T S
• Money and limitations
• What is Bitcoin
• How to use it
• How does it work
• Permissionless innovation
• Bitcoin vision
• Bitcoin for everybody

4. B L O O M B E R G P O L L
According to a recent Bloomberg poll, only
42% of Americans correctly identified
Bitcoin as a virtual currency. 6% thought it
was an iPhone app. (2014)

5. M O N E Y A N D
L I M I TAT I O N S

6. I S M O N E Y D Y I N G ?
T H E O B S O L E S C E N C E T H E S I S ( 1 )
“Money has been a technology to facilitate
trade.
To reach this purpose it was designed to
facilitate value exchange.”

7. I S M O N E Y D Y I N G ?
T H E O B S O L E S C E N C E T H E S I S ( 2 )
“Today money is no longer facilitating task it
was designated for.
Time is come to create a better money.”
— Winklevoss Brothers - Money 2020, Oct 2014

8. T H E C U R R E N C Y
W H AT I S M O N E Y ( 1 )
Aristotle definition of Money
• Durability: money must stand the test of time and the
elements. It must not fade, corrode, or change through
time.
• Portability: money must be able to hold a high
amount of worth, relative to its size and weight.
• Divisibility: easy to separate and recombine without
affecting its fundamental characteristics.
• Value: any good money would have intrinsic value,
without ties to any other object to support its worth.

9. T H E C U R R E N C Y
W H AT I S M O N E Y ( 2 )
• Scarce
• Divisible
• Storable
• Durable
• Fungible
• Verifiable
• Portable
• Difficult to counterfeit
• Widely accepted
Modern definition of Money

10. W H AT I S B I T C O I N

11. T O WA R D B I T C O I N
T H E G R E Y M E TA L M E TA P H O R ( 1 )
As a thought experiment, imagine there was a base metal as
scarce as gold but with the following properties:
T H E F I R S T D I G I TA L G O O D T H AT C A N N O T B E R E P L I C AT E D .

12. T O WA R D B I T C O I N
T H E G R E Y M E TA L M E TA P H O R ( 2 )
• boring grey in color;
• not a good conductor of electricity;
• not particularly strong, but not ductile or easily malleable either;
• not useful for any practical or ornamental purpose;
and one special, magical property:
• can be transported over a communications channel.
— Satoshi Nakamoto - Aug 27 2010

13. A D VA N TA G E S O F G O I N G
D I G I TA L
T H E D I G I TA L M E TA L ( 1 )
• Fast: transactions are instantaneous.
• Extensible: money behaviour can be programmed.
• Internet ready: already on the Web.
• Cheap: nearly for free.

14. A D VA N TA G E S O F G O I N G
D I G I TA L
T H E D I G I TA L M E TA L ( 2 )
• Easily accountable: anybody can start with Bitcoin in
minutes.
• Transparent: anybody can see everything is going on.
• Stable: no government can manipulate its value.
• Confidential: can be used anonymously.

15. T H E R E V O L U T I O N
W H AT I S B I T C O I N ( 1 )
‘60s definition of computer: a system that takes digital
data in input, elaborate it via an algorithmic model and
produces digital data as output.
To fully understand Bitcoin try to think how computer
revolution has been seen at beginning.

16. T H E R E V O L U T I O N
W H AT I S B I T C O I N ( 2 )
Now try to perceive the potential just reading today’s
Bitcoin definition:
a peer-to-peer network that maintains a public distributed
ledger of digital math-based assets known as bitcoins.
With this definition how hard would have been to foreseen
applications like video games and smartphones?

17. T R U S T E D T H I R D PA R T Y
T O WA R D D E C E N T R A L I Z E D A U T H O R I T Y
What is needed is an electronic payment system based on
cryptographic proof instead of trust, allowing any two willing
parties to transact directly with each other without the need
for a trusted third party.
— Satoshi Nakamoto, "Bitcoin: A Peer-to-Peer Electronic Cash System” -- October 31, 2008
Trustless does not mean that we do not need to trust
anything, but that we do not need to trust anyone.

