bitcoins and the digital economy presented by: matt blackman
TRANSCRIPT
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Bitcoins and the Digital Economy
Presented By: Matt Blackman
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Defining Bitcoins or BTCs
• Currency
• Open Source
• Decentralized
• Non-Localized
• Peer generated
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Big Picture
• How do they look?
• What use do they serve?
• What keeps Bitcoins secure?
o Times they have been secure
• How does their economy compete and plan to survive?
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When Were These Bits Coined?
• Idea proposed by Saroshi Nakamoto in 2008
o A need for a third-party free payment system
o Anonymous money transfers
• Network went live January 3, 2009
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Itty Bitty Uses
^ Not Entirely True ^
• Easy solution for monetary exchanges
• Provides anonymity needed by some
• Investable money market
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Otherwise Impossible
http://www.marketplace.org/sites/default/files/styles/slide-show-2-column-530x396/public/Silk-Road-Slide-1_0.jpghttp://www.marketplace.org/sites/default/files/styles/slide-show-2-column-530x396/public/Silk-Road-Slide-1_0.jpg
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What Bitcoins look like
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Well actually...
319475h26cmg7eir85k38960125f834e
or
• A string of characterso Around 33 characters to be inexacto Leading with a 1 or 3
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Where do Bitcoins come from Mommy?
• Generated by users by mining
• Mining creates blocks of bitcoin transaction solutions
• Incentive given to miners through Bitcoin rewards
• No central distributer of Bitcoins
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Et Compute Brute
• Psuedo-Random Hash Generationo Accept lowest value
• Millions of processors mining o Over 275 PetaFlops
https://en.bitcoin.it/w/images/en/f/f6/Quick-and-dirty-4x5970-cooling.jpg
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Blocks to Bits
• Market started at 50 BTC per block
• Number halved every 210,000 blocks
• Set Bitcoin limito 21 Million Bitcoins
• More Bitcoins, less reward
• Good newso Value of BTCs in USD always rises
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Blocks For Adults
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Stacking Blocks
• New block found every 10 minutes
• Block is around 80 bytes size
• 80 bytes * 6 blocks/hour * 24 hours/day * 365 days/year = 4.2 MB
http://cache.kotaku.com/assets/images/9/2011/02/800px-minecraft_classic.png
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Public Records
• Block information public
• Names not signed to blocko Only user keys
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Who Monitors Bitcoins?
http://upload.wikimedia.org/wikipedia/commons/9/95/Capital_Building.JPGhttp://www.peakpositions.com/PeakServerRoom.jpghttp://upload.wikimedia.org/wikipedia/commons/thumb/8/84/Stantheman.jpg/230px-Stantheman.jpg
? ?? ?
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Moving Wasn't Intended As Recreation
• User computers verify exchanges
• Nodes rehash Bitcoin datao Validateo Pass to next node in chaino Longest chain serves as validator
• Let's look at a transfer
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Just What You Thought
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Double Spending
• Issue with reusing Bitcoins
• Time stamps in Bitcoin block-chain hashes
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Who Runs the Nodes?
• They are run by viewers like you
• Bitcoin incentive to validate
• Only nodes whom validated rewardedo Add "Difficulty"
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Using the System
• Honest Chaino Valid Nodes trying to authentic transfer
• Attacker can send invalid data to nodes trying to verify their plan
• Creates attack chain that must validate quicker than Honest Chain
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If All Else Fails
• Attacker could send BTCs then send them back in future with invalid nodes
• Attacker would plan chain of nodes in advanced
• If resending of BTCs detected the original receiver generates new keys
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q=0.1
z=0 P=1.0000000
z=1 P=0.2045873
z=2 P=0.0509779
z=3 P=0.0131722
z=4 P=0.0034552
z=5 P=0.0009137
z=6 P=0.0002428
z=7 P=0.0000647
z=8 P=0.0000173
z=9 P=0.0000046
z=10 P=0.0000012
q=0.3
z=0 P=1.0000000
z=5 P=0.1773523
z=10 P=0.0416605
z=15 P=0.0101008
z=20 P=0.0024804
z=25 P=0.0006132
z=30 P=0.0001522
z=35 P=0.0000379
z=40 P=0.0000095
z=45 P=0.0000024
z=50 P=0.0000006
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Not Perfect, But Close
August 15, 2010
• Block 74638
• Generated 92233720368.54277038 BTCo UINT_MAX
• Devalued market for months
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Where are we at?
• Bitcoins always growing
• More people find Bitcoins benefits
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Even Bad Publicity is Good
• June 2011
• Gawker wrote about the Silk Roado Negatively
• Brought light to Bitcoins
• Value of BTCs boomed afterwards
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A Distant Digital Horizon
• Future in storeo Market won't fill out till 2140
• Competing economies
• Real Government free digital markets
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Acceptance of my failure to teach
Q&A