Technical review about Bitcoin and how it works.

1. Bitcoin Concepts Explained
Is Bitcoin Here to Stay?
May 21
st
, 2014 – Tallinn
Otto de Voogd
Digital Freedom Warrior

2. Foundation
Public-private key cryptography
Encrypt
Sign
Hash function (sha256)
One way function
Large amount of data -> short string

3. Bitcoin Address (Account)
Address (max 34 char), ex:
1JaTS1MPe2LrXJEe2tF6VJHbU27kkmn4Tu
Private key, ex:
Ky1w3UPyvrMzs6dNXiEGFLfAdxAvsRZ5c1xRUnonMznrcGVz2kTU
As many accounts as you want
Avoid reuse / Use unique address per transaction
Wallet contains the private keys
Sign to send coins to other address

4. Blockchain
Ledger of accounts
Blocks
Prevent double spending
No trusted third party
It is everywhere and nowhere

5. Mining
Process of adding blocks
Proof of Work (sha256)
Block reward (new coins + tx fees)
Longest chain
Consensus
Cheating makes little sense

6. Attributes of Money
Durability
Divisibility
Standardized
Transportability
Noncounterfeitability
Stability in value
Acceptability

7. Why?
Credit cards and Paypal blocked for some
Financial blockade against Wikileaks
Impose (religious) morality
Protect the state from criticism
Privatization of censorship
Censorship of things that are legal
Property rights?

8. No Cash
Customers: no privacy
Merchants
Payment facilitators
The state
Merchants: reversible transactions
Fraud
Distrust of customers
Increases transaction costs

9. Otto de Voogd
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ottodv.com/g+
BTC.ee