18. T H E C U R R E N C Y, T H E N E T W O R K A N D
T H E L E D G E R
W H AT I S B I T C O I N
M AT H B A S E D D I G I TA L
A S S E T
D I S T R I B U T E D L E D G E R
P E E R T O P E E R N E T W O R K
The TCP/IP for money
The Bitcoin A bitcoin
The Blockchain

19. N E T W O R K O V E R V I E W
T H E B I T C O I N N E T W O R K

20. T H E F L O W - S I M P L E V I E W
T H E B I T C O I N F L O W ( 1 )
source: atlas-ats-powerpoint-indiegogo

21. T H E F L O W - C O M P L E X V I E W
T H E B I T C O I N F L O W ( 2 )
source: BitData

22. C O N F I D E N T I A L I T Y O F T H E B L O C K C H A I N ( 1 )
Every transaction is publicly logged. Anyone can see the flow of
Bitcoins from address to address.
Alone, this information can't identify anyone because the
addresses are just random numbers.
P S E U D O A N O N Y M I T Y

23. C O N F I D E N T I A L I T Y O F T H E B L O C K C H A I N ( 2 )
However, if any of the addresses in a transaction's past or future
can be tied to an actual identity, it might be possible to work
from that point and guess who may owns all of the other
addresses.
https://en.bitcoin.it/wiki/Anonymity
P S E U D O A N O N Y M I T Y

24. T H E C U R R E N C Y
S O M E N U M B E R S ( 1 )
• Availability of bitcoins is fixed at 21M, (already discovered
~16M).
• Each bitcoin can be divided in 10^8 units (1/100 000 000 is
called satoshi).
• The network tends to produce a block (12.5 new bitcoins) every
~10 minutes.

25. T H E C U R R E N C Y
S O M E N U M B E R S ( 2 )
• The block reward is halved every ~4years (or 210 000 blocks).
• Currently in 3rd reward era out of 34 (rewards end at 2140).
• 1BTC ~ €540 on online exchanges.
(At time of writing, October 2016)

26. T H E C U R R E N C Y
P R E D I C TA B L E M O N E Y S U P P LY
Inflation distribution on monetary base

27. H O W T O G E T B I T C O I N ?
F O U R WAY S T O T H E D I G I TA L E C O N O M Y ( 1 )
• Digital currency exchanges: you can change your
fiat currency (USD, EURO, etc) to Bitcoin for a small
conversion fee.
• Bitcoin ATM: a growing number of ATM to buy
Bitcoins is going available worldwide.

28. H O W T O G E T B I T C O I N ?
F O U R WAY S T O T H E D I G I TA L E C O N O M Y ( 2 )
• Transactions: you can receive Bitcoins from other
people in exchange for goods and services.
• Mining: supporting the Blockchain operations, (the
backbone of the Bitcoin ecosystem), validating
transactions between users (proof-of-work) using
custom hardware, you are rewarded with Bitcoins.

29. H I S T O R I C A L H A S H R AT E
T H E R I S E O F B I T C O I N ( 1 )
Mining hashrate trend from October 2014 to October 2016

30. H I S T O R I C A L P R I C E
T H E R I S E O F B I T C O I N ( 2 )
Bitcoin USD value from October 2014 to October 2016

31. W H O I N V E N T E D T H E B I T C O I N ?
A B I T O F H I S T O RY ( 1 )
Satoshi Nakamoto, in 2008 publishes a white paper, Bitcoin: a
Peer-to-Peer Electronic Cash System via The Cryptography
Mailing List.
In 2009-2011 he wrote a lot of posts (80000 words, the size of a
novel) in flawless english with British colloquialisms (aside only
the first post where he used American spellings).

32. W H O I N V E N T E D T H E B I T C O I N ?
A B I T O F H I S T O RY ( 2 )
Satoshi is probably a pseudonym for a developer or a group,
vanished from the web in April 2011 because he moved to other
things.
If he is not a group, he is a world class programmer, with deep
knowledge of C++, economics, cryptography and peer-to-peer
networking.
His timestamps speculation are about either east-coast US with
a fairly normal sleep schedule or western Europe with a coder
sleep schedule (probably not Japan).

