Study on Bitcoin
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This document provides an overview of Bitcoin, including: - A description of earlier barter and monetary systems that Bitcoin improved upon. - An introduction to Bitcoin as a digital, decentralized currency that uses cryptography and a distributed ledger called the blockchain to manage transactions. - An explanation of key Bitcoin concepts like wallets, the blockchain, transactions, and mining - the process by which new Bitcoin is introduced and transactions are validated. - Details on how merchants can accept Bitcoin payments and the advantages it provides over traditional currency systems. The document concludes with a brief history of Bitcoin and references for further information.
Study on Bitcoin
- 1. BITCOIN Guided by Submitted By Ms. Caroline Mary Krishna Veni.A Asst. Professor S7 CSE CSE Dept. 1
- 2. CONTENTS Description of earlier systems Barter Money-Its advantages and disadvantages Introduction to Bitcoin Characteristics Bitcoin as email Bitcoin Wallet Bitcoin Protocol Block chain Transaction Mining How to accept bitcoins in store Advantages Brief History of Bitcoin Conclusion References 2
- 3. BRIEF DESCRIPTION OF EARLIER SYSTEMS Barter 3
- 4. (CONTD…) Goods *BECOME* Money Money is A medium of exchange A unit of account A store of value 4
- 5. CONTD… 5 Advantages Acceptable Durable Portable Scarce Divisible Recognizable Disadvantages • It is centralized • Misuse of Capital
- 6. SO REALLY HOW INNOVATIVE IS BITCOIN?? 6
- 7. WHAT IS BITCOIN? •Bitcoin lets you send money over the internet. •Digital, distributed currency developed by open source community. •Produced using software that solves mathematical problems. •Example for crypto currency. 7
- 8. ABOUT BITCOIN(CONTD……..) • Used to buy things electronically. • It is decentralized, no need of large bank to control money. • Proposed by an unknown author, Satoshi Nakamoto. • Mined using computing power in distributed network 8
- 9. CHARACTERISTICS OF BITCOIN It’s decentralized. It’s easy to set up It’s anonymous It’s completely transparent Transaction fees are miniscule It’s fast It’s non-repudiable 9
- 10. 1010 Internet Bitcoin is like email Internet
- 11. BITCOIN ACCOUNT 11 Functions using public key cryptography Generates pair of cryptographic keys Public key as bitcoin address Private key kept secret and create digital signatures
- 12. BITCOIN WALLET 12 Bitcoin addresses are collected in “wallet”. Essence of wallet Security and protecting private key
- 13. VERSATALITY OF WALLET 13 Wallets come in variety of forms Purchase with mobile device QR codes are used.
- 14. BITCOIN PROTOCOL WORKING OF BITCOIN 14 Block chain Transaction Processing mining
- 15. PROTOCOL(CONTD..) Block Chain Maintains consistent record of all transactions Blocks :- data structures encapsulating transactions. Prevents double spending. 15
- 16. CONTD… Transaction “We define a digital coin as a chain of digital signatures” Components of transaction Input Amount Output 16
- 17. EXAMPLE OF PARTIAL TRANSACTION GRAPH 17 Alice ,5 Alice ,2 Bob1,3 Bob2,2 Charlie.4 tA tC tB Bob3,1
- 18. PROTOCOL(CONTD..) Mining Primary importance All participants have a consistent view of bitcoin data and to create no bitcoins. Mining raises new problems Proof of Work 18
- 19. MIINING (CONTD..) How to make hash of it?? Miners take the information in the block, and apply a mathematical formula to turn hash. Hash : random sequence of letters and numbers. Every time someone successfully creates a hash, they get a reward of 25 bitcoins. 19
- 20. HOW MINING WORKS mining uses cryptography, with a hash function called double SHA-256 hash takes data and shrinks into smaller hash value(256 bits) cryptographic hashing becomes a good way to implement the Bitcoin "proof-of-work“ 20
- 21. CONTD.. To mine a block, collect new transactions in a block. hash starts with enough zeros , block has been successfully mined. About every 10 minute someone will successfully mine a block. 21
- 22. STRUCTURE OF BITCOIN BLOCK 22
- 23. CONTD… Block header contains field such as 1st field :-protocol version 2nd field :-hash of previous block 3rd field :-Merkle root ,special hash of all transactions 4th field :- time stamp server 5th field :-nonce,arbitrary value added on each hash value. 23
- 24. HOW TO ACCEPT BITCOIN PAYMENTS FOR YOUR STORE 24 Person to person payments
- 25. 25 MERCHANT BITCOIN POINT-OF-SALE (POS) SOLUTIONS Block chain merchant
- 26. ADVANTAGES 26
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- 30. REFERENCES S. Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 2008. To appear in the proceedings of the 2013 eCrime researches summit(eCrime) published by IEEE. http://www.righto.com/2014/02/bitcoin-mining-hard- way-algorithms.html http:/coindesk.com/information http://en.wikipedia.org/wiki/Bitcoin 30
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