bitcoin and blockchaimn full deatils in jjb

1. Where It All Started
Blockchain technology was first introduced in a whitepaper
entitled: “Bitcoin: A Peer-to-Peer Electronic Cash System,” by
Satoshi Nakamoto in 2008.
• No reliance on trust
• Digital signatures
• Peer-to-peer network
• Proof-of-work
• Public history of transactions
• Honest, independent nodes control majority of CPU computing
power
• Nodes vote with CPU computing power
• Rules and incentives enforced through consensus mechanism

2. The Technology Behind Bitcoin
• Think of Bitcoin as an electronic asset (as well as a digital
currency)
• A network of computers keeps track of Bitcoin payments, and
adds them to an ever-growing list of all the Bitcoin payments
that have been made, called “The Bitcoin Blockchain”
• The file that contains data about all the Bitcoin transactions is
often called a “ledger”
• Bitcoin value is created through transaction processing,
referred to as “mining,” which is performed by distributed
processors called “nodes” of the peer-to-peer network

4. 1. Storage for digital records
2. Exchanging digital assets (called tokens)
3. Executing smart contracts
• Ground rules – Terms & conditions recorded in code
• Distributed network executes contract & monitors
compliance
• Outcomes are automatically validated without third party
Three “Levels” of Blockchain

5. • A broader use is supported by the digital infrastructure
introduced through Bitcoin, as represented by “tokens”.
• A “token” can be defined as a “scarce digital asset based on
underlying technology inspired by Bitcoin.”
• Tokens may use similar codebases but different blockchain
databases.
• Ethereum was Bitcoin-inspired but has its own blockchain and is
engineered to be more programmable. Tokens can be issued on
top of the Ethereum blockchain.
• Token buyers are buying private keys, which are similar to API
keys, but can be transferred to other parties without consent.
A General Discussion about Tokens

6. • Tokens have a value and therefore a price.
• Tokens are a new model for technology and can be an alternative
to equity-based financing.
• Tokens do not dilute capital. They introduce a huge increase to
buyer base and time-to-liquidity.
• Token launches differ from equity sales; however, they can be
issued as a way to share profits.
• Tokens can be sold internationally over the internet and are
always open for business.
• Tokens decentralize the process of funding technology.
Tokens

7. • Tokens enable a better-than-free new business model.
• Tokens will introduce the rise of the “tech savvy senior
executive.”
• Tokens accommodate immediate custody without an
intermediary.
• Tokens can be extended to hardware, as part of the internet of
things.
Tokens,

8. Smart Contracts
Consensus protocols are key to determining the sequence of
actions resulting from the contract’s code. This enables
peer-to-peer trading of everything from renewable energy to
automated hotel room bookings.
Current paper-based
systems drive $18
trillion in transactions
per year.

9. • Hyperledger is an open source collaborative effort created to
advance cross-industry blockchain technologies. It is a global
collaboration, hosted by The Linux Foundation, including leaders in
finance, banking, IoT, supply chain, manufacturing, and technology.
• Business Blockchain Frameworks are hosted with Hyperledger.
• Hyperledger addresses important features for a cross-industry open
standard for distributed ledgers. The Linux Foundation hosts
Hyperledger as a Collaborative Project under the foundation.
Hyperledger

10. Hyperledger Projects
A few of the Hyperledger Projects include:
• Hyperledger Burrow – Permissible smart contract machine
with a modular blockchain client, built in part to the
specification of the Ethereum Virtual Machine (EVM)
• Hyperledger Fabric – Foundation for developing plug-n-play
solutions within a modular architecture
• Hyperledger Iroha – Simple and easy blockchain framework
designed to be incorporated into infrastructure projects
requiring distributed ledger technology
• Hyperledger Sawtooth – A modular platform for building,
deploying, and running distributed ledgers

