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Bitcoins and the Digital Economy

Bitcoins and the Digital Economy. Presented By: Matt Blackman. Defining Bitcoins or BTCs. Currency Open Source Decentralized Non-Localized Peer generated. Big Picture. How do they look? What use do they serve? What keeps Bitcoins secure? Times they have been secure

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Bitcoins and the Digital Economy

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  1. Bitcoins and the Digital Economy Presented By: Matt Blackman

  2. Defining Bitcoins or BTCs • Currency • Open Source • Decentralized • Non-Localized • Peer generated

  3. Big Picture • How do they look? • What use do they serve? • What keeps Bitcoins secure? • Times they have been secure • How does their economy compete and plan to survive?

  4. When Were These Bits Coined? • Idea proposed by Saroshi Nakamoto in 2008 • A need for a third-party free payment system • Anonymous money transfers • Network went live January 3, 2009

  5. Itty Bitty Uses ^ Not Entirely True ^ • Easy solution for monetary exchanges • Provides anonymity needed by some • Investable money market

  6. The Little Giant http://www.thinlinedata.com/

  7. Otherwise Impossible http://www.marketplace.org/sites/default/files/styles/slide-show-2-column-530x396/public/Silk-Road-Slide-1_0.jpg http://www.marketplace.org/sites/default/files/styles/slide-show-2-column-530x396/public/Silk-Road-Slide-1_0.jpg

  8. Making $$$$$$$ http://www.bitcoincharts.com/bitcoin/

  9. What Bitcoins look like

  10. Well actually... 319475h26cmg7eir85k38960125f834e or • A string of characters • Around 33 characters to be inexact • Leading with a 1 or 3

  11. 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

  12. Et Compute Brute • Psuedo-Random Hash Generation • Accept lowest value • Millions of processors mining • Over 275 PetaFlops https://en.bitcoin.it/w/images/en/f/f6/Quick-and-dirty-4x5970-cooling.jpg

  13. Blocks to Bits • Market started at 50 BTC per block • Number halved every 210,000 blocks • Set Bitcoin limit • 21 Million Bitcoins • More Bitcoins, less reward • Good news • Value of BTCs in USD always rises

  14. Blocks For Adults

  15. 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

  16. Public Records • Block information public • Names not signed to block • Only user keys

  17. Who Monitors Bitcoins? ? ? ? ? http://upload.wikimedia.org/wikipedia/commons/9/95/Capital_Building.JPG http://www.peakpositions.com/PeakServerRoom.jpg http://upload.wikimedia.org/wikipedia/commons/thumb/8/84/Stantheman.jpg/230px-Stantheman.jpg

  18. Moving Wasn't Intended As Recreation • User computers verify exchanges • Nodes rehash Bitcoin data • Validate • Pass to next node in chain • Longest chain serves as validator • Let's look at a transfer

  19. Just What You Thought

  20. Double Spending • Issue with reusing Bitcoins • Time stamps in Bitcoin block-chain hashes

  21. Who Runs the Nodes? • They are run by viewers like you • Bitcoin incentive to validate • Only nodes whom validated rewarded • Add "Difficulty"

  22. Using the System • Honest Chain • 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

  23. 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

  24. Not Perfect, ButClose August 15, 2010 • Block 74638 • Generated 92233720368.54277038 BTC • UINT_MAX • Devalued market for months

  25. Where are we at? • Bitcoins always growing • More people find Bitcoins benefits

  26. Even Bad Publicity is Good • June 2011 • Gawker wrote about the Silk Road • Negatively • Brought light to Bitcoins • Value of BTCs boomed afterwards

  27. A Distant Digital Horizon • Future in store • Market won't fill out till 2140 • Competing economies • Real Government free digital markets

  28. Acceptance of my failure to teach Q&A

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