If you don’t know what is Bitcoin…
§ Like cash, but based on Internet
§ Pros & cons of cash?
§ Bitcoin network
Pros: Technical Superiority
§ No unpredictable inflation by ”printing more
money” by political decision.
§ Transactions with Internet speed
§ Low delay, 0 cost
§ Highly anonymous, in certain conditions
§ Every transaction is public, though!
§ Unbreakable: guranteed by mathmatics
§ Open source
§ Tools / Apps based on the infrastructure.
§ Slowness: trusted transaction takes 10+min
§ High volatility.
§ Still in its early stage
§ Once stolen, no finding back
§ Double-edged sword
Bitcoin 101: How it works
§ Bitcoin Network
§ Every ”account” consists of the public key (=
bitcoin address) and the private key.
§ No real-identity needed. Register freely
§ Anyone who knows your public key, can send
§ To spend bitcoins, you have to know the private
§ The transaction is broadcasted to the bitcoin
§ The miners confirm the transactions
§ An example of a bitcoin address:
§ 2160 (about 1048) possible addresses
§ The corresponding private key:
§ 256 bits (1077 key space)
§ Boardcast to entire network, randomly choose
§ For small payments or with payments with
trusted peer, 0 confirmations is usually ok.
§ For large amounts, 6 confirmations is considered
§ What’s transferring inside the network?
§ Bitcoin transaction records
§ Each full node (= computer running the bitcoin
program) in the network has a copy of all
transaction records (20GB as for today)
§ About 7000 nodes today (From 10000 in Mar)
BTC network: Double spend elimination
§ Centrallized system vs Decentralized system:
eliminating a double spend fraud is a key
§ The main innovation in bitcoin is the blockchain.
§ “Byzantine problem”: Deal with liars
§ Disrupting the system would need enormous
§ The incentive of generating blockchain
§ Collecte all transactions in a block. A new block
is mined in about every 10 minutes.
§ 10,500,000 will be mined in the first 4 years. Will
be cut by half every 4 years