Bitcoin and blockchain_in_a_nutshell
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The document discusses the history and technology behind Bitcoin, including how it was created by the mysterious Satoshi Nakamoto, works through blockchain and mining without any central authority, and aims to provide an alternative currency that is independent and private. It also addresses some of the issues with Bitcoin like its energy use, lack of customer support, and negative press while arguing it has value as a decentralized technology for financial independence.
Bitcoin and blockchain_in_a_nutshell
- 1. Bitcoin and Blockchain technology in a A short, non-technical introduction Hoan Bui Quoc blockstackvn@gmail.com Bach Khoa University. May 13, 2018
- 2. Some thoughts about Cryptography Based on a non-true story
- 3. Title and Content Intro with List Mother Son No1: Bach Son No2: Khoa Copyright © by Lê Bích: https://www.facebook.com/lebichbungphe/ Hacker
- 4. Bach wants to send to Khoa an heirloom recipe cryptography
- 5. Symmetric Cryptography Problem: How to exchange symmetric key securely?
- 6. Asymmetric Cryptography § Cryptographic public/private key pair - mathematically linked § Use public key to encrypt, private key to decrypt and vice versa. Problem: How does/did Khoa know (that) it was Bach who sent the recipe?
- 7. Hash function and Digital Signature Sa/m: Digital Signature of Sender on message M
- 8. But…how is it related to BITCOIN?
- 9. What is Bitcoin? § Bitcoin (capital “B”) is a peer-to-peer network that maintains a public decentralized ledger of digital math-based assets known as bitcoins (lowercase “b”). The integrity of this ledger is backed and secured by a subnetwork of computers (miners) who audit and archive its transactions for a reward. § The supply of bitcoins is fixed at 21 million and each bitcoin can be divided into a hundred million pieces (10-8 BTC) called satoshi. § No need for trusted third-party. § Not backed by any government or organization. § Instantaneous peer-to-peer transactions.
- 10. Who created Bitcoin? § Nov 1, 2008: Satoshi Nakamoto publishes white paper titled Bitcoin: A Peer-to- Peer Electronic Cash System via “The Cryptography Mailing List”. § January 3, 2009: Satoshi releases Bitcoin source code and software client to the world. § 2009 – 2010: Satoshi updates the source code and writes hundreds of posts totaling 80,000 words (length of a novel). § April 23, 2011: Satoshi vanishes from the Internet after emailing a developer saying he has “moved onto other things”.
- 11. § Satoshi could be a woman, a man, or a group of people. Nobody knows! § In Japanese satoshi means “clear-thinking” or “wise”, naka can mean “inside” or “relationship” and moto is used to describe “the origin” or “the foundation.” Strung together it reads “thinking clearly inside the foundation”.
- 12. How does Bitcoin work? Bitcoin
- 13. How does Bitcoin work?
- 14. Bitcoin addresses bitcoins are not “stored” anywhere. There a no “accounts” § Public address: “receive” bitcoins § Private address: prove bitcoins ownership, sign messages
- 15. Transactions A transaction is a message containing: § input(s): output of previous transaction sent to your wallet address (prove ownership of your bitcoins) § output(s): bitcoin address of receiver and BTC amount you want to send. Transfer of bitcoin ownership from inputs to output. Your transaction broadcasted to the Bitcoin network
- 16. Blockchain Blockchain = block + chain § The blockchain is a database containing historical recorded of all the transactions that ever occurred in the network. § Every full node in the network has a copy that they keep up to date and verify § Broadcasted transactions are gathered into a “block” § Blocks are “mined” and appended to the blockchain § Block “chain” each other using “hash”
- 17. Mining § Where do bitcoins come from? With paper money, a government decides when to print and distribute money. Bitcoin doesn't have a central government. § Who gets to write the next block? Bitcoin using Proof-of-Work (PoW) protocol to archive decentralized consensus: 1. Miners solve mathematically hard puzzle (takes ~10 minutes to solve) 2.The first one to find the solution announces it to the network 3. Gets write to the next block 4. Generate new bitcoins as a reward Reward halves every 4 years (currently 12.5 BTC/block)
- 18. Orphaned Block ▪ Detached or Orphaned blocks are valid blocks which are not part of the main chain. They can occur naturally when two miners produce blocks at similar times or they can be caused by an attacker (with enough hashing power) attempting to reverse transactions.