33. T H E C Y P H E R P U N K R E V O L U T I O N
W H AT I S C H A N G I N G

34. R A N D O M Q U O T E S
TA K I N G A B R E AT H
Bitcoin is a remarkable cryptographic achievement and the ability to create
something that is not duplicable in the digital world has enormous value.
— Eric Schmidt (Google's former CEO)
Not having an internet strategy in 1995 is the equivalent of not having a
Bitcoin strategy now.
— Moe Levin (Bitpay CEO)
By 2005 or so, it will become clear that the Internet’s impact on the
economy has been no greater than the fax machine’s.
— Paul Robin Krugman (Nobel Memorial Prize in Economic Sciences, 1998)
Bitcoin will do to banks what email did to the postal industry
— Rick Falkvinge (Swedish Politician)

35. H O W T O U S E
B I T C O I N

36. W H AT C A N I D O W I T H B I T C O I N S
Direct purchase: buy
goods and services
from merchants.
See coinmap.org
P2P Payments: buy
goods and services
from everyone
Investments: buy, sell fiat and
cryptocurrencies on main exchanges
See en.bitcoin.it/wiki/
Trading_bitcoins
H O W T O U S E B I T C O I N

37. B I T C O I N F O R M E R C H A N T S
Enables merchants to transparently accept bitcoins receiving
instantly fiat currency on a specified bank account.
R E C E I V E PAY M E N T S

38. B U Y / S E L L B I T C O I N A N D O T H E R C RY P T O C U R R E N C I E S
Specialized web applications to exchange fiat (EUR, USD) and crypto
currencies, also supporting advanced trading setup and APIs.
B I T C O I N E X C H A N G E S
•Coinbase
•Bitstamp
•Kraken
•Bitfinex

39. WA L L E T T Y P E S
H O W M A N Y WA L L E T T Y P E S E X I S T ? ( 1 )
Hot Wallets (online)
• Online Wallet without control of private keys
• Online Wallet with control of private keys
• Desktop PC wallet (Full node, SPV Wallets)
• Smartphone Wallet

40. WA L L E T T Y P E S
H O W M A N Y WA L L E T T Y P E S E X I S T ? ( 2 )
Cold Wallets (offline)
• Hardware Wallet (personal keys)
• Brain Wallet
• HD Wallets (Master mnemonic key generating
multiple private keys)
• Multi-signatures (p2hs)

41. H W WA L L E T S
H O W M A N Y WA L L E T T Y P E S E X I S T ? ( 3 )
sources: hardwarewallets.com, kickstarter.com
BitcoinCard
BitSafe HardwareWallet
PaperWallet

42. H O W D O E S I T
W O R K

43. C O N S E N S U S I N A D E C E N T R A L I Z E D
S Y S T E M
T H E B I Z A N T I N E ’ S G E N E R A L P R O B L E M ( 1 )
A group of generals of the Byzantine army camped
with their troops around an enemy city.
Communicating only by messenger, the generals must
agree upon a common battle plan.

44. C O N S E N S U S I N A D E C E N T R A L I Z E D
S Y S T E M
T H E B I Z A N T I N E ’ S G E N E R A L P R O B L E M ( 2 )
However, one or more of them may be traitors who will
try to confuse the others. The problem is to find an
algorithm to ensure that the loyal generals will reach
agreement.
— Marshall Pease, Robert Shosthak and Leslie Lamport, The Byzantine Generals Problem

45. T H E D O U B L E S P E N D I N G P R O B L E M ( 1 )
Double-spending is the fraudulent activity of spending
same digital money more than once.
Bitcoin protects against double spending by verifying
each transaction to ensure that the inputs for the
transaction had not already been spent.
C O N S E N S U S I N B L O C K C H A I N

46. T H E D O U B L E S P E N D I N G P R O B L E M ( 2 )
Conventional financial systems prevent double-spending
using centralized authoritative servers. The most relevant
innovation of Bitcoin is the use of a decentralized peer-
to-peer system, where consensus among nodes about
the status of transactions is reached using majority.
https://en.bitcoin.it/wiki/Double-spending
C O N S E N S U S I N B L O C K C H A I N

