Bitcoinfirst decentralized digital currency

Bitcoin philosophy

Bitcoin - is building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context.

Bitcoin features

1. Bitcoins can be transferred between arbitrary nodes on the network.

2. Transactions are irreversible.3. Double spending is prevented by using a block chain.4. Transactions are broadcasted within seconds and

verified within 10 to 60 minutes.5. Transactions can be received at any time regardless of

whether your computer is turned on or off.

Bitcoin economic

1. Hard limit of about 21 million Bitcoins.2. Bitcoins are divisible to 8 decimal places yielding a total

of approx. 21×1014 currency units.3. Emission is programmed: every 10 min. 50 coins are

created. It number decrease twice every 4 year 4. Transactions are cheap, and mostly free.

1 BTC = 1 bitcoin0.01 BTC = 1 cBTC (bitcent) 0.001 BTC = 1 mBTC (millibit or mbit)0.0001 BTC = 1 uBTC (microbit or ubit)0.00000001 BTC = 1 satoshi

Bitcoin as gold

1. Definite owner at time2. Hard to mine3. Limited resource4. Can't be copied

1. Definite owner at time2. Hard to mine3. Limited resource4. Can't be copied

How to mine bitcoins?

Solve a "problem" using CPU or GPU. In case your PC (node) solve it - you earn 50 bitcoins.

Mining rules:1. Every node participate in solving2. Chance to solve = your-node-power / all-nodes-power3. Participate in pools of PC's

Problem is to find a "pretty" hash of transactions block header:

00000000000001c21dbf4715d5da1a288061faa21e950dd8df6ae25c8b55d868

How to mine bitcoins?

If you have any unused GPU or CPU resources you should try to earn bitcoins himself via participating in one of the mining pools (e.g. www.50btc.com)

How to mine bitcoins?

Buy it at specialized online market (e.g. https://mtgox.com/)

http://bitcoincharts.com/

Bitcoin: technical details● Technical and economic principles was described by Satoshi Nakamoto in 2009. ● Bitcoin wallet is developed under MIT license (open-source)● Bitcoin network is peer-to-peer● Every user of network has wallet with some secret key pairs (public and private)● Public key - identify target of transaction, private - identify owner. Public key has no information

about owner.● Only public information for everyone is hash (SHA-256) of public key.● During every transaction owner describe amount of coins, public key hash of new owner and sign

it by private key. Then all the users check validity of transaction.● To prevent double-spending any transaction broadcast to other nodes does not become

confirmed until the network acknowledges it in a collectively maintained timestamped-list of all known transactions, the block chain.

● Every generating node collect all the unconfirmed transactions, add reference to previous valid block, add nonce value and try to compute hash of new block with value less than specified target. In moment of successful block generating all the included transactions change it status to confirmed. So user can't use the same bitcoins twice, because all the attendees of network has history of all transactions.

● All transactions are stored in decentralized database (in April 2012, this database is approximately 1.2 gigabytes (raw block data without any indexing or optimization) )

http://www.youtube.com/watch?v=Um63OQz3bjo

Bitcoin: pros and cons

Pros1. decentralized2. anonymous3. independet4. fixed inflation5. convenient

Cons1. hard to mine bitcoins

nowadays2. hasn't granted funds3. long transaction4. splurge resources for

self-serving