1. May 2013
Co je nového a co nás čeká v oblasti
mobilních finančních služeb?
Jan Němec, Petr Šturc

2. In-shop payment
On-line payment
P2P payment
Membership
Rewards
Place check-in
Ticketing
Gift cards
Mobile Commerce Initiatives
2
Use cases Technologies
Smart Cards & Devices Forum 2013

3. Mobile Commerce Framework
MOBILE PROXIMITY
PAYMENT
MOBILE REMOTE
PAYMENTS
VALUE-ADDED SERVICES
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4. Mobile Wallet
MOBILE WALLET SERVICE PROVIDERSCONSUMERS
WALLET PROVIDERS
4
A mobile app that turns your phone into your wallet & stores virtual
versions of your existing plastic cards and other services on your phone.
Smart Cards & Devices Forum 2013

5. 3 models emerging for PoS
IN THE DEVICE/SE IN THE CLOUD HYBRID
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6. In the Device:
 Over 200 million wireless
subscribers
 Over 100 million phones
sold each year
 3 in 4 U.S wireless users
 Over 20,000 retail
outlets
Tap to pay
Save with offers
Simplify loyalty cards
Smart Cards & Devices Forum 20136

7. In the Cloud: PayPal
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Send money
Buy online
Collect coupons and offers

8. In the Cloud:
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QR based payment, couponing, loyalty, etc.
• Own transaction data
• Bring down payment processing cost

9. Hybrid soon: LevelUp
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Pay with rewards

10. Hybrid: Google Wallet V2
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Peer-2-Peer payments integrated to gMail
Instant Buy API for Android apps
NFC
Couponing

11. Couponing: PassBook, ShopKick, FourSquare
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12. Innovations: Square, PayPal Here, Intuit GoPayment
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13. Dwolla – another payment network
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14. Offers
Discounts
Loyalty accumulation/redemption
Personalized service (photo/face recognition)
Faster service (place order in advance)
Location-oriented service
Social media
14
New Services for Payment
Smart Cards & Devices Forum 2013

15. Gemalto’s 360° Mobile Payment Solution
In-Device to cloud based payment
15
Gemalto
NFC SIM
Gemalto
Secure NFC
application
Visa / MasterCard
Networks,
open loop payments
MNO TSM
NFC Payment
Payment Transactions
MNO
SP TSM
Gemalto
Mobile Wallet
e/m-Commerce
Domestic & Intl Money Transfer
Gemalto Mobile
Payment Platform
Bank
Back-End
Wallet
Server (SSP)
NFC Wallet Admin
Smart Cards & Devices Forum 2013

16. Bitcoin
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17. Bitcoin in the news
17
Value of 1 bitcoin in US$
Smart Cards & Devices Forum 2013

18. Bitcoin is … payment system
Decentralized
Cheap micro-payment
Pseudonymous
No charge-backs
P2P
Alice
Bob
To: 1ABtVtjFFC22zgH......
Amount: 1.0 BTC Send
a.k.a. Internet money
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19. Bitcoin is … application
https://github.com/bitcoin/bitcoin
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20. Bitcoin is … peer-to-peer network
Messages:
<addr> - node discovery
<tx> - transaction
<block> - accounting
+ 15 others
Alice
Bob
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21. Bitcoin is … experimental monetary system
Limited “cash” supply
Deflation
No central bank
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22. Bitcoin is … mystery
Who is Satoshi Nakamoto?
How single person beat 30yrs of research?*
Is he genius?
Is it single person?
Why he disappeared?
D. Chaum, Blind signatures for untraceable payments, Proc. Crypto, 1982
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23. Address & wallet
ECC crypto - secp256k1 curve
Address =
Base58(
Network id || RIPEMD160(SHA256(KeyPub) || Checksum
)
Checksum = SHA256(SHA256(*))
Example: 1ABtVtjFFC22zgHrAL8P24xpsiWoUSkXpk
Wallet = keystore holding private keys KeyPriv
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24. Transaction
50BTC originating from [here] goes [there].
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25. Transaction security
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26. Transaction inputs / outputs
∑inputs ≥ ∑outputs !
26

