BIT COIN

MINING & ATM

BY

SUMBAL JAHAN

267/2011

CSE-A2

What is BITCOIN????

•Bitcoin is an innovative payment network and a new kind of money.

• Bitcoin is a software-based online payment system.

•Digital currency

•decentralized cryptocurrency

•Bit coin is a peer-to-peer virtual currency.

•Additional cost : About 1% for each transaction : limits the possibility of small transactions. •Slow system : Checking services take days to complete. •No anonymity. •Accounts can be frozen •If fraudulent use of credit card, the seller has to pay a fee charged by the banking company. Classic electronic payment systems

Disadvantages

WHY BIT COIN ???

•Its fast •Its cheap•Central governments can’t take it away•There are no chargebacks•It isn’t inflationary•It’s as private as you want it to be•You don’t need to trust anyone else•You own it•You can create your own money

FEW THINGS ABOUT BIT COIN

•Satoshi Nakamoto

•Open source

•Limited bit coins

•Decentralized

•Peer to peer virtual currency

HOW DOES ONE ACQUIRE BITCOIN ??

•As payment for goods or services.•Purchase bitcoins at a Bitcoin exchange .•Exchange bitcoins with someone near you .•Earn bitcoins through competitive mining

You will need a place to store your new bitcoins????

BITCOIN WALLET

• A Bitcoin wallet is a file that contains a collection of private keys.

• Store private keys

• Software wallet: hard drive of your computer

• Online wallet: web based services

• Different type of wallets:

1. Desktop wallet

2. Mobile wallet

3. Online wallet

4. Hardware wallet

At its core, Bitcoin is just a digital file that lists accounts and money like a ledger. A copy of this file is maintained on every computer in the Bitcoin network.

Bit coin at core ??

•To send money, you broadcast to the network that the amount on your account should go down, and the amount on a receiver’s account up.

• nodesIn the bitcoin network apply that transaction to their copy of the ledger, and then pass on the transaction to other nodes. (using math based security)

•In bitcoin every one knows about everyone transaction

How the ledger works ??/

How Sending Money in Bitcoin Works

broadcasts a message with the accounts and the amount:“Send 5.0 BTC from Alice to Bob.”

.

• a completely different Digital Signature is required for every transaction.• Digital siqnature requires:

1. Private key :create signature2. Public key :others to check it

3. Elliptic Curve Digital Signature Algorithm or ECDSA is a cryptographic algorithm used by Bitcoin to ensure that funds can only be spent by their

rightful owners

•Bit coin rule:to spend funds a password is required calledDIGITAL SIQNATURE

ownership of funds

•5.0 BTC to Bob: Alice must reference other transactions where she received 5 or more Bitcoins.• These referenced transactions are called “inputs.” Other nodes verifying this transaction will check those inputs to make sure Alice was in fact the recipient, and also that the inputs add up to 5 or more Bitcoins.

•Input should be used completely

•Verfiy every transaction

• index of Unspent transaction

Anonymity

•If you access Bitcoin through a TOR network that hides your IP address, you can use Bitcoin without ever revealing anything more than your public key. •Bitcoin is often described as an anonymous currency because it is possible to send and receive bitcoins without giving any personally identifying information

•Bitcoin is pseudonymous. • In Bitcoin, your pseudonym is the address to which you receive Bitcoin. •Wallet can generate a new public and private key

Double Spending in Bitcoin

For example, if I have an mp3 file or an ebook on my computer, I can freelycopy that file a thousand times and

send it to a thousand different people.

•Digital signature

•Owner ship of funds

•Trasaction is passed node by node

•The Bitcoin system orders transactions by placing them in groups called blocks, and linking those blocks together in something called the block chain.

The Block Chain: an Ordering of Transactions

•Each block has a reference to the previous block, and this is what places one block after another in time •Unconfirmed transaction: not yet in the block chain•Any node can collect a set of unconfirmed transaction into a block :next block in chain •Block must contain the answer to a mathematical problem using cryptographic hash

cryptographic hash is as follows: Alice poses a tough math problem to Bob and claims she has solved it. Bob would like to try it himself, but would yet like to be sure that Alice is not bluffing. Therefore, Alice writes down her solution, computes its hash and tells Bob the hash value (whilst keeping the solution secret). Then, when Bob comes up with the solution himself a few days later, Alice can prove that she had the solution earlier by revealing it and having Bob hash it and check that it matches the hash value given to him before.

MINING

• Process of spending computer power to process transaction

1. Secure the network

2. Synchorinsed

• Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions.

• Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady.

• Mining is also the mechanism used to introduce Bitcoins into the syste9m: Miners are paid any transaction fees as newly created coins.

1. new coins in a decentralized manner

2. provide security for the system.

• Proof of work :data difficult to produce as to satisfy certain requirement(hash cash proof of work : next block to be accepted using mathamatical race )

Bitcoin ATMs•A bitcoin ATM is an electronic communications device that allows

someone to exchange bitcoins and cash •number of different vendors

• BitAccess, CoinOutlet, Genesis Coin, Lamassu and Robocoin.• Like a face-to-face exchange but with a machine, you insert your cash and either scan your mobile wallet QR code or receive a paper receipt .

•On October 29, 2013, a Robocoin ATM operated by Bitcoiniacs opened in the Waves coffee shop in downtown Vancouver, Canada

ADVANTAGES

•No third party can prevent or control your transactions •Transactions fees are much lower • Bitcoin is free software •No inflation risk, coin’s creation is limited •Bitcoins Cannot be Stolen•No Tracking•No Risk of “Charge-backs”

•Security and control •Transparent and neutral

•Micro transactions Global

DISADVANTAGES•Degree of acceptance •Volatility •Wallets can be lost• Lack of price stability.• No buyer protection• Lack of regulations• Bitcoins Are Not Widely Accepted•Bitcoin Valuation Fluctuates•Risk of Unknown Technical Flaws•No Valuation Guarantee•No Physical Form

Thankyou