1. Bitcoin (BTC)
Varsha Karunakaran
Nathestha Kaya 1

2. Introduction
• Introduced by an anonymous geek Satoshi Nakamoto, Japan
on 3rd January 2009.
• Distributed crypto-currency
• Decentralized digital currency i.e., no central authority (e.g.,
RBI , Federal Reserve)
• Represented by shorthand BTC just like Rs, $
• It uses open source code (any one can see how it works)
• Used internationally
• Smallest unit of bitcoin is 0.00,00,00,01 satoshi just like 1
paise in a rupee
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3. How bitcoins are
created called mining
• Bitcoins are created through a process
(similar to mining gold).
• In simple words when a certain complicated
mathematical problem is solved on the network
bitcoins are rewarded for each block
• Currently 25 BTC are generated for every block
within 10 minutes (by 2017 it will be 12.5BTC)
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4. • For every 4 years the reward generated is
adjusted i.e from 2009-2012 -10,500,000 coins
were generated .In 2012-2016 it will be
reduced to 5,250,000 and so on
• Thus the total number of bitcoins generated is
limited to 21,000,000 i.e controlled currency
supply
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5. • Physical bitcoins
– These physical representations of bitcoins have to
be broken open to reveal a piece of paper with
private key
– But in this case there is possibility that the creator
can still hold the private keys for it
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6. Bitcoin address
• Bitcoin addresses should be single use
• Whenever you want to receive a payment, you
should generate a new address
• This ensures security of your wallet
• It also makes it impossible to know who sent those
coins
• The most popular site for bitcoin wallets, and
transfers is http://blockchain.info (visit to get your
own bitcoin wallet)
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7. Who can own it
• Techies can own it by mining on their own (it’s
like trying to find gold under your back yard).
• For others
– Accept as payment from somebody who owns it
– Through services which trade bitcoins for your local
currency i.e., Rupee
– Buy them through bitcoin exchanges
– Trade cash for bitcoins in person through local
directory as their transactions are made public
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8. Where to store
Just like the one you use to store physical currency,
bitcoin system offers a wallet (basically a public key)
– Allows to transact
– Gives ownership of bitcoin balance
– All wallets can interoperate with each other just like your
email
• Each wallet has its own unique 33 characters and since
all of them are synchronized, fraudulent activities are
impossible
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9. • Software wallets
o installed in computer,
o gives a complete control to protect your money and
do backup
• Mobile wallets
o carry it wherever you want
o Pay in stores by scanning a QR code and ‘tap to pay’
• Web wallets
o Use bitcoin anywhere you want
o Less effort to protect your wallet
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10. Pros
• Easy to send through internet, without third party
interference
• Irreversible by design
• Fast transaction
• Costs very less than other payments
• Cannot be manipulated by any govt., bank, organization or
individual i.e., you can escape tax payments.
• It doesn’t have any border limitation, and can be used
globally
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11. Cons
• Bitcoins are accepted as exchange for illicit substances and
for online gambling
• Around 4.5 to 9 % bitcoins transacted for purchases of
drugs at a single online market, Silk Road
• Gun dealers use it to sell arms without background check
• Encourages cyber criminals to move and steal funds
• Bot nets are engaged in covert mining of bitcoins by
consuming computing cycles, using extra electricity and
increasing computer temperature
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12. Is it a bubble?
• Bubble –if suddenly everyone stops accepting
a currency (dollar, rupee) its value will drop to
zero
• Appropriate answers cannot be given but its
unlikely to happen
• E.g. even when Somalia government collapsed
20 years ago , Somali shillings are still
accepted as payment
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13. India and China bans BTC,
because…
• It involves risk of money laundering
• It volatility( in Jan 2013 one bitcoin valued at 50$ by
Dec it hit 1200 $ before softening to about 800 $)
and its lack of ‘backing assets’
• Bitcoin’s mobility i.e., its borderless and the Govt
cannot control them
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14. • In china the citizen were forbidden from taking
more than 50,000$ out of their country in a year
• In 2012 ,17 million Chinese made pilgrimage to
Macau for gambling chips which can be
converted to foreign currency and sent them
abroad
• Bitcoin was a way for wealthy Chinese to avoid
expenses of a trip to Macau
• China’s biggest search engine Baidu stopped
accepting bitcoin
• Alibaba also stopped accepting bitcoins
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16. • In India ,gold imports were slapped with
heavy restrictions and capital controls were
tightened,preventing money from being sent
or invested abroad
• Bitcoin was an alternative in this case
• On December 24th india warned to suspend
bitcoin exchanges
• But however this activity requires only
computer hardware and a web connection so
its beyond the reach of regulators
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18. From Newspapers
• On dec 5,Business line
‘Bitcoin sets sights in India’-big opportunities for bitcoin in
the $70 bn overseas remittance
• On Dec 18,Business line
‘Bit of a regulatory dilemma’-it may be a great idea ,but
replete with risks and lack controls
• Dec 24,The Hindu
‘Digging for virtual gold’-despite its futuristic appeal, what's
happening is a determined march to days when money
meant stuff you could jingle in your purse
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19. • Jan 2,business line
‘Bitcoin ,a hitech dinosaur’-it’s headed for
extinction like other private currencies earlier
• Jan7,The Hindu
‘Bitcoin and its potential to be disruptive’
Enroll for a free course on bitcoin
at http://www.udemy.com
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20. Q &A
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21. Thanks
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