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BITCOIN

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by

jo po

on 3 September 2014

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Transcript of BITCOIN

What is Bitcoin Mining??
PAYMENT GATEWAY OF BITCOINS
Bitcoin Wallet
:
A Bitcoin wallet is a file that contains a collection of private keys
Bitcoin Address
:
A Bitcoin address is an identifier of 27-34 alphanumeric characters, beginning with the number 1 or 3, that represents a possible destination for a Bitcoin payment.
(ex.
3
J98t1WpEZ73CNmQviecrnyiWrnqRh)


Difficulty


Computationally difficult problem
• Difficulty metrics


Reward


Pool Miner

Process to mine Bitcoin
8. Repeat.

1. New transactions are broadcast to all nodes.
2. Each miner node collects new transactions into a block.
3. Each miner node works on finding a difficult proof-of-work for its block.
4. When a node finds a proof-of-work, it broadcasts the block to all nodes.
5. New bitcoins are successfully collected or "mined" by the receiving node which found the proof-of-work.
6. Nodes accept the block only if all transactions in it are valid and not already spent.
7. Nodes express their acceptance of the block by working on creating the next block in the chain, using the hash of the accepted block as the previous hash.
Mining Ecosystem
Hardware
GPU-based mining rig
Lancelot FPGA-based mining board
• CPU Mining
• GPU Mining
• FPGA
• ASIC
• Cloud Mining
Public key
:
commonly just called the address

Private key
:
the important part that lets you spend the bitcoins on it’s corresponding public key.
BITCOINS
MYTHS ABOUT BITCOIN
Bitcoin is no different to any other digital currency
Bitcoins are a method of payment not a currency
Bitcoins are fully virtual and immaterial
Bitcoins are stored in wallet files, just copy the wallet file to get more coins!

Bitcoins can be printed/minted by anyone and are therefore worthless
Alice owns an online store that accepts bitcoins as a form of payment.
Bob wants to purchase a $2500 item. He looks online and sees that the prevailing rate for bitcoins is approximately
$500/bitcoin.

Alice is selling the item for 5 bitcoins on his website.
Bob creates a new Bitcoin address through his wallet. He can see Alice's public Bitcoin address on his website.
Bob never needs to disclose his identity to Alice and can thus remain completely anonymous.
Bob instructs his Bitcoin client (the free Bitcoin software he installed on his computer/mobile) to transfer 5 bitcoins from his wallet to the Alice's address. This is the transaction message.
Bob's bitcoin client will electronically "sign" the transaction request with the private key of the address from where he is transferring his bitcoins. While Bob's public key is available to anyone for signature verification, his private key is only known to him.
Bob's transaction is broadcast to the Bitcoin network and will be verified in a few minutes by miners. The 5 bitcoins have been successfully transferred from Bob's address to the Alice's address.
SECURING YOUR BITCOINS
Be careful with online services.
Small amounts for everyday uses.
Backup your wallet.
Encrypt your wallet.
Offline wallet for savings.
Keep your software up to date.
Multi-signature to protect against theft.
Bitcoin nodes use the block chain to distinguish legitimate
Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place
Mining

is the process of adding transaction records to Bitcoin's public ledger of past transactions.
THANK YOU
Group no. 15
029- Aishwarya Nair
036- Jyoti Rai
042- Amrita Singh
043- Debapriya Sinha
Casascius Bitcoins
Conclusion
Full transcript