Bitcoin 101
JayWSalon 05/16/2014 Tianfang Guo
http://www.flickr.com/photos/31119160@N06/8007585111/
If you don’t know what is Bitcoin…
§  Like cash, but based on Internet
§ Pros & cons of cash?
§  ”Decentralized”
§ Bit...
Pros: Technical Superiority
§  No unpredictable inflation by ”printing more
money” by political decision.
§  Transaction...
Problem, IRS?
4
Cons
§  Slowness: trusted transaction takes 10+min
§  High volatility.
§ Still in its early stage
§  Once stolen, no f...
Bitcoin 101: How it works
§  Wallet
§  Transaction
§  Bitcoin Network
§  Mining
6
Wallet
§  Every ”account” consists of the public key (=
bitcoin address) and the private key.
§  No real-identity needed...
Wallet (cont)
§  An example of a bitcoin address:
§ 1E7FaC7fX35P4n7cDmvzYLEb46KCAnmsir
§ 2160 (about 1048) possible add...
Transaction
§  Boardcast to entire network, randomly choose
node
§  For small payments or with payments with
trusted pee...
Bitcoin network
§  What’s transferring inside the network?
§ Bitcoin transaction records
§  Each full node (= computer ...
BTC network: Double spend elimination
§  Centrallized system vs Decentralized system:
eliminating a double spend fraud is...
Mining
§  The incentive of generating blockchain
§  Collecte all transactions in a block. A new block
is mined in about ...
Bitcoin Start-ups
JayWSalon 05/16/2014 Tianfang Guo
http://www.flickr.com/photos/31119160@N06/8007585111/
§  Coinbase
§ ”BTC Bank”
§ Directly connect to US bank account: Fast
purchase & withdraw
§ Slow on trading (4 business...
§  Bitstamp & BTC-E & Huobi
§ Fast Trading
§ Slow on withdraw & deposit (international bank)
§ Trading fees & withdraw...
§  Bitpay
§ Merchant Service for Bitcoin
16
§  Ripple
§ ”SWIFT 2.0”
§ Give all money an ”Internet speed”. Free
transaction cross account and currency
17
§  XAPO
§ Cold Storage
18
§  Coinify
19
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Bitcoin 101 from Tianfang Guo @ JayWSalon

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Bitcoin 101 session presented at JayWSalon
by Tianfang Guo (Engineer @ TrustLook)

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Bitcoin 101 from Tianfang Guo @ JayWSalon

  1. 1. Bitcoin 101 JayWSalon 05/16/2014 Tianfang Guo http://www.flickr.com/photos/31119160@N06/8007585111/
  2. 2. If you don’t know what is Bitcoin… §  Like cash, but based on Internet § Pros & cons of cash? §  ”Decentralized” § Bitcoin network 2
  3. 3. 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 §  Non-reversible §  Open source § Tools / Apps based on the infrastructure. 3
  4. 4. Problem, IRS? 4
  5. 5. Cons §  Slowness: trusted transaction takes 10+min §  High volatility. § Still in its early stage §  Once stolen, no finding back § Double-edged sword 5
  6. 6. Bitcoin 101: How it works §  Wallet §  Transaction §  Bitcoin Network §  Mining 6
  7. 7. Wallet §  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 you bitcoins. §  To spend bitcoins, you have to know the private key. § The transaction is broadcasted to the bitcoin network. § The miners confirm the transactions 7
  8. 8. Wallet (cont) §  An example of a bitcoin address: § 1E7FaC7fX35P4n7cDmvzYLEb46KCAnmsir § 2160 (about 1048) possible addresses §  The corresponding private key: § 5HuEupX3DNFJ7UypjFtXDTm4BVuAwZtAgYf9 4sMALPyakgafVnU § 256 bits (1077 key space) 8
  9. 9. Transaction §  Boardcast to entire network, randomly choose node §  For small payments or with payments with trusted peer, 0 confirmations is usually ok. §  For large amounts, 6 confirmations is considered safe. 9
  10. 10. Bitcoin network §  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) 10
  11. 11. BTC network: Double spend elimination §  Centrallized system vs Decentralized system: eliminating a double spend fraud is a key problem §  The main innovation in bitcoin is the blockchain. §  “Byzantine problem”: Deal with liars §  Disrupting the system would need enormous computing power. 11
  12. 12. Mining §  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 12
  13. 13. Bitcoin Start-ups JayWSalon 05/16/2014 Tianfang Guo http://www.flickr.com/photos/31119160@N06/8007585111/
  14. 14. §  Coinbase § ”BTC Bank” § Directly connect to US bank account: Fast purchase & withdraw § Slow on trading (4 business days) 14
  15. 15. §  Bitstamp & BTC-E & Huobi § Fast Trading § Slow on withdraw & deposit (international bank) § Trading fees & withdraw fees 15
  16. 16. §  Bitpay § Merchant Service for Bitcoin 16
  17. 17. §  Ripple § ”SWIFT 2.0” § Give all money an ”Internet speed”. Free transaction cross account and currency 17
  18. 18. §  XAPO § Cold Storage 18
  19. 19. §  Coinify 19

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