OVERVIEW ON CRYPTOCURRENCY
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1. Bitcoin is a decentralized digital currency that uses cryptography to secure transactions. It was created in 2009 by the mysterious Satoshi Nakamoto. 2. Blockchain technology underlies Bitcoin and other cryptocurrencies. It is a continuously growing list of transaction records linked through cryptography. 3. Mining is the process by which transactions are verified and added to the public blockchain ledger. Miners use specialized computer hardware to solve complex math problems, and are rewarded with new Bitcoin.
OVERVIEW ON CRYPTOCURRENCY
- 2. Thomas Carper, US-Senator • Virtual currencies, perhaps most notably Bitcoin, “have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.”
- 4. Cryptocurrency A digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets
- 5. In 2009, a mysterious inventor using the pseudonym, Satoshi Nakamoto, released upon the world the first decentralized, digital currency which he called Bitcoin It represented the first attempt to build a non-trust based currency. With cryptocurrencies, we have the first successful attempt to go outside the concept of using a central database to keep everything organized.
- 6. What is Money? Money is all about a verified entry in some kind of database of accounts, balances, and transactions. Just limited entries in a database no one can change without fulfilling specific conditions
- 7. Value of money The value of money is decided purely by its purchasing power, as dictated by inflation. Money is valuable only because it can get us a desired product or service.
- 9. Fiat currency is “LEGAL TENDER” backed by a “central government.” Either in physical form or it can be represented electronically. The government controls the supply and you can pay your taxes with it Cryptocurrency Not “legal tender” Not backed by a central government or bank (it is decentralized and global). Its form is more like bank credit sans the bank . An algorithm controls the supply and you can’t pay your taxes with it.
- 11. Satoshi Nakamoto, the unknown inventor of Bitcoin,. • In 2008, Nakamoto published a nine-page white paper containing the first-ever mention of bitcoin, calling it a "peer-to-peer electronic cash system."
- 13. Some common terms referred to in cryptocurrency understanding
- 15. It is a continuously growing list of records, called blocks, which are linked and secured using cryptography
- 18. Each block typically contains a cryptographic hash of the previous block, a timestamp and transaction data. It serves as the public ledger for all transactions on the network
- 19. The blockchain has complete information about different user addresses and their balances right from the genesis block to the most recently completed block By design, a blockchain is inherently resistant to modification of the data Transactions are immutable, meaning they cannot be deleted: Typically managed by a peer- to- peer network collectively adhering to a protocol.
- 20. Non-Trust based system Traditional currency system consisted of a single ledger sitting on a bank’s database somewhere, a cryptocurrency ledger is recreated in its entirety on every node of the network with every confirmed transaction This automatic, algorithm- powered approval process is what we mean by a non- trust based system. No single entity is in charge, which makes it almost impossible to manipulate.
- 24. How Bitcoin Handles The Double Spending Problem Bitcoin’s blockchain maintains a chronologically-ordered, time-stamped transaction ledger from the very start of its operation in 2009. Every 10 mins, a block (i.e. a group of transactions) is added to the ledger. And all the nodes on the Bitcoin network keep a copy of this global ledger (the blockchain).
- 26. What is 'Bitcoin Mining’ The process by which transactions are verified and added to the public ledger The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle The participant who first solves the puzzle gets to place the next block on the block chain and claim the rewards
- 27. What Miners do? • Trying to be the first miner to come up with a 64- digit hexadecimal number (a “Hash") that is less than or equal to the target hash. • In a hexadecimal system, each digit has 16 possibilities • Because it's guesswork, you need a lot of computing power in order to get there first. • The first miner whose nonce generates a hash that is less than or equal to the target hash is awarded credit for completing that block,
- 28. Eg. Of a Hash •0000000000000000 057fcc708cf0130d9 5e27c5819203e9f96 7ac56e4df598ee.
- 29. Proof of work means that a miner is proving that they did a certain amount of work, on average, in order to produce a block If someone wanted to modify a block in the blockchain and have everyone accept it, that person must perform the same amount of work that went into creating the block the amount of work required to rewrite history is considered to be infeasible and much too costly to do practically.
- 30. Reward for Mining The amount of new bitcoin released with each mined block is called the block reward The block reward started at 50 in 2009, is now 12.5 in 2018, and will continue to decrease. The block reward is halved every 210,000 blocks, or roughly every 4 years This diminishing block reward will result in a total release of bitcoin that approaches 21 million.