11. Protecting Private Keys
© Elliott Davis Decosimo, LLC © Elliott Davis Decosimo, PLLC
• Within the blockchain, trust relies on the safekeeping of
private keys, in support of a truly distributed identity
management
• Ultimately, that safekeeping resides with the actions
taken by individuals to secure their private key
• For cryptocurrency traders, one frequently sees the
recommendation to write one’s private key down on a
piece of paper and put it up for safekeeping in, for
example, a safe deposit box

12. Criticism and Challenges
Critics have cited the following blockchain challenges:
• Nascent technology
• Uncertain regulatory status
• Large energy consumption
• Control, security and privacy
• Integration concerns
• Cultural adoption
• Cost
• Challenges associated with audit, taxes, and compliance

13. • An area of heavy criticism has to do with the vast amounts of
energy necessary to process and store transactions, especially as
the use of blockchain technology increases
• The Bitcoin blockchain network’s miners are attempting 450
thousand trillion solutions per second in efforts to validate
transactions, using substantial amounts of computer power
• Note that there are also opportunities to decentralize the energy
grid
• Wasted resources: Mining Bitcoin wastes huge amounts of energy
($15million/day)
Energy Consumption

14. What is Bitcoin?
• Bitcoin uses peer-to-peer technology to operate with no central
authority or banks; managing transactions and the issuing of
bitcoins is carried out collectively by the network. Bitcoin is open-
source; its design is public, nobody owns or controls Bitcoin and
everyone can take part.
• Bitcoin is a network that enables a new payment system and a
completely digital money.
• Introduced as open source software in 2009 by developer Satoshi
Nakamoto.

15. • Bitcoins are created as a reward for payment processing work in which
users who offer their computing power verify and record payments
into a public ledger. Called mining,
• individuals engage in this activity in exchange for transaction fees and
newly minted bitcoins.
• Besides mining, bitcoins can be obtained in exchange for other
currencies, products, and services. Users can buy, send, and receive
bitcoins electronically for a nominal fee using wallet software on a
personal computer, mobile device, or a web application.

16. Mining
• Bitcoin mining is the processing of transactions in the digital currency
system, in which the records of current Bitcoin transactions, known as
a blocks, are added to the record of past transactions, known as the
block chain.

17. • A Bitcoin is defined by the digitally signed record of its transactions,
starting with its creation. The block is an encrypted hash proof of
work, created in a compute-intensive process. Miners use software
that accesses their processing capacity to solve transaction-related
algorithms .
• In return, they are awarded a certain number of Bitcoins per block.
The block chain prevents attempts to spend a Bitcoin more than once
-- otherwise the digital currency could be counterfeited by copy and
paste.
• Bitcoin mining was conducted on the CPUs of individual computers,
with more cores and greater speed resulting in more profitability but
nowadays application-specific integrated circuits (ASICs), in the
attempt to find more hashes with less electrical power usage.

18. • Bitcoin generally started with individuals and small organizations
mining. At that time, start-up could be enabled by a single high-end
gaming system.
• Now, however, larger mining organizations might spend tens of
thousands on one high-performance, specialized computer.
Source : Business Insider

20. Working of Bitcoin:
• The basics for a new user- As a new user, you can get started with
Bitcoin without understanding the technical details. Once you have
installed a Bitcoin wallet on your computer or mobile phone, it will
generate your first Bitcoin address and you can create more
whenever you need one.
• You can disclose your addresses to your friends so that they can pay
you or vice versa. In fact, this is pretty similar to how email works,
except that Bitcoin addresses should only be used once.

22. Transactions - private keys:
• A transaction is a transfer of value between Bitcoin wallets that gets
included in the block chain. Bitcoin wallets keep a secret piece of data
called a private key or seed, which is used to sign transactions,
providing a mathematical proof that they have come from the owner of
the wallet.
• The signature also prevents the transaction from being altered by
anybody once it has been issued.
• All transactions are broadcast between users and usually begin to be
confirmed by the network in the following 10 minutes, through a
process called mining.