47. WA L L E T A N D K E Y S
V I S I N N U M E R I S
https://blockchain.info/address/1fbk5AYjA7wLdwbru2CunWEuToBu1USsX
kPrivate Key
KPublic Key
ABitcoin Address
Elliptic Curve Multiplication
(One-Way)
Hashing Function
(One-Way)
Elliptic Curve Digital Signature Algorithm -- secp256k1
Hash = RIPEMD160(SHA256(pubkey))

48. T R A N S A C T I O N S
T R A C K VA L U E E X C H A N G E ( 1 )
Spending is signing a transaction which transfers value from a
previous transaction over to a new owner identified by a bitcoin
address.
— Andreas M. Antonopoulos - Mastering Bitcoin - O'Reilly 2014

49. T R A N S A C T I O N S
T R A C K VA L U E E X C H A N G E ( 2 )
Cryptographic transaction principle
source: Bitcoin: A Peer-to-Peer Electronic Cash System

50. C H A I N O F B L O C K S
T H E D I S T R I B U T E D L E D G E R
Secure Hash Algorithm — SHA256
The proof of work used in Bitcoin takes advantage of
the apparently random nature of cryptographic hashes.
A good cryptographic hash algorithm converts arbitrary
data into a seemingly-random number.

51. C O N S E N S U S V I A P R O O F O F W O R K
L O N G E S T C H A I N W I N S
Mining is a validation operation (Proof of Work)
of bitcoin transactions.
Mining activity, essential for the proper
operation of the Blockchain is rewarded with
assignment of new bitcoins.
Find a solution for
SHA256(SHA256(block header) + nonce) < target
Blockchain rewards me with a block (12.5 BTC)
Difficulty (inverse of target) will adapt to global
hashrate every ~2 weeks (2016 blocks)
Peer’s
chain 0
Peer’s
chain 1
Full Node
Peer’s
chain 2
For more informations about mining: http://www.slideshare.net/michele.mostarda/hydro-mining

52. S E C U R I T Y AT TA C K S
T H R E AT S A N D AT TA C K S I N T H E E N V I R O N M E N T
• 51% attack (50% +1)
• Block Withholding Attack
• The Race Attack
• Key Guessing / Collision Attacks
• Non-Bitcoin: non infrastructural attacks
• Non-Technical Attacks: scam activities (fraud)
Well known Blockchain vulnerabilities
Full list of Bitcoin weaknesses: https://en.bitcoin.it/wiki/Weaknesses

53. P E R M I S S I O N L E S S
I N N O VAT I O N

54. W H AT ’ S H A P P E N I N G
2 0 1 4 Q 4 S TAT U S A N D I N V E S T M E N T S ( 1 )

55. W H AT ’ S H A P P E N I N G
2 0 1 4 Q 4 S TAT U S A N D I N V E S T M E N T S ( 2 )
See also: http://coinmap.org/
H T T P : / / W W W. C O I N D E S K . C O M / S TAT E - O F - B L O C K C H A I N - Q 1 - 2 0 1 6 /

56. W H AT ’ S H A P P E N I N G
2 0 1 5 B I T C O I N L A N D F L O W S
source: ofnumbers.com

57. S P E E D U P C H A N G E
B I T C O I N A N D O P P O RT U N I T I E S ( 1 )
Before Internet it was available only peer-to-peer
computer communication. It required Telco
agreements to innovate, in general we had a low
advancement level: fax, low-level video
conference.

58. S P E E D U P C H A N G E
B I T C O I N A N D O P P O RT U N I T I E S ( 2 )
Bitcoin introduces for financial innovation the
same type of technological facilitation introduced
by Internet in telecommunication networks.
Programmable Money has born.

59. B L O C K C H A I N A S D B
P E R M A N E N T S T O R A G E ( 1 )
• Anybody can write small data (and sign any data) in
the Blockchain (for free or for a small fee).
• What is written in the Blockchain is forever.
• No one can remove or alter Blockchain
information.

60. B L O C K C H A I N A S D B
P E R M A N E N T S T O R A G E ( 2 )
• Example Applications: Proof of Existence,
decentralization of Notary Services.
• Blockchain permits Decentralized Computing.
• Blockchain supports the Internet of Things: IBM
Adept is a first authoritative example.

