Bitcoin... and beyond
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Transcript of Bitcoin... and beyond
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Bitcoin… and beyondJeff Garzik @ BitPayBitcoin Core Developer
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Bitcoin is…?• Asset class• Enabling
technology• Catalyst
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Bitcoin 101: The Basics
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Bitcoin: Features 1Digital 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
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Bitcoin: Features 2Micro-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
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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
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Bitcoin: how it works
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Concept: P2P networking
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Concept: Hashes
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Concept: Public Key crypto
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Concept: Public ledger
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Details: Transactions
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Details: Storing transactions
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Details: Block
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Details: Blockchain
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Details: Mining
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Details: Pooled mining
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Details: Mining pools
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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
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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.
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Bitcoin 201: Beyond money
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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
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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.
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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.
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Smart contracts: introA 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.
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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
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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.
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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
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Namecoin: exampleContext: 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
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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
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Bitcoin 301: Catalyst
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Venture investment
2012: $2m
2013: $92m
2014: $268m YTD (as of Oct. 2014)
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Developer engagement
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Catalyst for changeWho’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
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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 [email protected]
Thanks to Dr. Antonio Roldao for some slide graphics.