PRESENTS

“Bitcoin, the future of payment?”

By Wessel Kooyman, CEO, Cole Street

Currency (n.):

Representative currency: deriving its worth from a link to some physical store of value like gold, silver or gemstones.

Fiat currency: Derives its value from the fact that a government or central authority guaranteed it.

How to build a digital currency?

Requirements:- Decentralized (Peer to peer)- As anonymous as possible- Fraud proof: No double spending, no theft- Gradual availability of more currency, effort required

What is a hashing algorithm?

Hashing d7a8fbb307d7809469ca9abcb0082e4f8d5651e46d3cdb762d02d0bf37c9e592

File length: 12,322 bytes

What is a ledger?

How to build a digital currency?

The block chain: the innovative part of Bitcoin

The genesis block Dead

branch

Bitcoin – How the blocks in the blockchain are created

All transactions are logged in the blockchain (ledger) All nodes (miners, clients in P2) have the full blockchain New blocks are mined by the miners, who get a reward (first transaction) New blocks are verified by all and refused if not valid If you are miner, you must also process transactions – most earn a small

fee

Bitcoin – The network

Miners create blocks and process transactions All the miners are connected to each other peer-to-peer A Bitcoin client connects to the peer-to-peer network Transactions are written into the blockchain Confirmations are sent to the client

Bitcoin – Ways to do transactions

Currency exchanges like Mt Gox (EUR to BTC, BTC to EUR) Local exchange (with other individuals) Using your mobile phone Unlimited – after all, you only need to exchange some data to do a

transaction

Bitcoin - Mining

How it works Falling reward level Technology rat race: cpu, gpu, asic Profitability depends on BTC exchange rate, cost of electricity, cost of

hardware investment

Bitcoin (n.):

Not a representative currency, because it is not linked to anything physical.

Not a fiat currency, as its supply is actually finite and it lacks any central backing authority. 

Bitcoin (n.):

Something new, only possible because of the Internet and high-speed processing power of modern hardware

Unforgeable, verifiable, secure, (almost) no transaction fees, quasi-anonymous

Distributed, borderless No trusted third party needed for transactions (bank)

Part two: Bitcoin and society

- Impact on government- Context from privacy perspective- Impact from real life events in Bitcoin (Cyprus,

Argentine)

Government and privacy – a tug of war- Tor, WikiLeaks, Snowden- Cyprus, Argentine

Bitcoin - History

Created by “Satoshi Nakamoto”, an alias for the creator(s). Must be mathematician(s) and programmer(s). Released a paper describing the entire protocol in 2008.

2009-2010: First implementations of the miners. First transactions achieved.

2011-2012: Wikileaks, EFF, Silk Road, 1000+ merchants accept BTC. 2013: Accidental fork of the blockchain, government starts regulating,

Coinbase and MtGox run out of trading capacity, exchange rate spikes to $266

Part three: Bitcoin and money

Making money with Bitcoin – how are people doing it today?

Mining, rate speculation, currency exchanges, casino’s, crime, payment processing, securities exchanges.

Bitcoin – Has its own securities exchanges

MPEx, BitFunder, btct are Bitcoin denominated stock exchanges Recent acquisition of a casino for 126315 BTC ($12.4 million

USD) Companies on the exchange are mining companies, exchanges,

casino’s, etc. All Bitcoin related ventures. The securities are priced, naturally in Bitcoin.

The first exit in Bitcoin

SatoshiDice acquired for 126,315 BTC (€8.69 million) on July 18th.

Was trading publicly on MPEx, a Romanian Bitcoin securities exchange.

Bitcoin – Startup investors are here and ready

Angel network BitAngels put together $7m from 120 angels Boost VC in San Mateo has a incubator program for Bitcoin

startups VC’s: Liberty City Ventures has $15m Bitcoin fund, Union Square

Ventures, Andreessen Horowitz have invested in Bitcoin startups. French VC’s : on the beach

Bitcoin – follow up currencies are “altcoins”

Primecoin: the mining work results in discovery of new prime numbers

PPCoin: Includes “Proof of stake” Freicoin: Includes exploration of demurrage

Bitcoin – Future plans

Easier payment, more secure Hardware wallets Faster transactions Wider main stream adoption