- 19. Double spending and 51% attack
- 20. Why does Bitcoin exist?
- 21. Nakamoto’s Political Motivations Source: http://satoshi.nakamotoinstitute.org/quotes/motives/
- 22. Privacy An app using for transfers money on mobile
- 23. Your bank controls your money q Cyprus crisis (https://en.wikipedia.org/wiki/2012%E2%80%9313_Cypriot_financial_crisis) § On 25 March 2013, a €10 billion international bailout by the Eurogroup, European Commission (EC), European Central Bank (ECB) and International Monetary Fund(IMF) was announced, in return for Cyprus agreeing to close the country's second-largest bank, the Cyprus Popular Bank (also known as Laiki Bank), imposing a one-time bank deposit levy on all uninsured deposits there, and possibly around 48% of uninsured deposits in the Bank of Cyprus (the island's largest commercial bank) § Cyprus freezes all bank accounts, restricting all withdrawals and transfers of money q A woman who lost VND245 billion ($10.8 million) from her account at a Vietnamese bank has rejected a token compensation offer, saying the it's too low and that the bank needs to be more transparent.
- 24. Governments take populations hostage: Zimbabwe hyper inflation §1999 - Zimbabwe president Robert Mugabe begins redistributing private farm land, leading to a steep drop in economic productivity. §2000 - Mugabe prints an excessive amount of money to finance the Second Congo War, spending ~$23M per month. §2008-2009 - Inflation climbs to an alleged 6.5 sextillion percent. §2009 - Zimbabwe abandons the Zimbabwean Dollar (Z$) and does not replace it with another fiat currency. Source: https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
- 26. Light on Swiss National Bank
- 27. Practicality ØHow to get it? ØHow to store it? ØWhere to spend it?
- 28. How do I get bitcoins? § Buy bitcoins on exchanges § Coinbase (coinbase.com) § Remitano (remitano.com) § LocalBitcoins (localbitcoins.com) § Buy from other people (beware of scam) § Mining (hard but interesting) § Find someone private-key (just kidding :D)
- 29. How do I store my bitcoins? 1. Create a wallet a. Online (web wallet) b. Offline §Software wallet §Hardware wallet §Paper wallet 2. Keep your wallet safe a. Stored online b. Stored on computer c. Stored offline convenience security
- 30. Where to spend my bitcoins? Source: https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/ https://medium.com/@CoinATMRadar/how-to-use-a-bitcoin-atm-or-how-does-a-bitcoin-atm-work-283d7a08d7e
- 31. Issues ▪ Some form of centralization ▪ Hard to understand ▪ Energy consumption ▪ No “customer support” ▪ Negative press
- 32. Some form of centralization
- 33. Hard to understand Bitcoin is combination of: ▪ Game theory ▪ Cryptography ▪ Distributed system ▪ Peer-to-peer network ▪ Economic and monetary theory
- 36. Negative Press Ø Bitcoin is a ponzi scheme Ø But only nerds like cryptos! – You mean like when computer geek Jeff Bezos was starting a little company called Amazon to sell books on this thing called the Internet that nobody but nerds understood? I mean there are all these book stores I can go to, why would I need that? Ø But…But It’s Backed By Nothing – Nothing has any inherent value except the value we put in it. – Same applies to euros and dollars. Ø But…But It’s Unstable – You know this story too. Cryptos are unstable. They can go to nothing overnight. You can lose a lot of money. – This argument tells you absolutely zero. – Anything can go to nothing over night. – Nothing is immune. Not central markets or decentralized ones.
- 37. Resources
- 38. Any Questions?