Bitcoin the hype, the myth and the truth

● Bitcoin Client: Bitcoin Core, Bitcoin XT, Bitcoin Classic, Bitcoin Unlimited, BTC1, btcd ...● Bitcoin Wallets: Bitcoin Core, Bitcoin.com, Electrum, Bitgo, Xapo, Blockchain, Jaxx .... ○

Bitcoin: The Hype, The Myth and The Truth

~ Part 1 - 30/10/2017 ~

~ A Technical Overview about How Bitcoin works ~

● Bitcoin is the world's first decentralized digital currency, as the system works without a central repository or single administrator.

currency, or cryptocurrency

Satoshi, with the famous whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash

System”, released on 31/10/2008

What is Bitcoin?

Nakamoto Satoshi - 01/11/2008

Bitcoin P2P e-cash paper - The Cryptography

Mailing List

What is Bitcoin?

I've been working on a new

electronic cash system that's

fully peer-to-peer, with no

trusted third party.

What is needed is an electronic payment system based on

cryptographic proof instead of trust, allowing any two willing

parties to transact directly with each other without the need

for a trusted third party.

Nakamoto Satoshi - 31/10/2008 Bitcoin: A Peer-to-Peer Electronic Cash System

5

What is Bitcoin?

Nakamoto Satoshi - 11/02/2009

I've developed a new open source P2P e-cash system called Bitcoin It's

completely decentralized, with no central server or trusted

parties, because everything is based on crypto proof instead of trust

● The identity of Bitcoin’s father, Nakamoto Satoshi, is still the Myth From middle 2010,

Nakamoto Satoshi handed over control of the source code repository and network alert key

as well as transferred several related domains to various prominent members of the bitcoin community, and stopped his involvement in the project

billions USD (with the price at the time of writing this Slide: 1 bitcoin ~ 20,000 USD)

What is Bitcoin? - The Truth

7

● There will be only 21,000,000 bitcoin in supply The current Circulating Supply is 16.6

million.

generated in a day: 144)

down from 50 (2009) -> 25 (28/11/2012) -> 12.5 (2016-07-09) -> 6.25 (~ 2020)

What is Bitcoin? - The Truth

● You can spend up to 0.00000001 (one hundred millionth) Bitcoin Each of these bitcoin units

is called a satoshi A satoshi is the smallest unit in a bitcoin.

What is Bitcoin? - The Truth

9

● Bitcoin Client: Bitcoin Core, Bitcoin XT, Bitcoin Classic, Bitcoin Unlimited, BTC1, btcd

● Bitcoin Wallets: Bitcoin Core, Bitcoin.com, Electrum, Bitgo, Xapo, Blockchain, Jaxx

● Bitcoin Exchanges: Bitfinex, Bitflyer, Bithump, LocalBitcoins, Kraken, Coinbase

● Bitcoin Mining: Bitmain, Bitcoin.com, Bitfury, Bixin.com, Genesis Mining, ViaBTC, F2Pool, Slush ….

● Bitcoin Payment Processors: BitPay, Coinbase, BitPagos, Blockchain

● Bitcoin News and Data: https://news.bitcoin.com/ , https://www.coindesk.com/ , https://cointelegraph.com .

Bitcoin Ecosystem

● Bitcoin Address is an identifier of 26-35 alphanumeric characters, beginning with the

number 1 or 3, that represents a possible destination for a bitcoin payment Simply, people

use Bitcoin Address to receive Bitcoin.

○ 1XPTgDRhN8RFnzniWCddobD9iKZatrvH4

○ 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy

Bitcoin Fundamental

11

● Bitcoin Private Key

○ Public key cryptography: or asymmetrical cryptography, is any cryptographic system that uses pairs of

keys: public keys which may be disseminated widely, and private keys which are known only to the

owner.

