Bitcoin and beyond presentation from 0redev in Malmo Sweden

1. Bitcoin… and beyond
Jeff Garzik @ BitPay
Bitcoin Core Developer

2. Bitcoin is…?
• Asset class
• Enabling technology
• Catalyst

3. Bitcoin 101: The Basics

4. Bitcoin: Features 1
Digital cash + payment network
Frictionless, borderless transactions
No Single Point Of Failure (SPOF), manipulation
Resilient against bugs, malicious or missing actors
Public and transparent ledger
Payment freedom

5. Bitcoin: Features 2
Micro-payments
Smart contracts (Contract provably satisfied by math, not lawyers)
No risk of physical possession or loss
100% open source. Based on well studied, understood mathematical
and cryptographic techniques.
Very low fees, sometimes zero fees.
Anyone or thing may open account
Human2Human, Machine2H, H2M, M2M

6. Bitcoin:
monetary supply view
In circulation: 13,405,900
Maximum: 21,000,000
Predictable supply: +25 / 10 minutes
Model: Natural resource extraction. 50, 25, 12.5, …
Smallest unit: 0.00000001 bitcoins
Decentralized design requires pre-determined supply

7. Bitcoin: how it works

8. Concept: P2P networking

9. Concept: Hashes

10. Concept: Public Key crypto

11. Concept: Public ledger

12. Details: Transactions

13. Details: Storing transactions

14. Details: Block

15. Details: Blockchain

16. Details: Mining

17. Details: Pooled mining

18. Details: Mining pools

19. Current statistics
(snapshot)
Total blocks: 326,242
Time between blocks: 9.2 minutes
Transactions per hour: 3398
Network Terahash/sec: 252,413
Network PetaFLOPs: 3,205,649
China’s Tianhe-2 supercomputer: 33.8 PetaFLOPs

20. Current environment
Chicago Fed: “Automaton”
Trading
Low liquidity
Lack of swaps, other derivatives
Regulatory
IRS: Bitcoin is property. Others: It’s a currency
Much activity as states, central banks, countries attempt to catch up
to technology.

21. Bitcoin 201: Beyond money

22. Smart property
Associate physical property with very-low-value token
Transfer token to new owner at any time, without
intervening central authority.
Cars, smartphones, other tech can “know” its owner

23. Smart property:
equities & bonds
Bitcoin:
First decentralized, digital supply-limited resource
Stocks & bonds: supply-limited resources
Bitcoin tech provides shareholder registry, party-to-party
direct asset transfer.

24. Smart contracts: theory
All contract “clauses” are math equations
Parties provide digital signatures or other data to
prove contract is satisfied.
100% verifiable through math, not lawyers.

25. Smart contracts: intro
A bitcoin is spendable when it’s “script” is satisfied
Script: User-provided math equation attached to
every bitcoin
To spend a bitcoin, script must evaluate to “true”
To spend a bitcoin, spender must provider digital
signature or other cryptographic proof of ownership.

26. Smart contracts: multi-sig
Bitcoin transaction may require >1 signatures to
spend
1-person use case: Multi-factor security
N-person: M-of-N parties must approve, to spend
Escrow: 2-of-3 multi-sig
Infinitely flexible: (group-X AND group-Y) OR group-Z

27. Smart contracts: and more
Payment channels: Trustless [micro] transactions
Pay per barrel of oil or per minute wifi
Settlement guaranteed, if any party departs abruptly
Assurance contracts (PPP, KickStarter)
External state: Stock prices, events in the news, any
digital data.

28. Blockchain technology
Database evolution: 1) SQL 2) NoSQL 3) blockchain
Bitcoin first application of this new technology
Any dataset may be decentralized
…assuming sustainable economic model
Define validation (= consensus) rules for the dataset

29. Namecoin: example
Context: Internet DNS, name-to-IP address lookup
Challenge: Create decentralized database
Solution: DNS records stored in a blockchain
Buy “namecoin” tokens, which are used to purchase
database operations: new entry, renew expiring entry,
add data to existing entry, …
Free market provides pricing for each database
operation

30. Advanced blockchain:
DACs
Decentralized Autonomous Corporations
Built upon smart contracts, automated systems
Depending on application, some or all of executive,
administrative functions may be automated

31. Bitcoin 301: Catalyst

32. Venture investment
2012: $2m
2013: $92m
2014: $268m YTD (as of Oct. 2014)

33. Developer engagement

34. Catalyst for change
Who’s looking at bitcoin?
Thousands of developers, entrepreneurs
Cutting edge Wall Street trading, financial shops
Silicon Valley + majority of F500 tech companies
All notable central banks
Legislators, law enforcement

35. Fini
For more information,
Paper: https://bitcoin.org/bitcoin.pdf
Only a few pages. Must read.
Bitcoin project: https://bitcoin.org/
BitPay payment processing: https://bitpay.com/
Email jgarzik@bitpay.com
Thanks to Dr. Antonio Roldao for some slide graphics.