61. G E N E R I C A S S E T L E D G E R
C O L O R E D C O I N S ( 1 )
• Colored Coins enable the exchange of physical and
virtual goods (assets).
• They assign a meaning to the possession of a marked
(colored) bitcoin and track property transitions.
• Everybody can release and exchange a Colored Coin.

62. G E N E R I C A S S E T L E D G E R
C O L O R E D C O I N S ( 2 )
Bitcoin
Transaction
Transaction output
owned by Richard
1 bitcoin
Equals to 100 Twitter Shares
Transaction output
owned by Alice
3.33 bitcoin
Transaction output
owned by Bob
10 bitcoin
Transaction output
owned by Alice
0.25 bitcoin
Equals to 25 Twitter Shares
Transaction output
owned by Bob
0.75 bitcoin
Equals to 75 Twitter shares
Transaction output
owned by Richard
13.33 bitcoin

63. M U LT I S I G N AT U R E
E N A B L I N G S M A RT C O N T R A C T S ( 1 )
• Wallets needing more than one signature to send a
transaction.
• k/n multi-signatures are available in Bitcoin since
2012.
• Smart Contracts are trustless unbreakable
agreements.

64. M U LT I S I G N AT U R E
E N A B L I N G S M A RT C O N T R A C T S ( 2 )
• Example: micro and nano payments trustless
channels.
• Example: decentralized escrow (OpenBazaar is a
decentralized eBay).
• Example: Smart Properties.

65. A LT C O I N S
6 4 0 + C O I N S S H O U L D B E E N O U G H F O R E V E RY B O D Y ( 1 )

66. A LT C O I N S
6 4 0 + C O I N S S H O U L D B E E N O U G H F O R E V E RY B O D Y ( 2 )
• The most start as a fork of the Bitcoin codebase.
• They differ from Bitcoin for deflation parameters
or hashing algorithms.
• Being tied to Bitcoin, they become real money
too (crypto exchanges).

67. A LT C O I N S
6 4 0 + C O I N S S H O U L D B E E N O U G H F O R E V E RY B O D Y ( 3 )
• Less network effect, no real threat to Bitcoin.
• Ethereum is another story: complete rewrite of
the blockchain codebase, gained lot of attention
(and capitalization) in less than one year.

68. B I T C O I N F O R G O O D
M O N E TA RY S Y S T E M F O R D E V E L O P I N G C O U N T R I E S ( 1 )
• 50 % of the world is unbanked
• Kenya: 50 % of GDP is transacted via
Mpesa, SMS money
• Remittances: $400 B$ market, 8%
average fee

69. B I T C O I N F O R G O O D
M O N E TA RY S Y S T E M F O R D E V E L O P I N G C O U N T R I E S ( 2 )
• Microcredit
• P2P lending
• Crowdfunding

70. A C T I V I T I E S A F F E C T E D B Y T H E A D O P T I O N O F B I T C O I N
Category Disrupted Business Disrupted
Purchasing
Visa, Mastercard, American
Express
Digital Payment
Paypal, Google Play, Apple,
Amazon
Remittance Western Union
Donation Campaign Finance
Notary Notary Service
Legal Legal Service
B I T C O I N D I S R U P T I V I T Y

71. B I T C O I N V I S I O N

72. N E A R F U T U R E A P P L I C AT I O N S
L O N G T E R M O P P O RT U N I T I E S ( 1 )
• Smart Contracts
• Decentralized Applications (AppCoins)
• Decentralized Autonomous Communities/
Organizations (DAOs)
• Machine to machine enabled trading

73. N E A R F U T U R E A P P L I C AT I O N S
L O N G T E R M O P P O RT U N I T I E S ( 2 )
• Smart Internet (StorageCoin, eMailCoin,
DDosCoin, IndexCoin)
• Smart Internet Communities (OpenCoin)
• Autonomous Agents and a new Trade Network
• Ethereum https://www.ethereum.org/

74. S M A R T C O N T R A C T S
L O N G T E R M O P P O RT U N I T I E S ( 3 )
Self - enforcing and self-executing contracts that
facilitate, verify, or enforce the negotiation or
performance of a contract without a thrusted party.