○ The public key can be used to verify that a holder of the paired private key sent the message

Bitcoin Fundamental

● Bitcoin Private Key

○ A private key is usually a 256-bit number (some newer wallets may use between 128 and 512 bits)

○ Any 256-bit number from 0x1 to 0xFFFF FFFF FFFF FFFF FFFF FFFF FFFF FFFE BAAE DCE6 AF48

A03B BFD2 5E8C D036 4140 is a valid private key Example private key in Base58 format:

5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9KF

○ Bitcoin Address is actually not randomly generated It is calculated from the public key, which is

calculated from the private key (which is a random string) Therefore, we have the 1 - 1 - 1 relation

between private key - public key - bitcoin address.

○ The private key allows the bitcoins that belongs to the paired address to be spent

Bitcoin Fundamental

13

● Bitcoin Private Key

○ The private key allows the bitcoins that belongs to the paired address to be spent.

○ The private key can not be recovered when you lose it Revealing the private key will lead to losing Bitcoin

○ We use private key to sign a “Digital Signature”

○ Everyone in the Bitcoin network can use the public key to decrypt the “Digital Signature” to verify the

private key ownership.

Bitcoin Fundamental

Bitcoin Fundamental

15

Private Key

Message: I’m Thang I

have 10 bitcoins I want

to send 5 bitcoins to

Tien

Hashed Message:a1b2c3d

● A transaction is a transfer of Bitcoin value that is broadcast to the network

● A transaction typically references previous transaction outputs as new transaction inputs and

dedicates all input Bitcoin values to new outputs

● When you send Bitcoin, you actually spend your Unspent Transaction Outputs (UTXO) , to

generate one or more other UTXO

● Check Bitcoin Transaction

○ https://blockchain.info

○ https://blockchair.com

Bitcoin Transaction

Bitcoin Transaction

17

● Double-spending is the result of successfully spending some money more than once

Double spending problem

Bitcoin solves the “double-spending”

problem by inventing the blockchain and proof-of-work concept

● Blockchain is the chain of blocks (actually, the keyword blockchain was not mentioned in

the Bitcoin Whitepaper, but only used after that)

Blockchain

19

● The block is not easy to generated It require a proof-of-work

● A proof-of-work is a piece of data which is difficult (costly, time-consuming) to produce but easy for

others to verify

● The difficulty of this work is adjustable and it is adjusted after every 2016 blocks to limit the rate at

which new blocks can be generated by the network to one every 10 minutes.

● Due to the very low probability of successful generation, this makes it unpredictable which worker

computer in the network will be able to generate the next block.

Blockchain

21

● Currently, Bitcoin has block size limit It is 1MB*.

● Latest block height 492211, with more than 266.5 millions confirmed transactions.

● Total Bitcoin blockchain size: 163.92 GB It will take much time to download the full blockchain and

verify each block

● Average transaction per block ~ 2000

● Average transaction per second ~ 3.3

Blockchain

● Any computer that connects to the Bitcoin network is called a node

● Nodes that fully enforce all of the rules of Bitcoin are called full nodes.

○ Blocks may only create a certain number of bitcoins

○ Transactions must have correct signatures for the bitcoins being spent

○ Transactions/blocks must be in the correct data format

○ Within a single block chain, a transaction output cannot be double-spent.

○

● Full nodes maintain a complete and up-to-date copy of the blockchain They download every block and

transaction and check them against Bitcoin's core consensus rules independently with other nodes

Bitcoin Network

23

● SPV (Simple Payment Verification) Node, or Lightweight Node, or Thin Client: maintain

only a subset of the blockchain and verify transactions using a method called simplified

payment verification SPV Nodes download only the block headers, and do not download

the transactions included in each block

while others are lightweight nodes participating in pool mining and depending on a pool

server to maintain a full node

Bitcoin Network

Bitcoin Network

25

● The Block and the Chain in depth

The Next Part

● Bitcoin whitepaper: https://bitcoin.org/bitcoin.pdf

● http://nakamotoinstitute.org/

● Bitcoin wiki: https://en.bitcoin.it/wiki/Main_Page

● Bitcoin forum: https://bitcointalk.org/

● Bitcoin Reddit: https://www.reddit.com/r/Bitcoin/ and https://www.reddit.com/r/btc/

● Bitcoin Price: https://coinmarketcap.com/

Thank you for listening!