27. Transaction inputs / outputs
input
Output address
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28. How to avoid double-spending?
Private Balance ledger
Bank
may spend users’s money (attack)
may create money (inflation)
only may verify transaction
is SPoF (Single Point of Failure)
Alice Bob Carole
0 10 15
5 8 17
7 5 18
25
12
Ledger
cz - účetní kniha
fr - livre comptable
hu - főkönyv28 Smart Cards & Devices Forum 2013

29. How to avoid double-spending?
AlicePub BobPub CarolePub
0 10 15
5 8 17
7 5 18
25
12
Public Balance ledger
Bank
may spend users’s money (attack)
may create money (inflation)
only may verify transaction
is SPoF (Single Point of Failure)
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30. Public shared ledger = blockchain
“Genesis” block
Root hash
Nonce
Hash
Tx 1
Block 1
Root hash
Nonce
Hash
Hash Hash
Tx 2 Tx 3
Prev block hash
Block 2
Root hash
Nonce
Hash
Hash Hash
Tx 4 Tx 5
Prev block hash
Block 3
Root hash
Nonce
Hash
Hash Hash
Tx 6 Hash
Prev block hash
Hash
Tx 7 Tx 8
Merkle tree
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31. How does a block looks like?

32. Satoshi’s solution = Proof-of-Work
Creation of block is difficult
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33. Proof-Of-Work
Block hash must be close to zero (DIFFICULTY)
Block contains chosen counter – nounce
Nounce satisfying condition above is hard to find
(DIFFICULTY * 232 hash ops)
DIFFICULTY adjusted every 2016 blocks (to
keep block generation speed at 6 blocks/hr)
Current difficulty (28-Apr-13) = 8974296
 network hashrate ~ 70x1012 hashes/sec
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34. “I have found [this] to have zeros [here].”

35. Mining races
Bloc 557 Bloc 558
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36. Mining races
Bloc 557 Bloc 558
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37. Mining races
Bloc 557
Bloc 558a
Bloc 558b
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38. Mining races
Bloc 557
Bloc 558a
Bloc 558b
Bloc 559a
Bloc 559b
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39. Mining races
Bloc 557
Bloc 558a
Bloc 558b
Bloc 559a
Bloc 559b
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40. Mining races
Bloc 557
Bloc 558a
Bloc 558b
Bloc 559a
Bloc 559 Bloc 560
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41. Mining races
Bloc 557
Bloc 558a
Bloc 558b
Bloc 559a
Bloc 559 Bloc 560
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42. Mining races
Bloc 557
Bloc 558a
Bloc 558b Bloc 559 Bloc 560
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43. Double-spending
Attacker must outperform good guys in the mining races
(> 50% of computing power)
Bloc 557
Bloc 558a
Bloc 558b Bloc 559 Bloc 560
Hahah, I’ll change
history and
transfer your $ to
my address!
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44. Mining in numbers (29-Apr-13)
Block Count 233,806
Blocks avg. per hour 7.83
Blocks last 24h 188
(4700BTC =$658,800)
Network Hashrate Terahashs/s 72.23
Network Hashrate PetaFLOPS 917.33
Energy consumption*) 876 MWh
(~$87,000)
*) GPU: 1.8 Mhash/J oule FPGA: 18 Mhash/Joule
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45. “All the money comes from here!”
Why should anyone do it?

46. How to mine bitcoins for profit?

47. Pools
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48. Economy of mining
Miners are rewarded (25BTC per block Apr-13)
Miners have incentive to build valid blocks (with valid
transactions) … otherwise others will not build on
their work, branch will be orphaned and reward not
redeemed
The reward is halved every ~4years (210,000 blocks)
Total nb of BTC 11,097,625
Value in US$ (30-Apr-13) 1,598,058,000
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49. Number of bitcoins over time
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50. Transaction fee
Fee = Sum(tx outputs) – Sum(tx inputs)
May be collected by miner
Purpose:
Increase motivation - clients give fee for
faster service
Keep motivation when all coins minted
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51. Auto-adjustment
More user = more hashing = faster block
generation
DIFFICULTY raised to keep 10 mins / block
If raising too high - profitability of mining drops
and miners stops working
DIFFICULTY falls
 equilibrium should be reached (?)
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52. Resources
https://en.bitcoin.it/wiki/Category:Technical
http://blockexplorer.com
http://blockchain.info
https://github.com/laanwj/bitcoin-qt
http://people.mozilla.com/~bwarner/bitcoin/
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53. Thank you!
Jan Nemec
Jan.Nemec@gemalto.com