Agenda

1. History.

2. Working Mechanism.

3. Comparison with other crypto currencies.

4. Other competitors.

5. Success factors of Bitcoin.

6. Market fluctuations.

7. Issues/Problems.

8. Solution.

9. Conclusion.

History of Bitcoins

• Transferable digital money

   – Based on cryptographic signatures and hash functions

• P2P system, no central bank or trusted issuer

• Self published paper by a person/group with pseudonym "Satashi Nakamoto" in October 2008.

• 3rd of January, 2009 : Announced in the Cryptography mailing list

• 11th of January, 2009 : launched as open-source project on Sourceforge. 
  

Working Mechanism

Market Comparison

• Right from the current digital exchange.

• Summary

competitors(2)

•  Primecoin        

  • Based on prime numbers.
  • Network discovers new prime numbers.

•  Quarkcoin
  

  • Fastest to mine : 0.5574 minutes to confirm.
  • More secure : 9 rounds of encryptions using 6 different encryption algorithms.
  • First mined on : 21st July,  2013.

•  Ripple 
  

•  Zerocoin
  

Success Factors(1)

• No central point of trust.    




• Incentives for participation.




• Predictable money supply.




• Open source and easy-to-implement modules.
  

Success Factors(2)

• Support for scripting.    




• Irreversibility of transactions.




• Low fees of transaction.

  
  

Market Fluctuations

• January 2013 - June 2013    




• October 2013 - December 2013




•  Media Coverage

Reasons

• Black hat communities hacking the systems.

• Government restrictions.

• New laws.

• Digital market shutting down.

• Malware attacks.

• Accidental loss.

• Lack of measures to back up.

Malware Attacks

• Mass thefts : hack of marketplace / Bitcoin exchange.

• Individual thefts : 
  

  • Cryptocurrency Stealing Malware (CCSM) :
    • Wallet Stealer.
    • Credential stealer.
    • Man-in-the-middle malware.
    • RPC Automation malware.
  • Remote Access Trojans (RAT)

• Solutions:
  

  • Threshold Cryptography.
  • Super-wallets.

Privacy Issues(1)

• Bitcoin ecosystem = Decentralized -  Distributed.

• Everyone will have  the history of transactions.

• Bitcoin System  = Directed Acyclic Graphs.       

  • Each vertex represents a single transaction.

• Some interesting facts revealed:

  • Who is the rich Bitcoin user (Transacation code in 2010).

  • 98% of the addresses have fewer than 10 Bitcoins.

  • 47% of the general transactions make less than 0.01 Bitcoins.

  • 84% of the transactions are less than 10 Bitcoins.

Privacy issues(2)

• Analysis of a user network revealed many things.

• Multi-input payment = Involvement of same user.

• Shadow addresses.

• Mapping features of TCP/IP layers reveal approximate geographical location of the user.

• Companies accepting Bitcoins may require email address or personal information == Complete breach of privacy.

• Solutions :
  

  • Use of Mixtures.
  • Fair Exchange Protocol.

Scalability issues

• Challenges:
  

  1. Data retentions and communication failures.
  2. Delay associated with transaction confirmation.
  3. Growing size of private key storage.

• Solutions: 
  

  • Filtering of Bitcoin nodes as Clients and Verifiers.
    • May be with the help of trusted third party cloud service.
  • Semi-trusted bank as in intermediate
  • Pseudo Random Generator for generating private keys and associating expiration dates for public-keys.

Anonymity vs trust

• The Bitcoin enforces anonymity and unlinkability.

  • By allowing users to have different addresses and public keys in every transaction

  • However not completely anonymous.




•  Solutions:    

  • Usage of Mixtures.

  • Fair Exchange Protocol.

  • Switch to Zerocoin - But not compatiable with Bitcoin.

Fair Exchange Protocol

• Avoids the compromising nature of mixers.

• works on a backward compatible manner :

• Two users can exchange Bitcoins without third party intervention.

• Probability of cheating is smaller.

Conclusion

• Bitcoins has revolutionized the whole technology and financial world. 




• Not perfect but scope for improvement.




• More companies have started accepting Bitcoins.




• Improves global business trends.

Questions

THANK YOU

Bibiliography

[1] S. Barber, X. Boyen, E. Shi, and E. Uzun. Bitter to better – how to    .   make bitcoin a better currency. In Financial Cryptography and Data  .   .   Security, pages 399–414.Springer, 2012.

[2] Bitcoin Competitors: What You Should Know About 6 Alternative crypto    .   currencies : http://goo.gl/KG2NvC

[3] Coin Span of digital currencies: http://bitinfocharts.com/charts.html

[4] Cryptocurrency Market Capitalizations based on available supply
    http://coinmarketcap.com/#USD

[5] CoinDesk State of Bitcoin-2014 Report: 
    http://www.coindesk.com/bitcoin-2014-report/

[6]Bitcoin media mentions in the year 2013 using using media database Lexis .  Nexis
   http://www.bbc.com/news/magazine-25332746