23. Processing – mining:
• Mining is a distributed consensus system that is used to confirm
waiting transactions by including them in the block chain. It enforces a
chronological order in the block chain, protects the neutrality of the
network, and allows different computers to agree on the state of the
system

24. Payment Method
Using Bitcoin as an Individual
• Install the official Bitcoin client on your computer. To get started using
Bitcoin, whether you want to set it up on your phone or online, you'll need
to download the client and visit the main Bitcoin page to set up your
account on the computer. The client is suitable for Mac, Windows, and
Linux.
Set up your wallet:
• Like regular money, you've got to have a place to keep your digital money.
Wallets are basically programs that sort and track your digital currency via
your account settings. There are a variety of options available, depending
on your intentions for using Bitcoin.
• Software wallets don't run on a third-party service after download. These
wallets are operated from your computer, where you'll have to run a local
blockchain to keep your transactions anonymous.

25. • This is the wallet for which the Bitcoin was originally conceived. Software
wallets include:
 BitcoinQT
 Armory
Multibit

26. Web wallets
• Web wallets are always available online, making them probably the
most convenient and userfriendly. All you need to do is set up an
account and log in. They are, however, potentially somewhat less
secure than hardware wallets, though each of these is also
compatible with most Mobile phone providers. Web wallet options
include:
Blockchain
Coinbase
Coinjar
Coinpunk
BitGo

28. Get some Bitcoin:
You can earn Bitcoin in several ways.
• To purchase Bitcoin,
it's helpful to visit a database of Bitcoin marketplaces, likethis one.
You'll simply complete a transaction at most marketplaces, in which
your currency in converted into Bitcoin. You can also convert cash into
Bitcoin using a similar process.
• To mine
Bitcoin you can download and run a miner like CGMiner on a custom
CPU that can theoretically turn a profit without doing much of anything
at all. While you used to be able to do this on your home desktop, it's
not much of a practical possibility anymore. You'll spend more on
electricity keeping the computer running than you will turning a profit.

29. • To trade Bitcoin
look for other people participating in Bitcoin interested in transactions.
You can find them at trading sites. In addition, if you sell goods or
services, consider offering Bitcoin as a method for accepting payment.

30. Advantages:
• Payment freedom - It is possible to send and receive any amount of
money instantly anywhere in the world at any time. No bank holidays.
No borders. No imposed limits. Bitcoin allows its users to be in full
control of their money.
• Very low fees - Bitcoin payments are currently processed with either
no fees or extremely small fees. Users may include fees with
transactions to receive priority processing, which results in faster
confirmation of transactions by the network
• Fewer risks for merchants - Bitcoin transactions are secure,
irreversible, and do not contain customers’ sensitive or personal
information. This protects merchants from losses caused by fraud or
fraudulent chargebacks, and there is no need for PCI compliance.

31. • Security and control - Bitcoin users are in full control of their transactions; it is
impossible for merchants to force unwanted or unnoticed charges as can happen
with other payment methods. This offers strong protection against identity theft.
Bitcoin users can also protect their money with backup and encryption.
• Transparent and neutral - All information concerning the Bitcoin money supply
itself is readily available on the block chain for anybody to verify and use in real-
time. No individual or organization can control or manipulate the Bitcoin protocol
because it is cryptographically secure. This allows the core of Bitcoin to be trusted
for being completely neutral, transparent and predictable

32. Disadvantages:
• Degree of acceptance –
Many people are still unaware of Bitcoin. Every day, more businesses accept
bitcoins because they want the advantages of doing so, but the list remains
small and still needs to grow in order to benefit from network effects.
• Volatility –
The total value of bitcoins in circulation and the number of businesses using
Bitcoin are still very small compared to what they could be. Therefore,
relatively small events, trades, or business activities can significantly affect
the price. In theory, this volatility will decrease as Bitcoin markets and the
technology matures. Never before has the world seen a start-up currency, so
it is truly difficult (and exciting) to imagine how it will play out.