Bitcoin - new P2P currency

When central banks try to

regulate and fix some

"problems caused by market",

they usually trigger reaction from

the market "self-regulatory"

mechanisms which retaliate

Juraj Bednár

jooray+bitcoin@gmail.com

Creative Commons Attribution License

The mysteries

Economy and evolution

I like the evolution

because of it's lack of

central authority and

ability to maintain balance

In economy, markets do the

same thing (if we don't

touch it)

Satoshi Nakamoto

Who wrote it?

The paper and code is pretty solid,

would have probably earned

him a PhD

Little known about him

We don't even know if he's from Japan

Can we trust him? Look at the code!

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

-Genesis block

of Bitcoin

Yes, [we will not find a solution to political problems in cryptography,] but we can win a major battle in the arms race and gain a new territory of freedom for several years.

Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.

It's very attractive to the libertarian viewpoint if we can explain it properly. I'm better with code than with words though.

Is it legal?

Does it matter?

Virtual commodity is okay

in most countries

Goverments will not like

this a bit. Laundering, tax

evasion, financing of crimes

all possible. Does the good side

outweight the bad? Is it worth

fighting for?

Is it safe?

Bitcoin monetary base setup

Crypto pretty solid

Market determined value

Inflation (money supply created at a prespecified

rate, converges to 21 million)

Then there will be no new supply of Bitcoins

Inflation and deflation, that is expected is reflected

in value of money

(Uncertainity caused by central banks is much

bigger problem then infl. itself)

Not a mysterious "investment

and forex trading market"

Would you like to earn money in

that currency? Would you sell

your house for that currency?

Deflation in the US (The Great Sag)

1873-96

The Great Sag had a global scope, and featured incredible advances in technology (the Industrial Revolution) that lead to unprecedented cost-cutting and productivity-enhancing technologies—an increase in the supply of goods that caused downward pressure on prices.

Zimbabwe & various cases of hyperinflation

of fiat currencies

Tokens of exchange

What is wrong with traditional

money?

Money functions

Metals

Other commodities

Medium of exchange

Have some value of their own

Control (companies, banks and goverments control

how wealth can be transfered and to who and

creation of money)

Mandatory fraud insurance

Transaction fees

Fiat currencies

Storage of value (in time)

"Guaranteed" by state

Unit of account

Value is defined by market (usability)

Token of status / reputation

Required for paying taxes

Currency for debt recovery

Metric or measure

Other alternative currencies and transfer methods

Commodities vs. fiat money

Hawala

Hawala (also known as hundi) is an informal value transfer system based on the performance and honour of a huge network of money brokers, which are primarily located in the Middle East, North Africa, the Horn of Africa, and South Asia.

Features

You can not "create" new gold

out of thin air

Very difficult to block

Again: All rules are embedded in code

No identity tracking

Peer to peer cryptocurrency

Works with Tor

There are seed nodes in .onion

There is no login/password

(just coins and keys to use them)

No direct binding between identity

and coins

Transaction history is public

Relies on strong crypto (ECC, hashes)

Deanonymization attacks

(like Facebook)

Combining more coins links

them together

Possibility to use commercial

"mixes" (Bitcoin Laundry)

You can trade "virgin coins"

Public key cryptography for

signing transactions

Transaction history to prevent

double spending

Computationally difficult problem

(hashes in specific form) to

make history difficult to fake

No central point

Usage

Rules are known, there is no way

to change them now

Trade (!)

Coffee, computers, cloud

Drugs

Currencies

Except forking

Inflation period (mining)

Out of supply period

(21 million bitcoins)

Similar to mining gold

everyone can do it

it is not "easy"

The rate is known

More people =

less yield

$ Electricity > $ BTC

Mining

LEDS

6 MWh

Less flexible

BTC vs. USD

There is no other known

way to issue P2P currency

without central authority

Mining (or hashing) is

required for the network

to be secure (keeping

transaction history)

Where to start

Some value is guaranteed

Projects

Bitcoin faucet

Currency exchanges

(mtgox.com)

Czech cooperative BTC mining

(mining.bitcoin.cz)

Trade page on Bitcoin wiki

Bitcoin Laundry (Mike)

Paper bitcoins

(like scratchable lottery tickets)

Trade

Tooling

~ 5-10 thousand people

~ 20000 EUR a day

Central banks usually do more

harm than good in the long term

Statistics

E-Gold, Pecunix, Liberty Reserve

Predictability

Central server

After intervention from

US goverment more or less

unusable

Cause for rise of BTC value

Costarican goverment decided

to regulate the field, people panicked

exchanged LR for BTC, BTC gained

parity

Anonymity and regulations