Bitcoin 101 from Tianfang Guo @ JayWSalon
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Transcript of Bitcoin 101 from Tianfang Guo @ JayWSalon
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” § Bitcoin network
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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.
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Problem, IRS?
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Cons
§ Slowness: trusted transaction takes 10+min
§ High volatility. § Still in its early stage
§ Once stolen, no finding back § Double-edged sword
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Bitcoin 101: How it works
§ Wallet
§ Transaction
§ Bitcoin Network
§ Mining
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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
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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)
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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.
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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)
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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.
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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
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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 days)
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§ Bitstamp & BTC-E & Huobi § Fast Trading § Slow on withdraw & deposit (international bank) § Trading fees & withdraw fees
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§ Bitpay § Merchant Service for Bitcoin
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§ Ripple § ”SWIFT 2.0” § Give all money an ”Internet speed”. Free
transaction cross account and currency
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§ XAPO § Cold Storage
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§ Coinify
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