Outerz0ne 9/BTC Talk

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Rough draft edit heavily!

Abstract

State of the bitcoin address, Pizza, Pirates, and Profiteers: The Bitcoin has come a long way in its first 4 years as a crypto currency. Bursting bubbles and resurgence, the bitcoin has comeback to a greater acceptance and wider audience than ever before, breaking all time highs with prices in the $90+ range. This talk will cover everything you NEED to know about bitcoin, from a consumer and manufacturer standpointAcquisition to Spending (including mining crypto currencies and the future of mining) Staying secure anonymous with bitcoin, the infrastructure behind bitcoin, and the things you can do with bitcoin.

Webpage layout

General

What is a crypto currency?

Cryptographic currencies are currencies represented by units of complex cryptographic math problems.

What is Bitcoin?

What is Bitcoin? Bitcoin is many parts of a whole. not only is it a a new kind of digital currency. It's the first decentralized digital peer to peer crypto currency not regulated or controlled by a single organization, government, person or entity. It is also a complex peer to peer network. The network or blockchain helps regulate scarcity, and market stability. Bitcoin is completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust. Bitcoin dose not rely on any physical note or representation.

http://www.youtube.com/watch?v=Um63OQz3bjo (what is bitcoin) (exerpt: http://www.newyorker.com/online/blogs/elements/2013/04/the-future-of-bitcoin.html)

In many ways, bitcoins function essentially like any other currency, and are accepted as payment by a growing number of merchants, both online and in the real world. Bitcoins are generated at a predetermined rate by an open-source computer program, which was set in motion in January of 2009. This program produced each one of the nearly eleven million bitcoins in circulation (with a total value just over a billion dollars at the current rate of exchange), and it runs on a massive peer-to-peer network of some twenty thousand independent nodes, which are generally very powerful (and expensive) G.P.U. or ASIC computer systems optimized to compete for new bitcoins.

Bitcoin releases a twenty-five-coin (originally 50 bitcoins) reward to the first node in the network that succeeds in solving a difficult mathematical problem requiring a certain amount of brute-force computation (known as a proof-of-work calculation.) The solution is then broadcast throughout the network, and competition for a new block and its twenty-five-coin reward begins.

At first, anyone armed with an ordinary computer could download and run the Bitcoin software and gather (or “mine”) bitcoins. The more computing power you can dedicate to Bitcoin calculations, though, the better your chances of arriving first at each solution. This feature of the system, by design, resulted in a kind of computational arms race that strengthened the network by rewarding increased computing power. Four years into the Bitcoin project, only very powerful, purpose-built machines have enough muscle to keep pace with existing network nodes.

In this way, bitcoins are mined like gold used to be, in quantities that are small relative to the total supply, so that the supply grows slowly. There is an upper limit of twenty-one million new coins built into the software; the last one is projected to be mined in 2140. After that, it is presumed that there will be enough traffic to keep rewards flowing in the form of transaction fees rather than mining new coins. For now, the bitcoins are initially issued to the miners, but are distributed when miners buy things with them or sell them to non-miners

How does it (Bitcoin) work?

Brimstone: Magic? Tuttle: No little brimstone, its simple, complex math and science that gets things moving on good lady bitcoin. First off, But before we get into the back bone of the system, we would like to demonstrate some various exchanges in real time for you guys. (tuttle hands brimstone $20) brimstone sends the market rate of bitcoin to tuttles wallet, tuttle sends those bitcoin to pizza for coins and orders a pizza, the trick is concluded when the pizza arrives at the end of the talk. magic!

(information goes here --->) (https://en.bitcoin.it/wiki/Introduction) Creation of coins

The creation of coins must be limited for the currency to have any value.

New coins are slowly mined into existence by following a mutually agreed-upon set of rules. A user mining bitcoins is running a software program that searches tirelessly for a solution to a very difficult math problem whose difficulty is precisely known. The difficulty is automatically adjusted regularly so that the number of solutions found globally, by everyone, for a given unit of time is constant: an average of 6 per hour. When a solution is found, the user may tell everyone of the existence of this newly found solution, along with other information, packaged together in what is called a "block".

Blocks create 25 new bitcoins at present. This amount, known as the block reward, is an incentive for people to perform the computation work required for generating blocks. Roughly every 4 years, the number of bitcoins that can be "mined" in a block reduces by 50%. Originally the block reward was 50 bitcoins; it halved in November 2012. Any block that is created by a malicious user that does not follow this rule (or any other rules) will be rejected by everyone else. In the end, no more than 21 million bitcoins will ever exist.

