B I T C O I N

And Blockchain

What is

By Eugene Mutai | @kn9ts in @Andela

What is money!?!

What makes money, money?

Money is basically an accounting system that tracks:

  • who owns what

  • Who owes who what & has it been paid off

  • Who has what

How does money work?

Let's take a look at the history of the US Dollar

The money we use now is corrupted!

Eg. Banks lend more money than they have and call this: fractional reserve banking

It is new type of money currency!

It is DIGITAL money

global! borderless!

It is Decentralized

It is not owned or controlled by the government anyone

It isn't attached to state or government, thus it doesn't have a central issuing body or regulatory body, basically, there's no organization that can:
- Produce it (mint it)
- Keep track of it of its circulation, constantly checking where they all are
- Figuring when to make more money or just make more of it without cause
- Track fraudulent exchanges

- Block/stop any exchange of money
- Charge exuberant transaction fees to transfer it

Welcome to a world where we can now be our own bank. You and me.

We may need not banks anymore but we do need services that banks offer.

Cryptographically Secured

Cryptography: A special field of maths that can be  used to hide any data in any  public space.

Trust-less & Trustworthy

Out with the middle man (banks, remittance services, credit card issuers, accountants)

Nearly Instant

Right now, it is better to hop on a plane and deliver the money yourself than to send it through the bank to a loved one who really needs it on the other side of the planet

Nearly free to send

The cost of sending Bitcoin to a loved one anywhere in the world is almost negligible.

Accessible to Anyone

Anyone and everyone has access to Bitcoin/cryptocurrencies.

It is private money

Though traceable, one may not know who actually owns the bitcoins.

Tamper Proof

The blockchain powering bitcoin can not be mutated so easily to one's evil requirements

Stable Inflation

Bitcoin's system produces more Bitcoins at a constant rate controlled by the system's algorithm

It is also deflationary!

Has  a specific supply and other people losing their bitcoins reduces the supply as it would not longer be in circulation

Limited Supply

Only 21 million coins will ever be in existence

The last BTC will be minted/produced in 2140

So how does it work?

What goes on behind the scene to get your money from point A to point B

Bitcoin Wallet/Account

You are your own bank. You hold the keys to your account.

Public & Private Key

The public key is your public address/account ID just like a bank account no.

Fact: An account can be created without any connection to the network

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Bob's Bitcoin Wallet (Yes! Bob is Me)

Bob sends 5 BTC to Mary

Bob's private key is used to sign to the request using a HASH function.

Broadcasted to the Network

The nearest bitcoin miner will receive the transaction request and verify it's authencity

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What is Bitcoin mining?

It is the verification of the authenticity of every bitcoin transaction broadcasted to the network and adding those transactions in groups known as blocks to the database.

Thus called blockchain

Blocks of grouped transactions chained together cryptographically

There is no Bitcoin

without Blockchain

Everything is possible because of the blockchain

What is a Blockchain?

a secure decentralized distributed tamper-proof public ledger/database

Our current systems allow Corruption

The ledgers/databases we use today, all of them are temperable. You can remove a record, or you can add a record.

Problem Solved: Double Spending

The internet uses duplication of data in order to share/transmit it. Money should/can not be duplicated. It is to be exchanged.

Problem Solved: Value Dublication

It solved the biggest internet problem where equities and assets can not be digitized. Items that only require to remain authentic

Allows Tokenization

assets & equities virtual or represented virtually, known as tokenization eg. bonds, shares, title deeds, home ownership, log books, pay slips

Advantages of Blockchain

- no double spending
- complete audit trail of all transactions maintained
- transparency (all the information is publicly accessible)
- no middleman/intermediaries (asking for your personal information, to only also lock us out of our own funds)
- incredibly tamper proof/hack-resistant (quantum computers to be a threat at this age)
- it is real time/nearly instant
- Can processing across jurisdictions/time zones
- Using a
node network, it is fault tolerant

Blockchain adoption

Due to its characteristics, it can be adapted to store any digital information that would thrive due to those characteristics.

Recommended places to be used:

- Fraud prone systems
- Intermediaries/Middlemen
- Throughput
- Stable Data (permanent/unmodifiable)
- Speed required

Our money is shackled

Our money is shackled to 20th century deceptive financial innovation. Manipulated by the governments and banks

Imagine a world:

- Payments without intermediaries

- Investments without a broker
- Loan without a bank
- Insurance without an underwriter

- Record Keeping without an accountant

- Committees without a treasurer

- Escrow without an agent
- Charity without a Trustee

- Betting without a bookie

B I T C O I N

By Eugene Mutai

B I T C O I N

Introduction to Bitcoin and Blockchain. Why they are the most incredible innovations since the invention of the internet.

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