- 31. Transaction Fees Are some amount of Bitcoin that are included in a transaction as a reward for the miner who mines the block in which the transaction is included. • voluntary on the part of the person sending a transaction Thus, users sending transactions can use transaction fees to incentive miners to verify their transactions.
- 32. The Bitcoin Mining difficulty •It is recalculated every 2016 blocks is the measure of how difficult it is to find a new block •This will yield, on average, one block every ten minutes As more miners join, the rate of block creation will go up. As the rate of block generation goes up, the difficulty rises to compensate
- 33. What equipment do I need to mine? • Either a GPU (graphics processing unit) or an application-specific integrated circuit (ASIC)..
- 35. Mining factory
- 36. Bitcoin is like gold Gold must be mined out of the ground, and Bitcoin must be mined via digital means like gold, it have a limited and finite supply. In fact, there are only 21 million Bitcoins that can be mined in total Once miners have unlocked this many Bitcoins, the planet's supply will essentially be tapped out, unless Bitcoin's protocol is changed to allow for a larger supply.
- 38. cryptocurrency wallet • is a software program either on your desktop or on an app on your smart phone, that stores private and public keys and interacts with various blockchain to enable users to send and receive digital currency and monitor their balance. • If you want to use Bitcoin or any othercryptocurrency, you will need to have a digital wallet.
- 39. Types of wallets Offline wallet • a client that is downloaded and installed on the user’s own computer. The public and private keys are then stored inside of this software client Online wallet • as signing up for an account directly through the website. They are not very secure Hardware wallet • most secure of the commonly- used wallets. Most hardware wallets consist of a USB device Paper wallet You print out your public and private keys and secure them in any way you see fit
- 40. Public and Private keys
- 44. 3. Preventing voter fraud • Blockchain technology has the ability to provide an unhackable electronic vote- counting system. • This system can secure an election during voter registration, and can account for the voters identification and insure votes cannot be tampered with at a later date. • There’s a startup already working on this called Follow My Vote.
- 46. • Paying With Bitcoin at Bic Camera in Tokyo - YouTube (360p)_cut_cut.mp4
- 47. Bitcoin ATM BATMOne and BATMTwo - Bitcoin ATM - Bitcoins purchase process - YouTube (360p).mp4
- 50. Bitcoin Exchanges in India
- 51. Laszlo Hanyecz made the first real-world transaction by buying two pizzas in Jacksonville, Florida for 10,000 BTC
- 52. Monetary properties: • Controlled supply: Most cryptocurrencies limit the supply of the tokens. In Bitcoin, the supply decreases in time and will reach its final number somewhere in around 2140. All cryptocurrencies control the supply of the token by a schedule written in the code. This means the monetary supply of a cryptocurrency in every given moment in the future can roughly be calculated today. There is no surpris
- 54. Volatile price history May 2010 less than $ 0.01 April 2013- $266 Nov 2013 $1,242 Mar 2015 $250 January 2017 $920 September 2017- $5,000 December 2017- $19,210 5 February 2018- $6930 9 APR 2018 $7,093.35 4,58,426.52 Indian Rupee
- 56. • Bitcoin has a limited supply of 21 million which is expected to be reached by the year 2140. • In 10 years, the analyst thinks that there will be 17 million bitcoin in circulation, up from the current 16.3 million figure. • If the potential 17 million of bitcoins in supply is divided by the $1.75 trillion market cap estimate, then each bitcoin would be worth just over $100,000.
- 57. • INR 1000 investment in Bitcoin in 2010, now worth INR 2.3 crore • if you would have invested $1,000 in Bitcoins seven years ago, to purchase about 333,000 Bitcoins, you would have garnered about $3.2 billion • Dec-17—INR 13,77,202. • 9th April2018----INR-4,58,426.
- 58. Who is Satoshi Nakomoto? One of the biggest mysteries in the technology world is the identity of Satoshi Nakamoto, the computer programmer who invented the digital currency bitcoin The name—Satoshi Nakamoto—is a pseudonym. It could represent a man, a woman, or even a group of people But beyond solving a longstanding mystery, experts agree that uncovering Nakamoto's identity could have an immense impact on bitcoin's economics and internal politics.
