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- 1. Bitcoin Digital Cash -- The Basics Some slides from "BitcoinBasics: Bitcoin, Blockchain andBeyond" by itBit education Donn Lee 7 October 2017 Silicon Valley Code Camp San Jose, California
- 5. What is Bitcoin? BitcoinBasics 5 Bitcoin Basics Alice Bob • Currency (symbol: BTC) • Electronic Cash System • Internet-based • Peer-to-Peer 9ecb36561341d18eb654..
- 6. Why Bitcoin? BitcoinBasics Privacy Transactions are recorded with pseudonyms called bitcoin addresses. Open & Borderless It’s a global network in which anyone can participate. Decentralized & Censorship-resistant It’s a peer-to-peer network and not under the control of any organization. Low Fees & Fast Any amount, big or small, can be sent in seconds for $0.10 (or less). 6 Bitcoin Basics
- 8. FAQs BitcoinBasics Who sets the value of bitcoin? Like other commodities, bitcoin’s price is set by trading in open online markets called exchanges. Can I send less than 1 bitcoin? Yes, one bitcoin is divisible to as little as 0.00000001 BTC, the smallest unit, which is called a Satoshi*. 8 Bitcoin Basics How many bitcoinsare in circulation? Today, about 15 17 million BTC with a market cap of ~$3.4B $72B. This will grow slowly due to mining to a max of 21 million BTC around the year 2140. How do I get bitcoin? What is mining? Covered later in this talk :) Can I get my sent bitcoinsback? It’s like sending cash. You cannot get your bitcoin back unless the other party chooses to send the bitcoin back to you. But, no one can invalidate your bitcoin or “close your account” unless you give-up control of your bitcoin wallet. *Named after the creator Satoshi Nakamoto, a pseudonym
- 9. What is Bitcoin? BitcoinBasics Decentralized: Peer-to-Peer Crypto-Currency Math + Finance 9 Bitcoin Basics Ledger Distributed Ledger Globally Synchronized Trust-less TX TX TX TX TX TX Solves the Byzantine Generals’ Problem
- 10. What is Bitcoin? BitcoinBasics Decentralized: Peer-to-Peer Crypto-Currency 10 Bitcoin Basics Alice Bob50 BTC 30 19 1 transaction fee Pseudonyms Alice Digital Signature Miners prevent Double Spending Distributed Ledger Trust-less
- 11. What is Bitcoin? BitcoinBasics Decentralized: Peer-to-Peer Crypto-Currency 11 Bitcoin Basics Alice Bob50 BTC 30 19 1 transaction fee Pseudonyms Alice Digital Signature Miners prevent Double Spending Block Proof-of-Work Distributed Ledger Trust-less TX TX TX TX TX TX
- 12. How Do I ObtainBitcoins? BitcoinBasics 9 Bitcoin Basics
- 13. Transactions Like any currency, Bitcoin can be obtained in exchange for goods and services rendered. BitcoinATMs Making a transaction at a bitcoin ATM is pretty straightforward. ATM users first verify their bitcoin wallet by scanning a QR code on their smartphone. They then insert cash into the ATM and submit to complete the transaction. The appropriate amount of bitcoins are then transferred to their wallet based on the current ex- change rate. UGC, work, & games Get rewards/tips from others for user-generated content on social networks (eg. Twitter, Reddit) using micro-payment apps like ChangeTip. Micro- tasking, gaming, gambling, bitcoin faucets, torrent seeding, prediction markets, video streaming, jobs/freelancing, ads, sell goods, your paycheck bitcoin. Digital Currency Exchanges Digital currency exchanges operate similarly to fiat currency exchanges, allowing investors to buy and sell Bitcoin at the current market rates. Bitcoins can be purchased using a variety of fiat currencies including the Euro, U.S. Dollar and many others. Mining Miners are the backbone of the Bitcoin ecosystem, providing services that help secure the network and keep it running smoothly (ex. Processing and facilitating transactions). Miners are rewarded for their services with Bitcoin payments. Mining is a competitive process that re- quires specialized hardware and the ability to solve complex mathematical algorithms. BitcoinBasics 10 Bitcoin Basics Ways to Obtain Bitcoins
