BITCOIN INTRODUCTIONTECHNOLOGY AND TOOL

*Various slides adapted from James D’Angelo’s “How the Constraints of Digital Define Bitcoin”

“Sorry to be a wet blanket. But, writing a description of Bitcoin for general audiences is bloody hard. There’s nothing to relate it to.”

- Satoshi Nakamoto, July 5, 2010Bitcointalk forum

WHAT IS BITCOIN?• A technology and a tool for us to use

• A decentralized network

NAPSTER = CENTRALIZED

launched in 1999, shut down in 2001. Napster’s failure became an important case-study for hackers and a turning point in

the design of modern software systems.

BITTORRENT = DECENTRALIZED First version was released July 2nd, 2001 and still runs today.

peer-to-peer networks have been estimated to collectively account for approximately 43% to 70% of all internet traffic (depending on

geographical location) as of February 2009.

WHAT IS BITCOIN?• A technology and a tool for us to use

• A decentralized peer-to-peer network

• A distributed account ledger

CENTRALIZED MODEL - BANK LEDGER A RECORD OF ACCOUNTS – WHO HAS WHAT MONEY

a bank’s heart is not the vault, it is the ledger

TURN THE BANK INSIDE OUT – DISTRIBUTED ACCOUNT LEDGER (BLOCK CHAIN) Satoshi thought, “what if I

could turn a bank inside out? Instead of one central party controlling the ledger, what if every user were recruited to maintain a constantly updated copy?”

WHAT IS BITCOIN?• A technology and a tool for us to use

• A decentralized peer-to-peer network

• A distributed account ledger – everyone maintains a copy of an updated ledger. (perfect copies)

• A payment system

PUBLIC AND PRIVATE ADDRESS

1M7ssqJeownbsmaytLK1vUdGPJgfxJYpT

Representation of Seoul Bitcoin Meetup’spublic address

The ledger and all transactions are completely public and viewable athttps://blockchain.info/

NETWORK DETAILS

• No barrier to participateBank account, credit card, Paypal account• Create as many addresses as you like. No personal

information requiredBank account, credit card, various online services• Anyone can send bitcoin to anyone else, anywhere in the

world• Money transmitter services: Western Union, international

bank wires, money stuffed in your suit case

NETWORK DETAILS

• Practically free to send any amount of money anywhere Bank fees, wire fees, services fees etc. • Every 10 minutes the ledger is updated with the

transactions sent in the last 10 minutes • No charge backs

WALLETS

WALLETS

TRANSACTIONS

• Public-private key pair. Box and Key

• loss the private key = lose the coins.

• Multisig (Multiple signature) – requires more than 1 private key to unlock the box.

WHAT IS BITCOIN?• A technology and a tool for us to use

• A decentralized peer-to-peer network

• A distributed network

• A payment system – with a limit of 21 million coins

• The network is secure; however, individual security is the responsibility of the individual

SECURITY BY PROOF OF WORK - MINING

• Lottery analogy

10 minutes25 coin reward**Block creation

MINING DETAILS• Block reward of 25 coins to incentivize participants.

Transactions fees also go to the miners.

• Difficulty adjusted by the network every 2 weeks (2016 blocks)

• Attacks must over power the entire network (51% attack)

WHERE ARE WE NOW?

Current price: ~$405 USD – 415,000 원 Around 13.2 million coins

A 5.56 billion dollar market cap

A rapidly developing bitcoin industry

IN SUMMARY – ADVANTAGES OF BITCOIN Bitcoin allows anyone to send money to anyone else, anywhere on earth

No permission is required

Its pseudo-anonymous

There are no charge-backs

The recipient will see the incoming transaction in seconds

There is little or no fee regardless of the size of the transaction

Bitcoin returns control of money to the people

The mathematics has been proven trustworthy

The system doesn’t require trust between participants

USEFUL RESOURCES

1. Seoul Bitcoin – www.seoulbitcoin.org 2. Seoul Bitcoin Meetup - http://www.meetup.com/seoulbitcoin/ 3. Bitcoin White Paper - http://www.bitcoin.org/bitcoin.pdf4. BitcoinTalk forum - https://bitcointalk.org/5. Bitcoin on Reddit - http://www.reddit.com/r/Bitcoin/6. Bitcoin Wisdom - https://bitcoinwisdom.com/7. Coinmap - http://coinmap.org/8. Bitcoin 101 -http://www.youtube.com/watch?v=Bhe61JaNFLU9. Ddengle Korean forum - https://www.ddengle.com/10.Bticoin Developers Guide -https://bitcoin.org/en/developer-guide