Bitcoin 101the currency, the network, the community

About Me

By day, I run Earthsite, a web

agency for sustainable brands

By night, I’m a Bitcoin

enthusiast

JoeyShepp.com

DisclaimerThis lecture is not a pitch to invest

in bitcoin

This information is intended for

informational purposes only

I am not a licensed financial

advisor and this is not investment

advice

That said, I do hope to inspire you

to get involved in the Bitcoin

community

Roadmap

What is Bitcoin and how does it work?The currency, the network, the platform.

How do you use Bitcoin?For businesses and individuals.

What’s next for Bitcoin?The next generation of the Internet.

Discussion: How can Bitcoin be used for local economies?

Some Perspective

First, came the Computer

Who would want

a computer in

their home?

What would you

do with it?

Then, came the Internet

Let anybody publish?

It would be total

anarchy!

Email anybody in the

world?

Now Bitcoin

Innovations in the science of

cryptology has lead new

ways of connecting people

in a decentralized network.

The foundations of Bitcoin

technology is laying the

groundwork for a truly

equitable global governance

platform.

“The Internet of Money”

What is Bitcoin?

What is Money?

A medium of exchange

A unit of account

A store of value: Stable supply, durable, securable, stable value

Also… widely accepted, recognizable, fungible, divisible, transportable, transferable, hard to counterfeit

What is Bitcoin?

Bitcoin PopularityGoogle Trends and Search Volume

Bitcoin Perspectives“Bitcoin is a technological tour de force.~ Bill Gates, Microsoft Founder

“Bitcoin is the beginning of something great: a currency without a government, something necessary and imperative.”~Nassim Taleb, Scholar

“Bitcoin is Evil” ~ Paul Krugman, Economist

“A virtual currency scheme” ~ European Central Bank

“I think [each Bitcoin] could be easily worth $100,000Chris Dixon, VC with Andressen Horowitz

"Disruptive to our economy”, “Ban Bitcoin”, “Well, maybe it’s ok after all.”US

“It may not be the perfect global currency of the future yet, but it’s the pioneer of a

global currency.”

~ Sir Richard Branson Business magnate and investor

Virgin Galactic

Accepts Bitcoin

GreenBank Capital Inc.

First Public Company to Invest in Bitcoin !“I believe that Bitcoin is in the early stages of becoming a revolutionary payment medium, and GreenBank intends to be actively involved as a bitcoin incubator and investor.”!Danny WettreichCEO of GreenBank

Flourishing Startup Ecosystem

So, what is Bitcoin?

Bitcoin is a decentralized payment

network and new kind of currency

based on cryptographic innovations.

How Bitcoin WorksBitcoins are generated by anyone with a Bitcoin Mining application. A certain amount of work is required for each block to be mined.

The total amount of Bitcoins is predictable and limited.

Bitcoins are stored in a digital wallet, similar to online banking.

Transactions are verified by Miners and permanently and anonymously stored on the network.

Bitcoin software is Open Source, meaning anybody can review the code.

https://bitcoin.org/en/how-it-works

Bitcoin Advantages

Delivered person to person without a bank

Much lower fees in transferring money

Can be used in any country

Account cannot be frozen

No prerequisites or arbitrary limits

What does Bitcoinlook like?

A 256 bit number of 64 characters (your wallet password)

Wallets can be stored as an encrypted file on your computer or a hidden SD Card

Online Cloud Storage (requires you trust a company to hold)

Cold Storage (store offline to reduce risk of hack)

QR Codes & Paper Notes

Brain-Wallets (Memorization)

Soon: Swipe Cards and Phones

1CC3X2gu58d6wXUWMffpuzN9JAfTUWu4Kj

The Bitcoin Blockchain

A distributed asset ledger shared by all participating in the Bitcoin protocol (Currently near 10,000 “nodes”)

A full copy of a block chain contains every transaction ever executed

With this information, one can find out how much value belonged to each address at any point in history

The Genesis Block was the very first block that started the Blockchain we have today.

The Bitcoin Blockchain is currently 16.6gb in size and contains almost $10B USD in value.

Animated Visualization

Deflationary Currency

Bitcoin is programmed to have a fixed number of bitcoin (21m) that will ever exist and a fixed rate of releasing those bitcoin: 25 bitcoin created every 10 minutes. Predictable and stable.

The theory is that bitcoin will only gain in value over time because of the limited supply and increasing adoption. The last 5 years have proved this albeit a rocky climb.

We are used to a world where a Dollar can’t buy what it used to. Infact the US Dollar in inflated over 2275% since 1900. InflationData.com

Argentina’s currency currently loses 30% of value per year, a decision made by the central bank. - Wall Street Journal

What would a world look like where saving bitcoin made you money rather than loosing it?

