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Think bitcoin workshop slideshare

  1. 1. S DRIVING EDUCATION AND PROFESSIONAL USE OF DIGITAL CURRENCY IN AUSTRALIA www.thinkbitcoin.com.au Produced by: Martin Davidson Email: info@thinkbitcoin.com.au
  2. 2. What are Digital Currencies? 1) Digital currencies, also known as crypto currencies, are math based computer generated money.. But what is MONEY? S Medium of exchange S Store of value S Unit of account 2) They are also their own payment networks
  3. 3. History of Bitcoin https://bitcoin.org/bitcoin.pdf 2008: Bitcoin white paper is released 2009: Software becomes available 2010: First currency exchanges appear 2011: 1 Bitcoin = $1 USD 2012: Multi-signature 2013: Cyprus bank bail ins, 1BTC=$1k 2014: Mt Gox. Mainstream awareness 2015: Stock market listings..
  4. 4. Some Basic Terms S bitcoin: Without capitalization, is used to describe bitcoins as a unit of account S Bitcoin: With capitalization, is used when describing the concept of Bitcoin, or the entire network itself S Address: A location that bitcoins have been sent to and reside at. Alternatively, can be thought of as an account of sorts that has a balance of bitcoins S Blockchain: The complete transaction ledger of the Bitcoin network, showing how bitcoins have been transferred from one address to another over time. The blockchain is a public record of all bitcoin transactions in chronological order S Transaction: The movement of bitcoins from one address to another address. In traditional terms, this can be thought of as a payment or money movement
  5. 5. Digital Money Bitcoin is the most well known example of a new breed of digital currencies. S Global digital currency S Supply is capped at 21 million S Can be divided to 8 decimal places S Cannot be counterfeited S Currently valued at around $350 AUD S Network valued at $3.5bn
  6. 6. The Payment Network S Decentralized, peer to peer network S Transactions are fast and cheap S Transactions are irreversible S Transactions are verified in minutes S Open to anyone with an internet connection S Can be used to transmit anything of value. (2.0 projects)
  7. 7. What is Peer to Peer? No centralised database or single point of failure
  8. 8. Bitcoin Price $100 worth of bitcoin in 2010 would be valued at $500k today
  9. 9. Bitcoin Transactions 2011: 2,000 per day 2012: 7,000 per day 2013: 30,000 per day 2014: 70,000 per day 2015: 110,00 per day
  10. 10. Bitcoin Mining 25 bitcoins mined into new blocks every 10 minutes 144 blocks mined per day = $1,080,000 AUD ($300 per BTC)
  11. 11. What is Mining? Mining serves 2 purposes: S Mining creates new bitcoins in each block. The amount of bitcoin created is fixed and diminishes with time. S Mining creates trust by ensuring that transactions are only confirmed if enough power was devoted to the block that contains them.
  12. 12. Mining contd. S The creation of new blocks must take an average of 10 minutes S The regulation is done by periodically adjusting the hash target value for blocks. S Every 2,016 blocks (which spans 2 weeks if each block takes 10 minutes), the nodes calculate a new difficulty based on the time it took to mine the last 2,016 blocks.