75. S M A R T C O N T R A C T S
L O N G T E R M O P P O RT U N I T I E S ( 4 )
Smart contracts aim to provide security superior to
traditional contract law and to reduce other
transaction costs associated with contracting,
avoiding also to rely on a centralized entity.

76. H Y B R I D O R G A N I Z AT I O N
H U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 1 )
A decentralized network of AI autonomous agents
which attempt to maximise a production function
and which divides its labor into machine-intractable
tasks (which incentivises humans to do) and tasks
which it performs itself.

77. H Y B R I D O R G A N I Z AT I O N
H U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 2 )
It can be thought of as a corporation run without any
human involvement under the control of an
incorruptible set of business rules.
These rules are typically implemented as publicly
auditable open-source software distributed across
the computers of their stakeholders.

78. H Y B R I D O R G A N I Z AT I O N
H U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 3 )
A human becomes a stakeholder by buying stock in
the company or being paid in that stock to provide
services for the company.
This stock may entitle its owner to a share of the
profits of the DAO, participation in its growth, and/
or a say in how it is run.

79. D A / D O / D A O
H U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 4 )
• Decentralized Application (DA): simplest form of
decentralization automation. Smart Contract is an example.
• Decentralized Organization (DO): a human organization is
a combination of properties and a communication protocol
for individuals to interact with each other, including rules for
use certain parts of the properties.

80. D A / D O / D A O
H U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 5 )
• Decentralized Autonomous Organization (DAO):
differently from DA, a DAO has an internal capital, it
contains some kind of internal property and it has the ability
to use that property as a mechanism for rewarding certain
activities.

81. D A / D O / D A O
H U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 6 )
Source: http://en.wikipedia.org/wiki/Decentralized_Autonomous_Organization

82. A P P C O I N S
S M A RT F I N A N C I A L S Y S T E M S ( 1 )
Appcoins are Decentralized Applications based on the
Blockchain. Currently Bitcoin fullnodes and the Altcoin
pegged sidechains support non-Turing Complete scripts
(handling of transactions, signatures).

83. A P P C O I N S
S M A RT F I N A N C I A L S Y S T E M S ( 2 )
Several initiatives are moving toward the adoption of a full
scripting support, to enable the Blockchain or (other
sidechains) to become the support for advanced Smart
Contracts (DAs) and DAOs to setup applications like
crowdfunding and automatic share and dividend
management.

84. S M A RT F I N A N C I A L S Y S T E M S
D A O : W O R K I N P R O G R E S S
• Ethereum: Ethereum.org
• MaidSafe: maidsafe.net
• Rootstock: http://www.rsk.co

85. B I T C O I N F O R
E V E RY B O D Y

86. W H AT I S G O O D F O R ?
C O M M U N I C AT I N G B I T C O I N ( 1 )
• For consumers is a payment system which
doesn’t require to provide private credentials,
(no cloning credit card fraud)
• For marketers is a way to save transaction
costs and target products to techno-
enthusiast early adopters.
• For investors and traders is a high-risk /
high-reward speculative good.

87. W H AT I S G O O D F O R ?
C O M M U N I C AT I N G B I T C O I N ( 2 )
• For emigrants is an instrument to send
remittances without charges.
• For hackers is a brand new platform to create
innovative solutions.

88. L E G A L S TAT U S O F B I T C O I N W O R L D W I D E ( 1 )
B I T C O I N R E G U L AT I O N
•European Union: The European Central Bank
classifies Bitcoin as a convertible decentralized
virtual currency. A German court found Bitcoin to
be a unit of account. In July 2014 the European
Banking Authority advised European banks not to
deal in virtual currencies such as Bitcoin until a
regulatory regime was in place.

89. L E G A L S TAT U S O F B I T C O I N W O R L D W I D E ( 2 )
B I T C O I N R E G U L AT I O N
•United States: the U.S. Treasury classifies Bitcoin
as a convertible decentralized virtual currency. A
June 2014 U.S. government auction of almost
30,000 bitcoins, which the U.S. Marshals Service
seized from Silk Road, was said to increase
legitimacy of the currency. The U.S. Government
Accountability Office recommended that the (IRS)
formulate tax guidance for Bitcoin businesses.

