Download - Bitcoin Level 2
![Page 1: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/1.jpg)
Bitcoin Level 2
![Page 2: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/2.jpg)
![Page 3: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/3.jpg)
“We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers. As a medium of exchange, Bitcoin has clear potential for growth, in our view.”
- Bank of America Report, Dec. 5, 2013
![Page 4: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/4.jpg)
The point: Bitcoin lets us build a better financial system
![Page 5: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/5.jpg)
Primary Characteristics
● Peer-to-peer
● Decentralized
● Open Source
![Page 6: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/6.jpg)
Bitcoin makes it better
● Remittances
● Escape bad currencies
● Microtransactions
![Page 7: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/7.jpg)
The Technology of Bitcoin
![Page 8: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/8.jpg)
The Blockchain
● A global log of every bitcoin transaction that ever takes place
● Bitcoins exist only as account balances in the blockchain
● Adding a transaction to the blockchain is the action of sending that money
![Page 9: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/9.jpg)
![Page 10: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/10.jpg)
The Network
● Bitcoin is a peer-to-peer network
● You join the network by running a program called a Bitcoin Client
● The computers in the network relay transactions to each other and build the blockchain
![Page 11: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/11.jpg)
Transactions
● To send bitcoins, your client announces the transaction over the network
● The nodes that hear it verify it and then repeat it to their neighbours
![Page 12: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/12.jpg)
Transactions
● Transactions are composed of inputs and outputs
● The inputs to a transaction are the outputs from a previous transaction
● “Owning bitcoins” is having the key which allows you to spend an output
![Page 13: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/13.jpg)
TransactionsTransactions
![Page 14: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/14.jpg)
This is a big Breakthrough
● The entire network is able to come to an agreement
● Malicious entities in the network cannot do evil
![Page 15: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/15.jpg)
Bitcoin Ecosystem
![Page 16: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/16.jpg)
![Page 17: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/17.jpg)
Places you can spend Bitcoin
20,000+ online retailers, including:
![Page 18: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/18.jpg)
It’s easy to accept Bitcoins online
16tN2C5GvUhERbLxe9oC3GseaJvBXiQCq2
![Page 19: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/19.jpg)
Ways to get Bitcoins
● Exchanges: CaVirtex, Bitstamp
● Brokerages: Coinbase, Tinkercoin
● In person sales: Localbitcoins, DVLB
![Page 20: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/20.jpg)
Bitcoin and GovernmentsThree case studies
![Page 21: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/21.jpg)
United States
● March 2013 FinCen guidance document is very harsh on Bitcoin businesses
● June 2013, Regulators cease-and-desist the nonprofit Bitcoin Foundation for unlicensed money transmission
![Page 22: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/22.jpg)
United States
● October 2013, FBI Investigation shuts down Silk Road and arrests it’s owner on charges of drug trafficking and money laundering.
● Important: the indictment acknowledged his use of Bitcoin, but did not condemn it except the purposes for which he used it
![Page 23: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/23.jpg)
“There are plenty of opportunities for digital currencies to operate within existing laws and regulations.”
- U.S Secret Service, November 2013
United States
● FEC says Bitcoin can be accepted as political donations
![Page 24: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/24.jpg)
China
● December 2013, Companies can’t price products in Bitcoin or buy or sell Bitcoin
● Private use and ownership of Bitcoins is perfectly legal
![Page 25: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/25.jpg)
Canada
● Canada has the most liberal Bitcoin regulation in the world
![Page 26: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/26.jpg)
“Your [exchange] is not, at this time, engaged as a Money Services Business in Canada.”
- Letter from FinTRAC to the operator of a Canadian exchange
Canada
![Page 27: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/27.jpg)
Bitcoin is not finished
![Page 28: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/28.jpg)
Engineering Hurdles
● Scale Bitcoin from 1 transaction per second to 1000s per second
● The Blockchain and Tragedy of the Commons
● Increase privacy while not encouraging illegal use
![Page 29: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/29.jpg)
Adoption Hurdles
● It’s still too hard for many people to use
● Missing killer-application for Bitcoin in the first world
● Price volatility makes people nervous to hold bitcoins
![Page 30: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/30.jpg)
What are the downsides to Bitcoin?
● Deflationary monetary policy
● Anonymous, but not
● Difficult to regulate and tax
![Page 31: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/31.jpg)
Crazy ideas
● contracts inside the blockchain
● blockchain as copyright protection
● Alternative cryptocurrency explosion
![Page 32: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/32.jpg)
![Page 33: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/33.jpg)
Mining Pool Network Share
![Page 34: Bitcoin Level 2](https://reader033.vdocuments.pub/reader033/viewer/2022060106/554903e3b4c905213a8b46d5/html5/thumbnails/34.jpg)