Bitcoin

crypto-currency
distributed
anonymous

Crypto-currency

  • hash functions
  • digital signatures
  • proof of work

Distributed

  • No central authority
  • No centralized emission
  • No dependency on specific node

Anonymous

  • Anyone can join without registration
  • As many addresses as you want
  • No way to discover who owns the address

Addresses and wallets

Address is string of up to 34 digits and letters

Example: 12RXLQa5AcNvxLnW8pgnu6VgYJ5LriHJzq


Wallets

Offline: BitcoinQT, Armory, Multibit, Electrum

Online: blockchain.info, coinbase.com, inputs.io

Mobile: blockchain.info, coinbase.com, Bitcoin wallet, Mycelium, etc

Cryptography: 

1. Hash function

Simple example: Division modulus 10
16 mod 10 = 6
93 mod 10 = 3
46 mod 10 = 6


Real algorithm SHA256 and RIPEMD160
hello
2cf24dba5fb0a30e26e83b2ac5b9e29e1b161e5c1fa7425e73043362938b9824
b6a9c8c230722b7c748331a8b450f05566dc7d0f




hellp
fdd7585e08c4e2afd71dcabdb4636c89d557a3f42db9e2040c8bbd1708aa4ce7
6e7daf919a79b1cede5722aa0f017a911a94223f

Cryptography

Asymmetric encryption and digital signature


Addresses

<public key> + <private key>
base58(00+hash(<public key>)+checksum) + <private key>

12RXLQa5AcNvxLnW8pgnu6VgYJ5LriHJzq + <private key>

Addresses

<public key> + <private key>

tmp = 00 + ripemd160(sha256(<public key>))
checksum = first 4 bytes of sha256(sha256(tmp))
Example: D61967F6

base58(tmp+checksum) + <private key>

12RXLQa5AcNvxLnW8pgnu6VgYJ5LriHJzq + <private key>

Bitcoin transaction


Bitcoin transaction

Bitcoin Mining

a474d6522ffe33b77defdf9a246c02db4b851f85bd72375d08982ec884e8be19
Nonce: 1, 2, 3, 4, 5, .... 
000e76afb69a5dc94115c0cef1a8355e86137a17a25c9330b484378c9c0efb73

Miner reward: 25 BTC expansion + fees

Bitcoin mining

Bitcoin blockchain

Risks

  • reveal identity
  • stealing private keys
  • hacking online wallets
  • 51% attack on protocol

More info:

Presentation for meetup

By Sergey Yusupov