90. L E G A L S TAT U S O F B I T C O I N W O R L D W I D E ( 3 )
B I T C O I N R E G U L AT I O N
•China: While private parties can hold and trade
bitcoins in China, regulation prohibits financial
firms like banks from doing the same.
Source: https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country

91. B I T C O I N A N D
T H E E C O N O M I C
T H E O RY

92. Permalink: http://bitcoincharts.com/charts/btcdeEUR#igWeeklyztgSzbgBza1gEMAzm1g10zm2g25zv
B I T C O I N E C O N O M Y I S D E F L AT I N G
Bitcoin economy grows faster than monetary base:
this causes deflation (value of Bitcoin raises without
investing it).
B I T C O I N A N D R E A L E C O N O M Y ( 1 )

93. I N F L AT I O N V S D E F L AT I O N
• Inflation: value of money decreases over time.
• Deflation: value of money increases over time.
• The first seems good while the second bad, but:
• Inflation erodes the values of savings →
encourages spending → sustains economic
growth.
B I T C O I N A N D R E A L E C O N O M Y ( 2 )

94. I N F L AT I O N V S D E F L AT I O N
• Deflation discourages investments: why
spending today when spending the same
tomorrow will get me more?
• World central banks tend to regulate economy to
have a small but significant (~2%) inflation over
time.
B I T C O I N A N D R E A L E C O N O M Y ( 3 )

95. L I F E I N B I T C O I N I A
• A national economic system based on the
current Bitcoin configuration means economic
stagnation.
• Bitcoin can be used as side currency for
transactions and advanced services, not as
replacement for fiat currency.
B I T C O I N A N D R E A L E C O N O M Y ( 4 )

96. L I F E I N B I T C O I N I A
Citation: http://www.slideshare.net/larsga/bitcoin-digital-gold
• There are several Altcoin proposals designed to
solve the current Bitcoin limitations in replacing
fiat-currencies.
B I T C O I N A N D R E A L E C O N O M Y ( 5 )

97. C RY P T O C U R R E N C I E S A N D I L L E G A L A C T I V I T I E S ( 1 )
B I T C O I N A N D C R I M E
Silkroad: black market platform for selling illegal
drugs paid in bitcoins, closed by FBI in 2013.
https://en.wikipedia.org/wiki/Silk_Road_(marketplace)

98. C RY P T O C U R R E N C I E S A N D I L L E G A L A C T I V I T I E S ( 2 )
B I T C O I N A N D C R I M E
Mt. Gox: Bitcoin exchange based in Tokio,
handing 70% of transactions at that time, closed in
2014 for currency theft.
https://en.wikipedia.org/wiki/Mt._Gox

99. C RY P T O C U R R E N C I E S A N D I L L E G A L A C T I V I T I E S ( 3 )
B I T C O I N A N D C R I M E
Bitcoin Savings and Trust Scam: a Ponzi scheme
to allow users to investing at an interest of 7% a
week
https://www.techdirt.com/articles/20130723/16121723913/sec-confirms-that-bitcoin-savings-trust-
was-ponzi-scheme-files-lawsuit.shtml

100. S U G G E S T E D R E A D I N G S ( 1 )
• Introductive video to Bitcoin:
https://www.youtube.com/watch?v=Gc2en3nHxA4
• What is Bitcoin? Learn in 5 minutes:
http://www.slideshare.net/ryaneshea/bitcoin-v9
• Bitcoin basics:
http://www.slideshare.net/itBit_Bitcoin_Exchange
L I N K S A N D R E F E R E N C E S

101. S U G G E S T E D R E A D I N G S ( 2 )
• The Bitcoin vision:
https://www.youtube.com/watch?v=YIVAluSL9SU
• The Dot.org coordinating development and adoption of Bitcoin:
https://bitcoin.org/
L I N K S A N D R E F E R E N C E S

102. S U G G E S T E D R E A D I N G S ( 3 )
• Main news about crypto currency:
http://www.coindesk.com/information/
• Original Bitcoin paper:
https://bitcoin.org/bitcoin.pdf
L I N K S A N D R E F E R E N C E S

103. C O N TA C T S
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