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Bitcoin - new P2P currency

Video from Slovak version of this talk from Progressbar hackerspace: http://hackerspace.pod.cvut.cz/pgb_20110323_bitcoin_sk.mkv http://hackerspace.pod.cvut.cz/pgb_20110323_bitcoin_sk.mp4
by

Juraj Bednar

on 28 March 2011

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Transcript of Bitcoin - new P2P currency

Money functions Medium of exchange Storage of value (in time) Unit of account Token of status / reputation Metric or measure Tokens of exchange Metals
Other commodities Have some value of their own Fiat currencies "Guaranteed" by state Value is defined by market (usability) Required for paying taxes Currency for debt recovery Commodities vs. fiat money You can not "create" new gold
out of thin air Less flexible Some value is guaranteed Central banks usually do more
harm than good in the long term Predictability Anonymity and regulations Peer to peer cryptocurrency Relies on strong crypto (ECC, hashes) No central point Rules are known, there is no way
to change them now Except forking
Inflation period (mining)
Out of supply period
(21 million bitcoins) Features Very difficult to block
Again: All rules are embedded in code
No identity tracking 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 There is no login/password
(just coins and keys to use them)
No direct binding between identity
and coins
Transaction history is public Deanonymization attacks
(like Facebook)
Combining more coins links
them together
Possibility to use commercial
"mixes" (Bitcoin Laundry)
You can trade "virgin coins" Works with Tor
There are seed nodes in .onion Usage Trade (!)
Coffee, computers, cloud
Drugs
Currencies BTC vs. USD Mining Similar to mining gold
everyone can do it
it is not "easy"
The rate is known
More people =
less yield


$ Electricity > $ BTC 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 Bitcoin faucet
Currency exchanges
(mtgox.com)
Czech cooperative BTC mining
(mining.bitcoin.cz)
Trade page on Bitcoin wiki Projects Bitcoin Laundry (Mike)
Paper bitcoins
(like scratchable lottery tickets)
Trade
Tooling Statistics ~ 5-10 thousand people
~ 20000 EUR a day Juraj Bednár
jooray+bitcoin@gmail.com
Creative Commons Attribution License What is wrong with traditional
money? Control (companies, banks and goverments control
how wealth can be transfered and to who and
creation of money)
Mandatory fraud insurance
Transaction fees 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. Hawala LEDS E-Gold, Pecunix, Liberty Reserve Other alternative currencies and transfer methods Cause for rise of BTC value
Costarican goverment decided
to regulate the field, people panicked
exchanged LR for BTC, BTC gained
parity Central server
After intervention from
US goverment more or less
unusable The mysteries Is it safe? Who wrote it? Economy and evolution Market determined value 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?
Is it legal? Does it matter? Zimbabwe & various cases of hyperinflation
of fiat currencies 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. Satoshi Nakamoto 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 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)
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 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? Crypto pretty solid The paper and code is pretty solid,
would have probably earned
him a PhD Bitcoin monetary base setup 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)
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. 6 MWh
Full transcript