3. Cryptography
wallet = file (public & private key pair)
address = public key (1FBXz6pKKhdyg5CwT38mFW2oi6xM7uVQe7)
Everyone who has private key is owner of the wallet
- Bitcoin core wallet www.bitcoin.org
- Multibit www.multibit.org
- Electum www.electrum.org
- Bitcoin Armory www.bitcoinarmory.com
4. P2P network
Every node has downloaded every transaction since the
beginning ( ) so that it is easy to check if
that public key (address) has amount of bitcoins which
user wants to send (by checking all transactions..)
!
Once the wallet is created user just need to connect to
the network, create a transaction, sign it with his private
key (so that everyone can verify its authenticity) and
then just broadcast it to the network
!
Transaction is then added to the new with all new
(unconfirmed) transactions created within 10 minutes
Blockchain
block
nodes = timestamp servers
!
5. P2P network
New block contain previous block hash,
timestamp, every new transaction and nonce
Block’s hash is then computed…
6. Proof of work
Creating hashes is computationally trivial, but Bitcoin
requires that the new hash value have to be in
particular form:
!
It has to start with certain number of zeros by
to current adjusted by currentdifficulty hashrate
Nodes connected to the network are forced to try as
many as it is needed to create right hashnonces
=> mining
7. Proof of work
Right after right hash is computed, “coinbase”
transaction is created and miner is
rewarded by 25 BTC which are added to his wallet
(after coinbase transaction is confirmed)
New transactions are then broadcasted to the network
in new block and stored in the blockchain forever
!
No additional changes can’t be made because it
would change consistency of every block hash
8. Mining
25 BTC ~ 300 000 CZK every 10 minutes?
Originally it was 50 BTC (reward is halving)
solo mining
9. Mining
Solo mining is now impossible so that only option to
mine is by and reward is dividedmining in the pool
10. 51% attack
If bitcoin node (pool) reaches 51% and more hashrate
it can create (and confirm by mining) 2 block in
sequence and create transactionsdouble spending
Due to the current hash rate it is (almost) impossible
14. 3. Protocol
Security?
Major vulnerability
August 2010
!
Attack can create an indefinite number of bitcoins
184 billion bitcoins were generated in a transaction, and
sent to two addresses on the network
=> Within hours, the transaction was spotted and
erased from the transaction log.
The bug was fixed and the network forked
(only major security flaw ever found and exploited)
15. 3. Protocol - today
Bitcoin foundation?
8,332 commits made by 221 contributors
representing 474,151 lines of code :
16. 3. Protocol - today
Satoshi Nakamoto?
Remains anonymous, but we can clearly see that he
has mined BTCs worths ~ 400 000 000 $
!
(~7 727 600 000 CZK today) bitcoins are untouched
17. 2. Cryptocurrency
Virtual money?
Reward of the “genesis” block was 50 bitcoins. The
value of the first bitcoin transactions were negotiated by
individuals on the bitcointalk forums with one notable
transaction involving a 10 000 BTC pizza
(121 167 000 CZK today)
19. 2. Cryptocurrency
Security?
- Heavy DDOS attacks on trading web server due to
poorly coded security - XSS, SQL injection..
bitcash.cz
mtgox.com
bitcurex.com
- Succesfull attacks - all BTCs in wallets are gone
11.11.2013
7. 2. 2014
14. 3. 2014
20. 2. Cryptocurrency
Security?
- Multiple malware for stealing BTCs (hidden in cracks)
OSX/CoinThief.A
- Direct hackers attacks
!
- Hardware damage / lost notebooks (smartphones)
21. Secure Bitcoins
1. Encrypted backed-up (!!) offline created wallet
2. Printed wallet public & private keys as QR codes
www.truecrypt.org www.bitaddress.org
www.blockchain.info - online wallet
24. Mazacoin
First sovereign national crypto coin in history
- based on Zetacoin
- two phase pre-mine
- block reward 5000 MZC
www.mazacoin.org
25. Auroracoin
Island inflation is 5215 % in 2014 (CR 94.36%)
Icelandic krona has lost over 99.5% of its value in $
= $85 according to the Central Bank
26. Auroracoin
- Based on Litecoin (scrypt)
- 50 % premine
330,000 Icelanders will get 31.8 auroracoin EACH over the
following year by the initiation called “Airdrop”
www.auroracoin.org
27. Cryptocurrency 2.0
. Mastercoin - Distributed exchange protocol layer with
network security of Bitcoin, Distributed Applications,
Distributed Exchange
. Nextcoin - first 100% Proof-of-Stake currency written
from scratch, completely decentralized, eliminates risk
of a 51% attack, “forging” instead of mining
. Ethereum - Decentralized Autonomous Corporations
Turing-complete scripting language, user-issued
currencies, smart property, smart contracts,
decentralized exchange, easy to scale
28. Thank you for your attention
!
Questions?
!
!
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