Luv Khemani Bitcoin presentatiom.pdf

8/14/2019 Luv Khemani Bitcoin presentatiom.pdf

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Bitcoinand why it will change the world

Luv Khemani


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What is Bitcoin?
http://www.youtube.com/watch?v=Um63OQz3bjohttp://www.youtube.com/watch?v=Um63OQz3bjo


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Brief History of Bitcoin

- Bitcoin client released on 3 January 2009

- Bitcoin Design paper released in 2008 by an annonymousprogrammer calling himself Satoshi Nakamoto

- 21 May 2010First commercial Bitcoin transaction takes place10,000 BTC for 2 pizzas (worth ~1.22 million USD today)

- 17 July 2010MtGox Bitcoin exchange established.Currently the largest Bitcoin exchange in the world


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Brief History of Bitcoin

- 06 Nov 2010Bitcoin economy hits US$1 million at $0.50/BTC

- 9 Feb 2011Bitcoin hits parity with US$

- 28 Nov 2012

First Bitcoin "halving day". Reward reduced from 50 to25BTC

- 28 Mar 2013Bitcoin Market Cap crosses $1 billion


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Whats the big deal with Bitcoin?

DecentralisedNo Central Authority

Inflation-proofOnly 21 million Bitcoins to ever exist

Fast

Bitcoins sent appear almost instantly to receiver (like email)~10 minutes to confirm

Cheap

Cost today ranges from free to $0.02


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Whats the big deal with Bitcoin?

World's first decentralised currency

But we have had decentralised networks for decadesnow, why was a decentralised currency not invented

earlier?-Security of funds (Ensure others cannot spend mymoney, solved via asymmetric cryptography) ~1973

-Syncing Ledger with all nodes (solved using P2P

technology like BitTorrent/Napster/Skype/etc....) ~1993

So why did it take ~15 years for Bitcoin?


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Unsolved Problems before Bitcoin

i) Consensus on order of transactionsBetter known as the double spending problem.

2 valid transactions trying to spend the same coin.

There is NO CENTRAL authority in a decentralised system

ii) Distribution of coins in a fair way

Protocol has rules to determine whether a Transactionis valid/invalid. (ie Can only spend your own coins,

cant spend more than your balance, etc..)BUT...


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Consensus

Without a central authority, ledger consensusmust be democratised. How?

1 person,1 vote?1 ip,1 vote?


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Fair Distribution of coins

- Unfair to those who are not favored(Everyone other than WallStreet)

Could we learn from Nature?-Crops are farmed.

-Minerals/Metals are mined.

Work has to be done to earn

Creator creates all coins and decides how todistribute them?


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Proof of Work

Consensus

1 hash, 1 vote*A hash function is any algorithm or subroutine that maps data sets of variable length to data sets of a fixed length.

Distribution of coins

1 hash, 1 lottery ticket

The system is secure as long as honest nodes collectivelycontrol more CPU power than any cooperating group ofattacker nodes. Satoshi Nakamoto


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How Bitcoin Works 101

"Bitcoin Accounts"

Consists of a public key and private key

Public Key

Think of it as your bank account number

Private KeyLets you spend funds in corresponding publickey


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Sending Bitcoins

Broadcast your intent to spend to BitcoinNetwork

"I, owner of public key ABCDE, wish to send 2BTC to publickey FGHIJ."

Signed with private key of ABCDE

Miner verifies that signature is valid, you have sufficientbalance in ledger, transaction complies with protocol rules.

Miner publishes your transaction in a block.


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What is a block?

A block contains a collection of transactionsverified by a miner.

Miner's worldwide are racingto mine the nextblock.

Miner who is successful, gets a block reward(Currently 25BTC) and all transaction feesoftransactions he included in his block.


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What a block looks like


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Implications of Bitcoin
http://www.youtube.com/watch?v=GZDfpXm8hOQhttp://www.youtube.com/watch?v=GZDfpXm8hOQ


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Implications of Bitcoin

- Online Payment processors made obsoleteBitcoin is free to accept and saves merchants 3%-5% in fees. No chargebacks.

- Bitcoin used as store of valueStrong case with Central Banks debasing their currencies.Money from offshore tax heavens bowing to US pressure moves to Bitcoins.

Bitcoin cannot be frozen, confiscated, debased by anyone.

- Once adoption reaches an inflection point

Global Hyperinflationas producers of real goods/services refuse to accept depreciating Fiat

Currencies with high transactional costs

Luv Khemani Bitcoin presentatiom.pdf

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