Nathan Krussel Crypto CurrencyBitcoin
Roadmap • What is a Crypto Currency • Purpose of Crypto Currency • What is Bitcoin • How does Bitcoinwork • Mining BTC • How people perceive Bitcoin • Current Uses for BTC • Future of BTC
What is a Crypto Currency • A digital medium used in exchanges. • Cryptographically secure • Distributed • Peer-to-Peer • Decentralized • Mutual distrust • “Anonymous”
Purpose of Crypto Currency • Remaining Anonymous • Deregulation of Currency • Secure Money Transactions • Public Ledger of Currency and Exchanges • Speedy Transactions • World Wide Use • No exchanges to worry about • No freezing of ones account • Reliable and Immutable
What is Bitcoin • Also known at BTC • Much like the U.S. Dollar is known as USD • The most commonly known Crypto Currency, and the pioneer that brought it to farm • Not the first electronic cryptographic currency • Most successful Crypto Currency to date • When most people think of a Crypto Currency they think of Bitcoin • Completely Digital Currency, nothing is on paper and isn’t backed by anything else other than its self. • http://www.youtube.com/watch?v=Um63OQz3bjo
What is Bitcoin • Created in 2009 by Satoshi Nakamoto • Uses double SHA-256 • SHA-256 of a SHA-256 • Governed by the Block-Chain • This is distributed amongst the nodes, so no one person can modify it • Has the record of every transaction ever made • Roughly 13.5 GB as of 1/22/2014 • 281988 blocks have been created • Can be broken up into 8 decimal places. USD is 2 decimal places. • This can be expanded in the future if the value of BTC increases dramatically
How Does Bitcoin Work • Based off a public ledger known as the block-chain • Everything about the transactions (from, to, how much, when) is all public knowledge • This creates an open nature. • Aims to create a new block every 10 minutes • Does this by adjusting the difficulty • Difficulty changes ever 2016 blocks • To “solve a block” one must compute the correct hash • There is a target number, that the hashed value must be equal to or lesser than.
Block Chain • Not a linear chain, but one that has forks and self heals. • Forks occur when two blocks are presented as solved within a few seconds of each other. • The “correct” chain is the one with the longest path back to the genesis block. • The fork that is the incorrect, now all those blocks in that fork become invalidated. • The faster the hashing rate of the network as a whole, the more secure the block chain is • The chain will guarantee a block is validated after 100 blocks are attached onto the end of the chain.
Difficulty Changes • Difficulty changes every 2016 blocks to ensure it takes about 10 minutes a block. • Dynamically adjusted by the entire network. • Difficulty is calculated as follows • Difficulty = Difficulty_1_target/current target • Target is what the sha256 block header must be equal to or less than • The lower the target, the more difficult this is to solve. • August 5th 2013 Difficulty: 31,256,960.73 • Jan 23rd 2014 Difficulty: 1,789,546,951
Solving a Block • To solve a block the SHA-256 of the block header must be equal to or less than the target • Every bitcoin client compares the actual time it took to solve the 2016 blocks to the two week goal. • The modifies the target by the percentage difference. • A single retarget never chances the target by more than a factor of 4, so there aren’t large spikes in difficulty.
Mining Bitcoin • CPU • Was the original way to do it, was initially solo mining (not pooled) and you got all of the block or none of it (50 BTC) • Slow compared to today’s standards. • Core i5 2500 about 20.6 megahash/s
Mining Bitcoin • GPGPU • Somebody wrote a program that would use the GPU’s within PC’s to mine, this was discovered to be more energy efficient per hash, and gave you an advantage in higher hash rates. • AMD/ATI GPU’s were much faster and more efficient per megahash using OpenCL • AMD 6870 (3 year old card as of now purchase price about 150 USD) ~300 megahash/s
Mining Bitcoin • Specialty hardware/ASIC • These have been recently released, and are designed specifically just to mine for BTC • Much more expensive then GPU’s, but exponentially faster. • Bitforce 60 about 2500 purchase price, 60 gigahash/s • Newer models will cost 12,000 but produce 3 terahash/s or faster.
How People Perceive Bitcoin • Many people see it as a way to do nefarious activity and that’s all the use they can see for it. • Others see it as a way to “stick it to the man” • Some who are just mining see it as a way to cash out and make some money • Certain Individuals see this as just a different currency that you are in complete control of.
Current Uses for Bitcoin • Some retailers take BTC • Overstock is the newest one, newegg has hinted at it. • Sacramento Kings now accept BTC • A few smaller online retailers take BTC • Many miner producing companies accept BTC • Use an exchange to trade BTC out for your currency of choice. • Bitcoin is still in its infancy of adoption, so the list of people who accept it grows everday
Future for Bitcoin • More retailers will begin to accept BTC • Used in international trading to avoid currency exchanges • Become as common place as credit cards • Less volatility in hard currency value (USD) • Nefarious uses • Currency Flops and becomes worthless
Resources • http://en.wikipedia.org/wiki/Crypto-currency • http://bitcoin.org/bitcoin.pdf • https://en.bitcoin.it/wiki/Block_chain • https://blockchain.info/ • https://en.bitcoin.it/wiki/Difficulty • https://en.bitcoin.it/wiki/Target • http://www.youtube.com/watch?v=Um63OQz3bjo • https://en.bitcoin.it/wiki/Mining_hardware_comparison