Introduction to Bitcoin

“Sorry to be a wet blanket. But, writing a description of Bitcoin for general audiences is bloody hard. There is nothing to relate it to.” – Satoshi Nakamoto, July 5, 2010.

l Wikipedia Definition

lBitcoin is a payment system invented by Satoshi Nakamoto in 2008 and introduced as open-source software in 2009. The system is peer-to-peer; all nodes verify transactions in a public distributed ledger called the block chain. The ledger uses its own unit of account, also called bitcoin. The system works without a central repository or single administrator, which has led the US Treasury to categorize it as a decentralized virtual currency. Bitcoin is often called the first cryptocurrency although prior proposals existed.

Bitcoin is more correctly described as the first decentralized digital currency. It is the largest of its kind in terms of total market value.

TopicslThe History of BTClTrustlProslConslThe Nuts and Bolts of BitcoinlWalletslHow to Use BTClHow to Acquire BitcoinlQuestions and Recommendations

Bitcoin HistorylElectronic currency introduced through e-goldlSatoshi Nakamoto (pseudonym)l2008- Financial Downturn, QE, Housing Crisis

l “The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.” -Satoshi Nakamoto, February 2009

l2010 10,000 BTC used to buy $25 worth of pizzal2011 BTC reached $1 on February 9th

l2011 Mt Gox is hacked June 19th

l2013 BTC market cap exceeds $1 billion on March 28th and reaches $100 per BTC three days later

TrustlIdentity TheftlFraudulent ChargebackslWealth ConfiscationlCounterfeitinglInflation of Currency (chart follows)lPrice Manipulation by Futures Contracts (chart follows)

Advantages of BitcoinlOpen SourcelPeer to PeerlLimited Number of BTC produced

l Approximately 21 MillionlTransaction Cost Virtually EliminatedlAbility to Reach All PopulationslProgrammabilitylAnonymity or Complete TransparencylAbility to Transcend BorderslMicro-PaymentslHuge Growth Potential

PMs vs. Fiat vs. BTC

Bitcoin Distribution

Disadvantages of CryptocurrencylPrice VolatilitylGovernment & Central Bank InterventionlMt Gox and Third Party Reliance by the UninitiatedlViewed as Criminal BehaviorlDouble Conversion Necessity

The Nuts and BoltslComputer Protocol utilizing SHA256 encryption, BitTorrent technology and Elliptic Curve technology (entirely pre-2002 technology)lTwo Parts of every Bitcoin Wallet

l Private Keyl Public Key 1EutXYQhFusvohQhwqoFVMxan8q8tKa3He

lBlockchainl Decentralized Ledgerl Eliminated Double Spending

lMiningl Proof of Work

Public and Private KeyslPublic Keys

l Used to receive paymentl May be transmitted anywherel Multiple may be made for one private keyl Recorded on blockchain

lPrivate Keysl Used to transmit paymentl Must be kept secure

The Technology

Elliptic Curve (1987)Proof of Work (1997)SHA 256 Encryption (2001)

How To Use

lTrade for Goods and ServiceslWebsites (Overstock & Microsoft)lGyftlRetailers (map as of 7/1/15)

Wallets

liPhonelAndroidlOnline WalletslCold Wallets

How to Acquire Bitcoin

lCoinbaselBitcoin Personal TransactionslFaucets and Startups

lNewslCapital Investment in 2012: $2.1 million lCapital Investment in 2013: $92 millionlCapital Investment in 2014: approx. $284 millionlMarket Capitalization is Approximately $4 Billion (@ around $300/BTC)

Q&A

Learn More

lWorld Bitcoin Network (YouTube)lBitcoin.orglBitcoin.it (Bitcoin Wiki)lReddit.com/r/bitcoinlDominic Frisby