  13. 13. Mining is a 3 step process S Step 1: Miners create a file that contains (a) the hash of the last block in the existing blockchain, (b) a block of the new proposed transactions broadcast in the Bitcoin network and (c) a random number that the miner guesses (a “nonce”). The combination of (a) + (b) + (c) is the data used as the input for Step 2 S Step 2: Miners apply a cryptographic function to the data. The details of the function (SHA- 256 in the case of Bitcoin). What is important to understand is that the function does some calculations on the file/data from Step 1 and produces a random number known as a “hash” S Step 3: The hash is reviewed against a desired pattern (in the case of Bitcoin, how many leading zeros it has, an outcome that is effectively random). If the hash matches the pattern, the miner has a correct block and will win an economic prize. If the hash does not match the pattern, the miner returns to step 1, guessing a new nonce and repeating the exercise
  14. 14. Cryptographic Currency mining
  15. 15. Mining pools Bitcoin mining is a rapidly expanding and highly specialised, capital intensive industry. S Mining pools use different distribution schemes, they share in the bitcoin rewards. S Mining farms are located where energy costs are lowest
  16. 16. Bitcoin issuance over time May 2015: 14 million bitcoins have been mined 2032: 99% of all bitcoins will be mined 2140: 100% of all 21 million bitcoins will be mined
  17. 17. Public Transaction Data Every transaction is publicly visible on the blockchain forever
  18. 18. How to use Bitcoin
  19. 19. What’s a Bitcoin Wallet? The Public Key is used to produce a Bitcoin address (like an account no.) 1AA6oACAt6iD7asKpCKoLnZQLoZCRj8CSV The Private Key is used to digitally sign the transaction like (like a pin no.) 5JxA624fMUnePFkgGYCUxWcDfzaomDM3QeXj9FxViJSsEz2X9Wh
  20. 20. Different types of wallets
  21. 21. Bitcoin units of account S 1BTC = bitcoin ($300AUD) S 0.001 = mBTC –millibitcoin (30cents) S 0.000001 = uBTC – microbitcoin/ bits (.03 cents) S 0.00000001 = Satoshi – smallest unit of a bitcoin (.0003 cents) S 21 million BTC / 7 billion people = 0.003 BTC / 3mBTC per person (90c) The default fee for most bitcoin wallet apps is 0.0001 BTC – 3 cents. This fee is paid to the miners verifying transactions on the network. You can choose to send a higher or a lower fee with some bitcoin wallet apps. eg- Bitcoin QT/ Blockchain.info NB: The market price of bitcoin will affect the transaction fees.
  22. 22. How to get, buy and sell bitcoins • Online exchanges • Bitcoin ATM’s/ vending machines • OTC (over the counter) • Peer to peer/ in person (Local Bitcoins) • Offer a product or service via your website/ shop • Mine bitcoins / mining contracts
  23. 23. Opportunities for Digital Currencies
  24. 24. Remittances $540 billion market – 10% potential savings..
  25. 25. Digital Money for A Digital World More people on the internet now, than the global population in 1960! Question- How will people transact in the future?
  26. 26. Global Mobile Banking Developing nations’ mobile and Internet infrastructure is growing rapidly. • M-Pesa now accounts for 31% of GDP in Kenya • 70% of African population have mobile phones
  27. 27. Store of value for unstable currencies? March 2015: “Inflation of as much as 40 percent is the biggest economic challenge Argentina faces”, says presidential hopeful Sergio Massa.
  28. 28. Micro-payments Decentralized Centralised
  29. 29. Crowd Funding Innovative decentralized solutions allow programmable money using smart contracts Centralised options using Bitcoin
  30. 30. Charities and non profits Bitcoin transactions offer the option of full transparency
  31. 31. Freedom of speech/ information Like the internet, Bitcoin is a protocol which cannot be shut down. • Transactions cannot be censored
  32. 32. Bitcoin has no borders Over 100,000 businesses now accept bitcoin transactions
  33. 33. International trade "Bitcoin helps us reduce the inherent costs involved in international trade. Tomcar Australia already uses Bitcoin to pay a growing number of overseas suppliers. Our manufacturing partner, MTM is also actively exploring using Bitcoin to do this as well. If we use Bitcoin ourselves, it makes sense to accept it from customers too,” Mr. Brim, Tomcar owner says.
  34. 34. In Store Payments Up to 1% bitcoin to dollar transaction fee or $0 to hold digital currency
  35. 35. In Store Payments Coinjar EFTPOS debit card linked to your Bitcoin trading account
  36. 36. Online payments/ E-commerce Payment cost savings with zero currency volatility risk
  37. 37. Marketing with apps Advertise your business using Bitcoin web and mobile app services
  38. 38. Future applications
  39. 39. Produced by: Martin Davidson Email: info@thinkbitcoin.com.au