Satoshi NakamotoAnonymous person or group of people who designed the original Bitcoin and goes by the pseudonym Satoshi Nakamoto.

Released the ground-breaking White Paper “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008.

The smaller unit of Bitcoin, 1/100,000,000 has been named “Satoshi” in homage.

Likely has a lot of Bitcoin, maybe 1,624,250 Bitcoin, or close to a $1 Billion USD.

Bitcoin History2008

• Bitcoin.org registered by “Satoshi Nakamoto” • “Bitcoin: A Peer-to-Peer Electronic Cash System” paper posted October • Bitcoin projected registered at Sourceforge

2009• Satoshi mines “genesis block” of 50 BTC – January • Bitcoin v0.1 released on cryptography@metzdowd.com and Usenet • First bitcoin transaction, #bitcoin-dev on Freenode, v0.2 released

2010• First offline transaction: 10K BTC for two pizzas • v0.3 announced, Slashdotted, Mt Gox founded – July • First specialized GPU hash miners and pooled mining operations

2011• Bitcoin takes parity with US dollar. • $31 top of first "bubble", followed by the first price drop • Dec: $2, minimum after few months

2012 • Dec: $13, slowly rising for a year

2013• Silk Road busted, arrests for money laundering. • November: Bitcoin breaks $1,000 in second bubble • December 2013: Price crashes to $600

2014• Price fell following the shutdown of MTGOX • Price continued to fall due to a false report regarding Bitcoin ban in China • Now (April) stabilizing at $450

What gives Bitcoin value?

• Intrinsic Values

• No or low transaction fees

• Anonymous, if you want

• Public Ledger (Blockchain)

• Platform for future Apps

• Adoption and Demand

• Limited Supply (21m)

• Deflationary Currency

Current Bitcoin Price

~$500.00 USD (August 2014)

Current Market Capitalization

$7 Billion USD

Estimated Network Value

$400 Billion USD

(Winklevoss)

Bitcoin Legal StatusSamples from April, 2014

United States: Tax as Property

China: Bank Restrictions

Germany: Private Money

Wikipedia

Thailand: Illegal…

Australia: Legal, Tax Guidelines

Brazil: Tax as Property

Using Bitcoin

Bitcoin Uses

Store Value Transact Move Money

Limited Supply Lower Fees No or Low Fees

Compared to Gold 60,000+ Businesses Accepting

International Remittances

More Fungible Pseudonymous Pseudonymous

No Storage Costs No Chargebacks Circumvent Government Control

Business BenefitsAccepting is free and requires no approval

Can be converted immediately into local currency

No chargebacks

No or low processing fees

Open to a global market

Trackable for easy and transparent reporting

Support the growth of a “people’s money”

Bitcoin Wallets

More secure, but more technical Requires trust, but easier

Buy BitcoinCurrently, the easiest way to buy bitcoin is through Coinbase.

Coinbase is San Francisco based, supported by $25m in VC funding and makes the process as easy as online banking.

You simply setup an account and verify your bank can support direct transfer of funds.

Then you can purchase bitcoin for the now current exchange rate.

Coinbase also works as an online wallet to safely store your bitcoin.

In the coming year technologies will advance to make it easier to you to manage your own bitcoin and not have to trust a company. Until then, I trust Coinbase with my coin.

Bitcoin ExchangesExchange currency for

Bitcoin and Bitcoin for

currency.

Usually local to nations

and currencies.

Requires connecting a

local bank account to

transfer money to.

Requires trusting

exchange to transact on

your behalf

Support Local Businesses

coinmap.org provides a map of

local businesses that accept

bitcoin.

yelp.com just announced that

businesses can report if they

accept bitcoin.

Bitcoin ATMs are popping up

everywhere and will soon make it

easy to exchange bitcoin for local

currency where ever you are.

DonationsScientific Research: Einsteinium

altecoin is dedicated to raising

funding for cutting edge scientific

research worldwide

Natural Disaster: 13 bitcoin ($6,000+)

donated in bitcoin

Tips: Tip small fractions of bitcoin for

good comments or content

Political Campaigns: Federal

Elections Commission just ruled to

allow $100 or less in bitcoin value.

Retail Shopping

Buy “Gyft" Cards with Bitcoin to shop at major retailers including Target, Whole Foods, Amazon, CVS and more.

http://www.gyft.com/bitcoin/

Merchant ServicesNo or low transaction fees

No chargebacks

No exchange rate risks

Easy setup

No minimums

International payments

The Future of Bitcoin

Disruption

Category Disrupted Businesses Disrupted

Remittance Western Union

Digital Payment Paypal, Google, Apple, Amazon

Purchasing VISA, Mastercard, American Express, Discover

Donations Campaign Finance

Soon… Trusts, Property Transfer, Stocks

AltCoins

There are 20+ “altcoins” (alternative

bitcoin-inspired) with market caps over

$1 million USD.