- 60. • In 2008, Nakamoto published a nine-page white paper containing the first-ever mention of bitcoin, calling it a "peer-to-peer electronic cash system." • A few months later, Nakamoto released bitcoin's first software and partnered with developers and coders online to improve it. • This collaborative environment continued until 2011 when, without warning, Nakamoto vanished. • Before vanishing, he is supposed to have accumulated about 1 million bitcoins
- 61. Nick Szabo Dorian Prentice Satoshi Nakamoto Hal Finney Craig Steven Wright
- 62. Why is uncovering Nakamoto’s identity so important? "If bitcoin fulfills its role of becoming a global currency, than Satoshi Nakamoto would likely be the richest person in the world. If Satoshi Nakamoto were ever to sell Bitcoins in his or her possession the price of Bitcoin could potentially become more volatile than it already is. Identifying Bitcoin’s creator may be a quixotic endeavor The Bitcoin community will be forced to coexist with the enigma that is Satoshi Nakamoto, for the better or for the worst
- 64. Ethereum was proposed in late 2013 by Vitalik Buterin The value of the Ethereum currency grew over 13,000 percent in 2017.
- 65. • It is a result of a prolonged disagreement on how to handle the Bitcoin scalability problem. • Bitcoin cash is a cryptocurrency is a fork of Bitcoin Classic that was created in August 2017 • Increase maximum block size to eight megabytes • Modification of transaction signature hashing algorithm
- 66. Initial coin offering In an ICO, a quantity of the cryptocurrency is pre-allocated to investors as "tokens", in exchange for fiat cash or other cryptocurrencies These tokens supposedly become functional units of currency if or when the ICO's funding goal is met and the project launches In contrast to (IPOs), where investors gain shares in the ownership of the company, in ICOs, the investors buy coins of the company, which can appreciate in value if the business is successful
- 68. What is the future of cryptocurrencies?
- 70. • Cryptocurrency Will Replace National Currencies by 2030.“ Thomas Frey
- 73. Govermental actions • China has banned ICOs and cryptocurrency trading, and may clamp down on mining. • S.Korea has banned ICOs and anonymous trading. • Japan has introduced a licensing regime for cryptocurrency exchanges. • Bank of America, Citi Bank, JP Morgan and Lloyds, restrained their customers from buying the cryptocurrency via credit cards. • Google has prohibited advertisment of cryptocurrencies in their websites, so has Facebook
- 74. • Finance Minister Arun Jaitley in his budget speech had said the government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.
- 75. RBI's cryptocurrency clampdown: Will existing investors lose their money? As part of its bi-monthly monetary policy statement, the central bank stated that, with immediate effect, entities regulated by it can no longer deal with or provide services to any individual or businesses dealing with or settling virtual currencies. Bitcoin investments in India are estimated to be in region of $2billion. Existing investors have been given a window , They are required to stop having a business relationship with the entities dealing with virtual currencies forthwith and unwind the existing relationship within a period of three months
- 76. As Per the RBI notification Indian Government may soon unevil its own cryptocurrency named as Lakshmi and its value may go around 50$ to 200$
- 77. Bitcoin’s main benefits of decentralization and transaction anonymity have also made it a favored currency for a host of illegal activities and money laundering Tax-Evasion Money laundering Drug peddling Smuggling , weapons procurement and paid assassinations Counterfeiting Sex Rackets Ransoms
- 79. • A study, which was conducted by researchers from the University of Technology, Sydney, found that 44 per cent of bitcoin transactions and 25 per cent of all users were associated with illegal activity and “darknet” transactions
- 81. Bitcoin scams • The Massive Mt. Gox Disaster • Canadian Bitcoins and the Simplest Scam • The Optioment Ploy • Bitcoin Gold and False Promise • Silk Road’s Ridiculous Email Trap • Coincheck scam
- 83. Will Bitcoin Gain Traction as a Currency • Many Bitcoin fans believe it will become a true global currency, one that you could spend on sandwiches or scarves the same way you’d use Visa or MasterCard today • But if and when it did, it might be the end of Bitcoin’s huge price surge; for the digital coin to be useful as a currency, its value would have to stabilize.
- 84. One hypester calls Bitcoin “a gift from God to help humanity sort out the mess it has made with its money”. Bitcoin’s price is not a reflection of its growing usage as currency; it reflects merely demand for the mirage of its speculative value Its price is rising only because people all over the world are hearing stories of how others doubled or tripled their money in a short period — and they don’t want to miss out.
- 85. What is a 'Ponzi Scheme'
- 86. Reasons why you should not invest in bitcoins,as of now! Extreme volatility Neither commodity, nor currency An unregulated space • The issue of legality • Prone to illegal activity
- 87. Summary The concept of a decentralized, no-trust, annonymous and fast global currency is really appealing. Blockchain technology is really path breaking and definitely will find its application in lots of avenues in due course Due to extreme volatality and increasing govermental enforcements, it may be desirable to defer investment in any cryptocurrency for the time being The illegal uses of cryptocurreny always cast a shadow to the normal law abiding citizen