- 14. Brokers & Exchanges Coinbase Kraken LocalBitcoins(person-to-person) NOTE: Most of these services control your keys in an online “hot” wallet, and could get hacked or go bankrupt. To take full- ownership, move your bitcoin to a wallet that you control. BitcoinBasics 14 Bitcoin Basics List of exchanges (use at your own risk): https://exchangewar.info
- 16. How Do I Store MyBitcoins? What is a Bitcoin Wallet? Selecting a wallet is a necessary step in owning and using bitcoins. Wallets are where your bitcoins are virtually stored and what you use to facilitatepayments and transactions. BitcoinBasics 16 Bitcoin Basics
- 17. Hot vs. ColdWallets BitcoinBasics HotWallets • Connected to the Internet 17 Bitcoin Basics • Allow for instantaneous transfer of funds • Greater ease of use butmore vulnerable to hacking Cold Wallets • Offline wallets that live on a small hardware device • More secure, but payment processmay be more cumbersome • Or on paper
- 19. Wallet Apps Airbitz Mycelium Hive Breadwallet bitWallet(power users) Blockchain.info(browser-based) Bitcoin Core(desktop) Most of these support iOS and Android. BitcoinBasics 19 Bitcoin Basics Some brokers/exchanges have their own wallet apps. For example, Coinbase.
- 20. Keys and Blockchain BitcoinBasics 20 Bitcoin Basics Alice Bob 30 19 Alice Digital Signature Miners 1b0b0738.. . 50 BTC 1a11ce6238.. Wallet 1 transaction fee From: 1fb7cc3.. To: 1a11ce6238.. Amount: 50 BTC Sig: d9cb5fd3c0362.. From: 1a11ce6238.. To: 1b0b0738.. Amount: 30 BTC Sig: 882afa1ef.. Fee & change address
- 21. Keys and Blockchain BitcoinBasics 21 Bitcoin Basics Alice Bob 30 19 Alice Digital Signature Miners . 50 BTC 1a11ce6238.. Wallet 1 transaction fee Whoever knows the private key, can move the bitcoin
- 22. How Do I Keep My BitcoinsSafe? BitcoinBasics BackupWallet Backup your wallet to your computer, external hard drive and/or the cloud. EncryptData Encrypt your data to add an extra layer of protection. Cold Storage Storing some or all of your wallet data offline ensures a greater level of security. UpdateSoftware Be diligent about updating your wallet software. Make sure you are always using the latest version of your wallet. 22 Bitcoin Basics
- 23. What is Bitcoin Mining? BitcoinBasics 9 Bitcoin Basics23 Bitcoin Basics Global Consistency Validation by miners ensures there is consensus among all nodes in the network: an authoritative distributed ledger. Computing Competition Computers operated by miners perform over 8,000,000 TeraHash/s (cryptographic computations per sec) for ~10 mins, for each new block of transactions. Security Proof-of-work confirmations by miners ensures transactions cannot be altered and bitcoin cannot be double-spent or counterfeited. For-profit Business Current reward per mined block is 25 12.5 BTC. Block reward halves every 4 years.
- 24. 9 Bitcoin Basics24 Bitcoin Basics
- 25. What is Bitcoin Mining? BitcoinBasics 9 Bitcoin Basics25 Bitcoin Basics Alice Bob50 BTC 30 19 1 transaction fee Alice Digital Signature Miners prevent Double Spending Block Proof-of-Work Computing Competition Global Consistency Security For-profit Business 8,000,000 TH/s globally
- 26. 9 Bitcoin Basics26 Bitcoin Basics Send bitcoin
- 27. 9 Bitcoin Basics27 Bitcoin Basics Send bitcoin
- 28. 9 Bitcoin Basics28 Bitcoin Basics Blockchain Explorer
- 30. 9 Bitcoin Basics30 Bitcoin Basics Transactions
- 31. 9 Bitcoin Basics31 Bitcoin Basics Segregated Witness (segwit)