Each vary their technology based on

offering different benefits and markets.

Because the technology is open source,

anybody can launch a new type of “coin”.

But the challenge is adoption and that is

where Bitcoin is winning.

Etherium

Decentralized Contracts

Ethereum can be used to codify, decentralize, secure and trade just about anything: voting, domain names, financial exchanges, crowdfunding, company governance, contracts and agreements of most kind, intellectual property, and even smart property thanks to hardware integration.

https://www.ethereum.org/

Crowd fund success: Raised $14 million and still going

DACsDecentralized

Autonomous Communities

/ Corporations

A Distributed Autonomous

Community (DAC) is an

"entity" without any

central point of control,

with a certain agenda,

business plan, and

protocol.

MaidSafe

Decentralized Internet

The MaidSafe vision is to replace today's existing server centric and intrusive systems with a fully distributed, safe, secure and private network. A network with no third party being able to intercept, copy, steal, sell or otherwise access the network’s data.

http://maidsafe.net/ Crowd fund success: Raised $7 million in 5 hours!

This Year

Investment Interest

Regulation Welcomed

Reliable Companies ??

Mainstream Adoption ??

Bitcoin ATMs (some)

Price Stabilizing ??

The Future

Redefining “local”

Developed world leap-frogs traditional banking

Integrated with current payment systems

DACs

Conclusion

Bitcoin SummaryDecentralized - No central authority, based on a networked system

Anonymous - You control your identity

Transparent - Complete transaction history is stored as a public ledger

Integrity - Transactions are verified by a distributed network of miners and stored in a distributed network of user nodes

Distributed - Network is supported by user’s computers all around the world, cannot be shut down without shutting down the Internet

Open - Anybody can participate without permission

A Human CurrencyInternational Currency: Developing world can leapfrogs banks, and developed world

will unBank themselves.

Decentralized: No central bank or government.

Network Effect: The value of the network is greater than the sum of the individuals in

the network.

Deflationary: Because of the fixed number of bitcoin, value will grow over time. No

more printing money to get out of debt crisis.

Math Rules: Current Fiat currency is controlled by a central authority. Bitcoin is

controlled by consensus through equitable mathematical equations.

Beyond Currency: Bitcoin has currency features, but viewing it solely as a currency

ignores its more widespread application

Resources

Bitcoin Foundation

Bitcoin Foundation

standardizes, protects and

promotes the use of Bitcoin

cryptographic money for the

benefit of users worldwide.

Business and Individual

Memberships support Bitcoin

development.

https://bitcoinfoundation.org/

Bitcoin Meetup Groups

Local groups to meet

others interested in Bitcoin

Largest groups in: New

York, London, Tel Aviv-

Yafo, San Francisco,

Buenos Aires, Sunnyvale,

Toronto and Santa Monica.

http://bitcoin.meetup.com/

Let’s Talk BitcoinIn late April 2013, Adam B. Levine

founded Let’s Talk Bitcoin! as a twice

weekly audio show along with co-

hosts Andreas M. Antonopoulos and

Stephanie Murphy, PhD.

It has now evolved into a content

network of talkshows about Bitcoin.

Highly recommended for Bitcoin

commentary and discussion.

You can subscribe via podcast for

free!http://letstalkbitcoin.com/

Bitcoin News

CoinDesk: The Voice of Digital

Currency

NewsBTC: Bitcoin News Service

Bitcoin Magazine: Bitcoin News and

Culture

Bitcoin DiscussionBitcoin Subreddit: Links and

Discussion on Bitcoin

Bitcoin Talk: Discussion forum

about all things Bitcoin.

Video Lectures

Khan Academy: Bitcoin Lectures

Udemy: Bitcoin or How I Learned to

Stop Worrying and Love Crypto

Oditorium University: Introduction to

Bitcoins

PermacreditsPermacredits are the first true asset-

backed decentralized cryptocurrency,

backed by permaculture.

When you buy Permacredits you are

buying a membership in a global

network of Eco resorts, Sustainable

living spaces, Permaculture farms,

Retreat centers, Eco Developments,

Permaculture Design Schools,

Vegetables, Apps, and more.

Buy them, sell them, trade them,

vote with them, get paid with them

http://permacredits.com/

Coinality

Coinality is a job board where

employers and job seekers can

connect for job opportunities that

pay in digital currencies such as

Bitcoin, Litecoin, and yes, even

Dogecoin.

Jobs range from one-time to full-

time and negotiations are handled

independently between the two

parties.https://coinality.com/

will work for coins

Discussion

How could your business use bitcoin?