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Bitcoin & the Blockchain

An Introduction

by Christopher Allen <ChristopherA@LifeWithAlacrity.com>

June 6, 2015

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What is Bitcoin?

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Is it a coin?

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What is Bitcoin?

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Is it a coin?

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What is Bitcoin?

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Is it a coin?

Is it a commodity?

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What is Bitcoin?

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Is it a coin?

Is it a commodity?

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So what is Bitcoin?

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So what is Bitcoin?

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Bitcoin is a consensual fantasy!

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So what is Bitcoin?

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But so is this!

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So what is Bitcoin?

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Both are a consensual reality!

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This paper is currency because someone stands behind it…

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A community, a consensus of people, decided to believe in it

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These bits are currency because someone bought a pizza…

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May 22nd 2010, one pizza for 10,000 BTC ($2,249,000 today)

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A community, a consensus of people, came to believe in Bitcoin

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May 22nd 2010, one pizza for 10,000 BTC ($2,249,000 today)

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…and Bitcoin has been a currency ever since.

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Before there was currency ancient cultures could only barter

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But you could only barter if someone wanted your goods

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The invention of currency allowed trade across distance and time

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North America

The Mediterranean

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These currencies were�hard to obtain or duplicate

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North America

The Mediterranean

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So what prevents Bitcoin�from being duplicated?

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You can't, because the�secret of Bitcoin is…

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…there is no such thing�as a Bitcoin!

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The secret of Bitcoin is that it is really only ledger!

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Ledgers are almost as�old as currency

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But in the 14th-century:�Double Entry Accounting!

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Invented in 2008:

The Blockchain Ledger!

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Bitcoins don't exist, because�they are just a balance

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In a ledger, all debits�must equal credits

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Debits

Credits

-25

+25

-100

+70 +30

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If everything must balance, where does the first credit come from?

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Debits

Credits

-25

+25

-100

+70 +30

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via a Tetris-like puzzle game�called mining

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There is a winner�every 10 minutes…

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…and the puzzle gets�harder every two weeks

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This game incentives 5698 players to keep fair copies of the ledger

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Redundantly, all over the world.

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There is no center,�no controls them—there is no�“One ring to rule them all”

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Instead, we have have achieved�a consensus, about a consensual�currency, where no one can cheat,�and everyone can participate.

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But the Blockchain is not only for Bitcoin…

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    • Self-auditing books
    • Shares of other kinds of assets (stocks, commodities, etc.)
    • Financial instruments and insurance
    • Smart contracts
    • These consensus techniques can also be used for many other things.

Bitcoin is only the first app of the Blockchain

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In some ways, Bitcoin is like this bank of lockers

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Each locker�has…

    • An identifying number
    • A slot that money can be put in
    • A window to see inside
    • A lock that requires a key

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    • These lockers are secure
    • The windows are unbreakable
    • The metal can't be cut
    • All the lockers are bolted to the ground
    • There are almost an infinite number of lockers

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    • The lockers are in a public place
    • Anyone may see what is inside any locker
    • Anyone can put money in a locker
    • Anyone can see the identifying number, but not who owns it

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    • Each locker is free of charge
    • Anyone may claim an unused locker, for which they get a key
    • You may have as lockers as you choose
    • The keys are unforgeable

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    • You many only open the locker with the key
    • Once you open a locker, you take out the money and throw away the key (the lockers are free!)
    • If you loose the key, the money is locked away forever

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    • Transactions can be done without people meeting in person
    • No banks or governments are involved
    • Anyone peeking can only know that a transaction was made

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    • As of today, there Bitcoins worth $3,373,831,169 in the lockers
    • Today, over 130,000 lockers transfered money
    • There are currently 5687 people guarding these lockers

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Questions?

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