Bitcoin and Blockchains
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This document provides an overview of Bitcoin and blockchains. It discusses what a blockchain is, how Bitcoin works through a peer-to-peer network with miners verifying transactions in blocks added to the blockchain every 10 minutes. While Bitcoin itself has issues like scams and volatility, the blockchain technology has applications for securely recording transactions without a central authority. Ethereum also uses blockchains to enable smart contracts through a cryptocurrency called Ether.
Bitcoin and Blockchains
- 4. Link Blockchain 10 Live Online Blockchain Demo
- 5. Bitcoin
- 6. Why Should Anyone Care? • Bitcoin itself is not very attractive • Scams • Pyramid schemes • High-risk investment • Money laundering
- 7. Why Does Bitcoin Have Any Value? • Three killer apps • Silk Road (purchase illegal things) • Ransomware (must pay in Bitcoin) • Economies with high in fl ation (like Argentina) • 2017: Speculation
- 8. Elon Musk
- 9. 7% of all Bitcoins Stolen
- 11. Bitcoin Price Chart • What is the real value of a bitcoin?
- 14. Bitcoin Rose Faster than the DotCom Bubble
- 15. In 1637, a single tulip bulb sold for more than the cost of a large mansion http://www.bbc.com/ culture/story/ 20160419-tulip- mania-the- fl owers- that-cost-more-than- houses
- 16. This part of my life, this part right here, this part is called "being stupid"
- 18. • Visa is valued at $6 per transaction • Bitcoin over $10,000 per transaction Is Bitcoin a Means of Exchange?
- 19. Is Bitcoin a Store of Value?
- 20. Gold is the Classic Store of Value
- 21. ...only 20 of the currencies are actually being used for something other than trading. The rest are purely speculative trading instruments. Initial Coin Offerings (ICO)
- 22. Constantly issuing more to push Bitcoin price up Actual cash reserves are 3% https://davidgerard.co.uk/blockchain/2021/05/13/tether-publishes-two-pie-charts-of- its-reserves/ Tether Market Capitalization
- 23. 1929 Bank Run
- 24. Ethereum
- 25. Smart Contracts • Programs that run on the Ethereum blockchain • A company can be run by a program, and have no physical location • Advocates expected to be exempt from all laws and taxes
- 26. Digital Autonomous Organization (DAO ) • Started with $150 M investment • Launched in May, 2016 • Security concerns were raised but ignored • On June 18, a hacker stole $70 M
- 28. • "White-Hat Hackers" stole rescued the remaining Ether from the DAO to pressure Ethereum into forking • Reportedly, the funds were returned later
- 29. July - Oct, 2017
- 34. Blockchains
- 35. Blockchains • The technology behind Bitcoin • Everyone has a copy of the complete ledger • Very dif fi cult to lie or cheat • Enables business dealings with people you don't trust • No trusted central authority • Bank, government, regulator, ...
- 39. How Bitcoin Works • Blocks are signed by miners with a SHA-256(SHA-256(block)) hash • The hash must start with 69 bits of zero • Dif fi culty is adjusted to keep the time between successes near 10 min. • This makes forging signatures very dif fi cult • Miners get an award (currently 25 bitcoins) plus transaction fees • Link Bitcoin 8
- 40. Bitcoin's Importance • Bitcoin is a real-world test of blockchain technology • A bunch of rebels, criminals, scammers, and suckers • Demonstrated how well blockchains work • AND THEY WORK
- 41. History • "Satoshi Nakamoto" invented and launched Bitcoin on Jan. 3, 2009 • A response to the 2008 fi nancial crisis • Fiat money without any bank or government controlling it
- 42. Merkle Tree • Designed to "allow ef fi cient and secure veri fi cation of large data structures" -- Link Bitcoin 2
- 43. Block • A block is a public ledger of all bitcoin transactions • Every computer running the full bitcoin software has a copy of the entire blockchain • Every 10 minutes, the Bitcoin transactions are gathered together into a block and fi nalized by miners with proof of wor k • A hash value that's very dif fi cult to compute, but easy to verify • Each mined block produces 25 new bitcoins (soon this value will halve)
- 44. Genesis Block