Siddharth Rao
University of Tartu, Estonia
Under the guidance of
Dr. Vitaly Skachek
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.
2013 Bitcoin market reports.
Current Bitcoin trends.
History.
Working Mechanism.
Comparison with other crypto currencies.
Other competitors.
Success factors of Bitcoin.
Market fluctuations.
Issues/Problems.
Solution.
Conclusion.
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.
Nakamoto, S.: Bitcoin: A peer-to-peer electronic cash system
3rd of January, 2009 : Announced in the Cryptography mailing list
11th of January, 2009 : launched as open-source project on Sourceforge.
Works like previous e-cash attempts such as Bit-gold, Hashcash.
Verifying ownership - "Double spending".
Trusted central authoritybut Blockchain.
A public ledger - which creates a time stamped history of all previous transactions.
Litecoin
Peercoin
Namecoin
Primecoin
Quarkcoin
Ripple
Zerocoin
No central point of trust.
Incentives for participation.
Predictable money supply.
Open source and easy-to-implement modules.
Support for scripting.
Irreversibility of transactions.
Low fees of transaction.
Black hat communities hacking the systems.
Government restrictions.
New laws.
Digital market shutting down.
Malware attacks.
Accidental loss.
Lack of measures to back up.
Mass thefts : hack of marketplace / Bitcoin exchange.
Individual thefts :
Solutions:
Bitcoin ecosystem = Decentralized - Distributed.
Everyone will have the history of transactions.
Bitcoin System = Directed Acyclic Graphs.
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.
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 :
Challenges:
Solutions:
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.
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.
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.
[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