This document is a lecture on Bitcoin and transparency given by Professor Sangkyu Rho of Seoul National University Graduate School of Business. The lecture discusses what Bitcoin is, how mining works to secure the blockchain, how Bitcoin transactions function through public key encryption and digital signatures, and how Bitcoin enables a fully distributed and decentralized payment network. While Bitcoin transactions are pseudonymous for privacy, the entire blockchain is publicly transparent and traceable from start to finish for all transactions.

1. 비트코인과 투명성
(Bitcoin and Transparency)
2014. 9. 30.
Prof. Sangkyu Rho
Graduate School of Business
Seoul National University

2. Bitcoin
• Future
of
money?
• What
is
mining?
• How
can
I
use?
• Anonymous?
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 2

3. Future
of
Money?

4. Why
Bitcoin?
• Fully
distributed
and
decentralized
payment
network
– We
are
the
bank!
(Peer-­‐to-­‐peer
network)
• New
paradigm
of
security
and
privacy
– Trust
by
computaHon
• PlaIorm
for
financial
innovaHons
– Internet
of
Money
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 4

5. “We
are
the
Bank!”
5
Miner
User
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School
Organic Media Lab 2014

6. Trust
By
ComputaHon
• Blockchain
– The
public
ledger
of
bitcoin
transacHons
– hNp://blockchain.info
• Proof
of
works
– What
miners
do
– To
prevent
bad
guys
from
modifying
blockchain
• Public
key
encrypHon
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 6

7. Internet
of
Money
• Mechanism
to
prevent
double
spending
• New
containers
to
store
value
• New
ways
to
collaborate
(distributed
compuHng)
• Open
sourced
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 7

8. What
is
Mining?
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 8

9. Block
Organic Media Lab 2014
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 9

10. Bitcoin
Mining:
Proof
of
Work
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 10

11. Two
Sides
of
Mining
• To
secure
the
blockchain
– If
good
guys
>
bad
guys
• To
supply
new
Bitcoins
– As
awards
to
miners
who
first
provide
proof
of
work.
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 11

12. Virtuous
Cycle
of
Bitcoin
Mining
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 12

13. How
Can
I
Use?
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 13

14. What
you
need
to
know
• Bitcoin
Exchange
– Bitstamp,
Mt.
Gox
(now
bankrupt),
…
– Korbit
• Bitcoin
Wallet
– Client:
MulHbit
– Service:
Coinbase,
Blockchain
• Bitcoin
TransacHons
– Public
key
encrypHon
– Digital
signature
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 14

15. Bitcoin
TransacHons
Organic Media Lab 2014
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 15

16. Bitcoin
TransacHons
• Bitcoin
addresses
are
public
keys
• Bitcoin
transacHons
are
digital
signatures
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 16

17. 10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 17

18. 10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 18

19. What
you
have
in
your
wallet?
• Bitcoin?
• EssenHally,
private
keys
– Protect
your
wallet
with
a
secure
password
– Backup
your
wallet
data
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 19

20. Anonymous?
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 20

21. Bitcoin
TransacHons
in
Blockchain
Organic Media Lab 2014
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 21

22. Bitcoin
is
a
Link
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 22

23. Bitcoin
is
a
Link
Organic Media Lab 2014
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 23

24. Bitcoin
is
a
Network
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 24

25. Bitcoin
is
a
network
Organic Media Lab 2014
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 25

26. Bitcoin
TransacHons
are
Pseudonymous
• 사적인 익명성
– No
private
informaHon
is
shared
• 공적인 투명성
– Every
transacHon
is
traceable
from
beginning
to
end.
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 26

27. Bitcoin
• More
than
digital
money
• Much
more
transparent
than
we
think
• DisrupHve
innovaHon
in
financial
industry
(especially
in
payment)
• InnovaHve
way
of
mass
collaboraHon
in
compuHng

28. 28
Recommended
Readings
• 노상규,
“비트코인은 버블인가,
파괴적 혁신인가?,”
hNp://organicmedialab.com/2014/01/06/bitcoin-­‐as-­‐disrupHve-­‐innovaHon/
• 윤지영,
“연결이
지배하는
세상,
화폐의
필연적
진화,”
hNp://organicmedialab.com/2014/02/05/inevitable-­‐evoluHon-­‐of-­‐money/
• 윤지영,
“비트코인,
우리가 은행이다,”
hNp://organicmedialab.com/2014/02/22/we-­‐are-­‐a-­‐bank-­‐in-­‐bitcoin/
• 노상규,
“비트코인 채굴과 선순환 구조,”
hNp://organicmedialab.com/2014/01/11/virtuous-­‐cycle-­‐of-­‐bitcoin-­‐mining/
• 노상규,
“비트코인 주소,
거래,
그리고 지갑,”
hNp://organicmedialab.com/2014/02/20/bitcoin-­‐addresses-­‐transacHons-­‐
and-­‐wallets/
• 윤지영,
오가닉 미디어:연결이 지배하는 미디어 세상,
21세기북스,
hNp://organicmedia.pressbooks.com,
2014.
• Jerry
Brito
and
Andrea
CasHllo,
Bitcoin:
A
Primer
for
Policymakers,
Mercatus
Center
at
George
Mason
University,
2013.
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School

29. Any
QuesHons?
E-­‐mail:
srho@snu.ac.kr
Blog:
www.organicmedialab.com
Facebook:
sangkyu.rho
LinkedIn:
Sangkyu
Rho
TwiNer:
@srho77

30. Who’s
Sangkyu
Rho?
• Profession:
– 서울대 경영대 교수 since
1995
– 서울대 경영대 MBA부학장 since
2013
– Blogger
since
2013
• Interests:
– Data
&
Knowledge
– Social
&
Network
• Contacts:
– srho@snu.ac.kr
– www.organicmedialab.com
– Facebook:
sangkyu.rho
– TwiNer:
@srho77
10/12/14 (CC BY-SA 3.0) Sangkyu Rho, SNU Business School 30