Because the block reward will decrease over the long term, miners will some day instead pay for their hardware and electricity costs by collecting transaction fees. The sender of money may voluntarily pay a small transaction fee which will be kept by whoever finds the next block. Paying this fee will encourage miners to include the transaction in a block more quickly. Sending payments

To guarantee that a third-party, let's call her Eve, cannot spend other people's bitcoins by creating transactions in their names, Bitcoin uses public key cryptography to make and verify digital signatures. In this system, each person, such as Alice or Bob, has one or more addresses each with an associated pair of public and private keys that they may hold in a wallet. Only the user with the private key can sign a transaction to give some of their bitcoins to somebody else, but anyone can validate the signature using that user’s public key.

Suppose Alice wants to send a bitcoin to Bob. 

   Bob sends his address (from which the public key can be derived) to Alice.
   Alice adds Bob’s public key and the amount of bitcoins to transfer to a message: a 'transaction' message.
   Alice signs the transaction with her private key.
   Alice broadcasts the transaction on the Bitcoin network for all to see.

(Only the first two steps require human action. The rest is done by the Bitcoin client software.)

Looking at this transaction from the outside, anyone who knows that these addresses belong to Alice and Bob can see that Alice has agreed to transfer the amount to Bob, because nobody else has Alice's private key. Alice would be foolish to give her private key to other people, as this would allow them to sign transactions in her name, removing funds from her control.

Later on, when Bob wishes to transfer the same bitcoins to Charley, he will do the same thing: 

   Charlie sends Bob his address.
   Bob adds Charlie's public key and the amount of bitcoins to transfer to a message: a 'transaction' message.
   Bob signs the transaction with his private key.
   Bob broadcasts the transaction on the Bitcoin network for all to see.

Only Bob can do this because only he has the private key that can create a valid signature for the transaction.

Eve cannot change whose coins these are by replacing Bob’s public key with her public key, because Alice signed the transfer to Bob using her own private key, which is kept secret from Eve, and instructing that the coins which were hers now belong to Bob. So if Charlie accepts that the original coin was in the hands of Alice, he will also accept the fact that this coin was later passed to Bob, and now Bob is passing this same coin to him. Preventing double-spending

The process described above does not prevent Alice from using the same bitcoins in more than one transaction. The following process does; this is the primary innovation behind Bitcoin. 

   Details about the transaction are sent and forwarded to all or as many other computers as possible.
   A constantly growing chain of blocks that contains a record of all transactions is collectively maintained by all computers (each has a full copy).
   To be accepted in the chain, transaction blocks must be valid and must include proof of work (one block generated by the network every 10 minutes).
   Blocks are chained in a way so that, if any one is modified, all following blocks will have to be recomputed.
   When multiple valid continuations to this chain appear, only the longest such branch is accepted and it is then extended further.

When Bob sees that his transaction has been included in a block, which has been made part of the single longest and fastest-growing block chain (extended with significant computational effort), he can be confident that the transaction by Alice has been accepted by the computers in the network and is permanently recorded, preventing Alice from creating a second transaction with the same coin. In order for Alice to thwart this system and double-spend her coins, she would need to muster more computing power than all other Bitcoin users combined. Anonymity

When it comes to the Bitcoin network itself, there are no "accounts" to set up, and no e-mail addresses, user-names or passwords are required to hold or spend bitcoins. Each balance is simply associated with an address and its public-private key pair. The money "belongs" to anyone who has the private key and can sign transactions with it. Moreover, those keys do not have to be registered anywhere in advance, as they are only used when required for a transaction. Transacting parties do not need to know each other's identity in the same way that a store owner does not know a cash-paying customer's name.

A Bitcoin address mathematically corresponds to a public key and looks like this: 

   1PC9aZC4hNX2rmmrt7uHTfYAS3hRbph4UN

Each person can have many such addresses, each with its own balance, which makes it very difficult to know which person owns what amount. In order to protect his privacy, Bob can generate a new public-private key pair for each individual receiving transaction and the Bitcoin software encourages this behavior by default. Continuing the example from above, when Charlie receives the bitcoins from Bob, Charlie will not be able to identify who owned the bitcoins before Bob.

What is a blockchain?

