1.
Inside
Bitcoins
Las
Vegas
Oct
5th
2014
Ashok
Misra
ashok@alinaconsultants.com
@epaymentsNut

2.
Bitcoin
–
My
background
and
involvement
• Couple
of
decades
experience
in
building
banking
applicaIons,
funds
transfer.
• Worked
on
ecommerce
applicaIons
&
security
for
Amazon.com
,
Real
Networks,
Linden
labs.
• Founded
an
ecommerce
consultancy
company
2
years
ago.
• Read
‘the
peer
to
peer
Electronic
Cash
System
paper
about
3
years
ago
and
dismissed
it.
• Re
read
it
six
months
later
and
was
completely
mesmerized.

3.
Abstract
• Ecommerce
growth
• Genesis
of
payments
for
ecommerce
• Bitcoin
as
a
payment
method
• The
Bitcoin
ecosystem.
• How
do
you
acquire
bitcoin?
• How
do
you
keep
bitcoin
safely
?
• ApplicaIon
of
Bitcoin
for
ecommerce
• Pi[alls

4.
Ecommerce
Whirlwind
Tour
• Growth
of
ecommerce
• Technologies
such
as
ssl,
etc.
• Ecommerce
verIcals

5.
Ecommerce
payment
methods
• Credit
/
Debit
cards
• Redirect
payment
methods,
paypal
• Push
payments
/
Bank
transfer
• Mobile
payments
• Invoicing
• COD

6.
Ecommerce
CC
Purchase
Path
High
Level
Steps

7.
Money
–
Some
Background
• What
is
wrong
with
a
barter
system
?
• First
MinIng
of
Money
began
2500
years
ago.
• 1945
Bre_on
Woods
• 1971
Nixon
Shock
–
USD
become
fiat
&
worlds
reserve
currency.
• FracIonal
reserve
banking,
monetary
mulIplier.
• Problems
with
paper
money.

8.
What
is
Bitcoin
?
What
is
bitcoin
(BTC)
?
• Created
in
2009
by
Satoshi
Nakamoto
• Digital
Currency
• Opensource
• Non
poliIcal
• No
central
authority

9.
Bitcoin
Basics
• Opensource
• Digital
currency
• Peer
to
Peer
• Non
poliIcal
• No
central
authority
• ~Double
Spend
• ~Chargeback
• ~High
Fees
• ~Intermediaries

10.
Bitcoin
Purchase
path

11.
Concepts
&
Misconcepts
• No
central
authority
• Does
not
solve
problems
that
Fiat,
Gold
can
not.
• Bitcoin
is
backed
by
processing
power.
• Bitcoin
is
not
backed
by
anything.
• Bitcoins
have
no
intrinsic
value.
• Bitcoin
is
illegal.
• There
is
no
way
to
control
inflaIon
with
bitcoin.
• Bitcoin
has
been
hacked.

12.
High
Level
Legal
Issues
• FinCEN
March
18th
2013
Guidance
• US
Tax
treatment,
Capital
gains,
• ECB
Warning
• Denmark,
Germany,

13.
Some
Stats
• BTC
mined
thusfar:
11
million
• Market
Cap
USD
:
One
Billion
• One
BTC
=
apprx
$
350
USD
• No
of
mining
computers:
1600
• Block
Count:
275000

14.
Bitcoin
Ecosystem
• Users
/
Merchants
• Hardware
Vendors
• Miners
• Exchanges
• Wallets

15.
Crypto
primer
• The
need
for
cryptography
• Symmetric
&
Asymmetric
cryptography
• pgp
key
pairs
• EllipIc
Curve
Digital
Signature
Algorithm
ECDSA
• SHA
hashes

16.
What
is
the
blockchain?
• The
block
chain
is
collaboraIvely
maintained
on
a
peer-­‐to-­‐peer
network
• Chaining
blocks
together
make
it
impossible
to
modify
transacIons
in
a
block
without
modifying
subsequent
blocks
• The
concept
of
the
‘proof
of
work’
is
built
on
random
nature
of
hashes.

17.
Why
is
Bitcoin
a
be_er
payment
method
for
ecommerce
?
• Merchant
underwriIng
/
Acquiring
• Receipt
of
funds
/
Se_lements
• Processing
Costs
• Security
• Refunds
/
Chargebacks
• Availability
/
Single
point
of
failure
• Magstripes,
EMV,
CNP
…..

18.
What
is
a
bitcoin
wallet
?
• Can
refer
to
a
wallet
program
or
a
wallet
file.
• Wallet
files
are
a
collecIon
of
private
keys
• Wallets
interact
with
the
peer
to
peer
system
• Full
service
wallets
• Signing
only
wallets
• Offline
wallets
• Hardware
wallets

19.
Bitcoin
Security
• What
does
it
mean
to
say
that
Bitcoin
can
get
hacked
?
• Protocol
has
a
strong
track
record.
• Online
wallets
• MulI
signature
to
protect
against
thep.
• Is
Bitcoin
vulnerable
to
quantum
commuIng?

20.
Gotchas
/
Caveats
• Price
point
/
VolaIlity
• Consumer
ProtecIon
• TaxaIon
• Refunds

21.
Intro
Reading
List
• Satoshi
Nakamoto
-­‐
Bitcoin:
A
Peer-­‐to-­‐Peer
Electronic
Cash
System
• Bitcoin
Developer
Guide
• Prof
Hyak
-­‐
The
DenaIonalizaIon
of
Money
• Alan
Greenspan's
'Gold
and
Economic
Freedom’
• Paul
Krugman
-­‐
Bitcoin
Is
Evil

22.
Watching
Pleasure
1. Why
Bitcoin
terrifies
Big
Banks
Interview
with
Andreas
Antonopoulos
2. Follow
The
Coin
weekly
roundup
3. The
rise
and
rise
of
Bitcoin
-­‐
Documentary

23.
Resources
/
links
• Bitcoin.org
(
official
project
web
site
)
• BitcoinfoundaIon.org
(
non
profit
org
)
• Github.com/bitcoin/bitcoin
(
project
repo
)
• en.bitcoin.it/wiki
(
bitcoin
wiki
)

24.
QuesIons?