This document provides an overview of Bitcoin, including: - A description of earlier barter and monetary systems that Bitcoin improved upon. - An introduction to Bitcoin as a digital, decentralized currency that uses cryptography and a distributed ledger called the blockchain to manage transactions. - An explanation of key Bitcoin concepts like wallets, the blockchain, transactions, and mining - the process by which new Bitcoin is introduced and transactions are validated. - Details on how merchants can accept Bitcoin payments and the advantages it provides over traditional currency systems. The document concludes with a brief history of Bitcoin and references for further information.

1. BITCOIN
Guided by Submitted By
Ms. Caroline Mary Krishna Veni.A
Asst. Professor S7 CSE
CSE Dept.
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2. CONTENTS
 Description of earlier systems
 Barter
 Money-Its advantages and disadvantages
 Introduction to Bitcoin
 Characteristics
 Bitcoin as email
 Bitcoin Wallet
 Bitcoin Protocol
 Block chain
 Transaction
 Mining
 How to accept bitcoins in store
 Advantages
 Brief History of Bitcoin
 Conclusion
 References
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3. BRIEF DESCRIPTION OF EARLIER SYSTEMS
 Barter
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4. (CONTD…)
Goods *BECOME* Money
Money is
 A medium of exchange
 A unit of account
 A store of value
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5. CONTD…
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 Advantages
 Acceptable
 Durable
 Portable
 Scarce
 Divisible
 Recognizable
 Disadvantages
• It is centralized
• Misuse of Capital

6. SO REALLY HOW INNOVATIVE IS BITCOIN??
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7. WHAT IS BITCOIN?
•Bitcoin lets you send money over the internet.
•Digital, distributed currency developed by open source
community.
•Produced using software that solves mathematical problems.
•Example for crypto currency.
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8. ABOUT BITCOIN(CONTD……..)
• Used to buy things electronically.
• It is decentralized, no need of large bank to
control money.
• Proposed by an unknown author, Satoshi
Nakamoto.
• Mined using computing power in distributed
network
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9. CHARACTERISTICS OF BITCOIN
 It’s decentralized.
 It’s easy to set up
 It’s anonymous
 It’s completely transparent
 Transaction fees are miniscule
 It’s fast
 It’s non-repudiable
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10. 1010
Internet
Bitcoin is like email
Internet

11. BITCOIN ACCOUNT
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Functions using public key
cryptography
Generates pair of cryptographic
keys
Public key as bitcoin address
Private key kept secret and
create digital signatures

12. BITCOIN WALLET
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Bitcoin addresses
are collected in
“wallet”.
Essence of wallet
Security and
protecting private key

13. VERSATALITY OF WALLET
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Wallets come in variety of
forms
Purchase with mobile device
QR codes are used.

14. BITCOIN PROTOCOL
WORKING OF BITCOIN
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Block chain
Transaction
Processing
mining

15. PROTOCOL(CONTD..)
 Block Chain
 Maintains consistent record of all transactions
 Blocks :- data structures encapsulating
transactions.
 Prevents double spending.
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16. CONTD…
 Transaction
“We define a digital coin as a chain of digital
signatures”
Components of transaction
 Input
 Amount
 Output
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17. EXAMPLE OF PARTIAL TRANSACTION GRAPH
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Alice ,5
Alice ,2
Bob1,3
Bob2,2
Charlie.4
tA tC
tB
Bob3,1

18. PROTOCOL(CONTD..)
 Mining
 Primary importance
All participants have a consistent view of
bitcoin data and to create no bitcoins.
 Mining raises new problems
 Proof of Work
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19. MIINING (CONTD..)
 How to make hash of it??
 Miners take the information in the block, and
apply a mathematical formula to turn hash.
 Hash : random sequence of letters and numbers.
 Every time someone successfully creates a
hash, they get a reward of 25 bitcoins.
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20. HOW MINING WORKS
 mining uses cryptography, with a hash function
called double SHA-256
 hash takes data and shrinks into smaller hash
value(256 bits)
 cryptographic hashing becomes a good way to
implement the Bitcoin "proof-of-work“
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21. CONTD..
 To mine a block, collect new transactions in a block.
 hash starts with enough zeros , block has been
successfully mined.
 About every 10 minute someone will successfully
mine a block.
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22. STRUCTURE OF BITCOIN BLOCK
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23. CONTD…
 Block header contains field such as
 1st field :-protocol version
 2nd field :-hash of previous block
 3rd field :-Merkle root ,special hash of all
transactions
 4th field :- time stamp server
 5th field :-nonce,arbitrary value added on each
hash value.
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24. HOW TO ACCEPT BITCOIN PAYMENTS FOR YOUR
STORE
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Person to person
payments

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MERCHANT BITCOIN POINT-OF-SALE (POS) SOLUTIONS
Block chain
merchant

26. ADVANTAGES
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30. REFERENCES
 S. Nakamoto, Bitcoin: A Peer-to-Peer Electronic
Cash System, 2008.
 To appear in the proceedings of the 2013 eCrime
researches summit(eCrime) published by IEEE.
 http://www.righto.com/2014/02/bitcoin-mining-hard-
way-algorithms.html
 http:/coindesk.com/information
 http://en.wikipedia.org/wiki/Bitcoin
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