Where are Bitcoins stored?

In order to work with Bitcoin a wallet is a requirement. It's probably the safest to use a full Bitcoin client like the official one. However when just started out with small amounts you might choose security over ease of use.

    • Blockchain.info; hosted online wallet. Create when just getting started, the added benefit is that you can deposit money via Bank/Mobile to fund your account right away.
    • Electrum; a thin client. Like the Blockchain wallet this uses a remote server to retrieve the transaction data. Once installed you can start working with Bitcoin immediately.
    • Original Bitcoin client; the original or "reference" client. It takes a while to get started with this client since it needs to download all the transactions before you can actively use it.

How can one use Bitcoin?

Historic Events with Bitcoin.

10k pizza extra credit if pizza arives when talking about pizza) Cyprus mega april fools we broke 100

Acquiring

Where can I purchase Bitcoins?

Spending

Where can I spend Bitcoins?

Mining

Trading

Scraps to be worked into the page/talk

Topics

  • What is bitcoin
  • Who made bitcoin
  • The blockchain, and infrastructure
  • Security, wallet security
  • Anonymity
  • Mining and the future of mining
  • Buying
  • Spending
  • The 10,000btc pizza
  • Trading
  • Other currencies
  • You run barter town, future of bitcoin and economics


Who made bitcoin

In 2008, Satoshi Nakamoto, the founder of Bitcoin, whose real identity is not known, cleverly combined existing peer-to-peer network technologies, cryptographic techniques, digital signatures, and the potential power of network effects to design and develop the Bitcoin system. Nakamoto was very clearly motivated in this effort by the fallout from the 2008 financial crisis. When the experiment was launched and the first fifty bitcoins (the so-called genesis block) were mined, in January of 2009, he (or she, or they) included this line of text along with the data: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

Until his disappearance from the Web, around the spring of 2012, Nakamoto was a visible participant on cryptography forums, where he discussed Bitcoin freely, and published a nine-page paper outlining the details of the project. These posts reveal that even in 2008, Nakamoto was able to respond to concerns regarding the scalability of bitcoin with remarkable prescience; he clearly understood the ramp-up of computing power that would be required for producing bitcoins as the system grew. 

   Only people trying to mine new coins need to run network nodes And at first, most users ran network nodes, but as the network grew beyond a certain point, mining increasingly became the domain of specialists with server farms of specialized hardware.

A casual review of Nakamoto’s various blog posts and bulletin-board comments also confirms that, from the first, Bitcoin was devised as a system for removing the possibility of corruption from the issuance and exchange of currency. Or, to put it another way: rather than trusting in governments, central banks, or other third-party institutions to secure the value of the currency and guarantee transactions, Bitcoin would place its trust in mathematics. At the P2P Foundation, Nakamoto wrote a blog post describing the difference between bitcoin and fiat currency:

(nytarticle)

Infistructure

Bitcoin Wallets

Use of the phrase "Official Bitcoin Client"

For reference, I would avoid using this phrase to describe the client available at Bitcoin.org and instead use a more accurate substitution such as "Bitcoin Reference Client", "BitcoinQT Client", or the "Original Bitcoin Client". Bitcoin.org uses both of the latter two.

Getting Bitcoin

There are tons of options of getting Bitcoin. Here are a couple of solutions if you have a better solution for a certain region please let me know.


Inside the US

  • Coinbase

Coinbase wants to be the Paypal for Bitcoin. Just hook up your bank account and you can instantly exchange Bitcoin.

  • Bitinstant

BitInstant enables you to make local cash deposits for Bitcoin. Just go down to wallmart for instance and have your Bitcoin in your account without problem. There is also an option to deposit using Dwolla.

Other locations

How do you Buy Bitcoins

LocalBitcoins

Mtgox

Mining, future of mining

buying, selling, trading

Pizza

other currencies

the future

Interesting Bitcoin Videos

Neat Linkz Doodz!

presented by

  • Brimstone

Lover of pie, distributed system, and money, brimstone started in Alabama, but now lives in Atlanta. He finds it hard to talk about himself.

  • Will Tuttle
    • 1EJ7z9qyUPpdCzAsCsY1nQ7t47GqGwjyC6

Feejee mermaid owner, part time circus geek, inventor of the digital viewmaster, Tuttle started out in nashville but now lives in huntsville. He finds it easy to talk about himself, but is a slacker.

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