Bitcoin and the Blockchain
Outline
- Why you should care, today
- Bitcoin Origins and History
- What is mining?
- What is the blockchain?
- Consensus
- Pseudonymity
- Bitcoin and the Blockchain
Bitcoin vs bitcoin
Why you should care, today.
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Strengths
- it works. today. right now.
- global reach
- objective inference
- inexpensive and swift
- irreversible transactions
- consensus and security
- psuedonymous
Weaknesses
- ¯\_(ツ)_/¯
A cypherpunk is an activist who uses software, protocol, and most importantly cryptography to invoke social and political change.
Bitcoin Origins
https://bitcoin.org/bitcoin.pdf
10000 BTC = 2 pizzas
Then 2013 Happened
- it works. today. right now.
- global reach
- objective inference
- inexpensive and swift
- irreversible transactions
- consensus and security
- psuedonymous
What's the Blockchain
- it works. today. right now.
- global reach
- objective inference
- inexpensive and swift
- irreversible transactions
- consensus and security
- psuedonymous
What is mining?
It's like Sudoku
-
No central banks
-
No physical form
-
No government backing
-
Anyone can participate
-
No formal identification
Why hasn't Bitcoin collapsed?
Hard to Solve, Easy to Verify
Winning has a Financial Reward
Bitcoin Mining is like Sudoku
Hash Functions
Arbitrary Text
fixed size number
Hash Functions
Mary had a little lamb, little lamb,
little lamb, Mary had a little lamb
whose fleece was white as snow.
And everywhere that Mary went
Mary went, Mary went, everywhere
that Mary went
The lamb was sure to go.
He followed her to school one day,
school one day, school one day,
He followed her to school one day,
Which was against the rules,
It made the children laugh and play,
laugh and play, laugh and play,
It made the children laugh and play,
To see a lamb at school.
2,474,925,876
Hash Functions
Alice had a little lamb, little lamb,
little lamb, Mary had a little lamb
whose fleece was white as snow.
And everywhere that Mary went
Mary went, Mary went, everywhere
that Mary went
The lamb was sure to go.
He followed her to school one day,
school one day, school one day,
He followed her to school one day,
Which was against the rules,
It made the children laugh and play,
laugh and play, laugh and play,
It made the children laugh and play,
To see a lamb at school.
184,000,478,453
Hash Functions
Elice had a little lamb, little lamb,
little lamb, Mary had a little lamb
whose fleece was white as snow.
And everywhere that Mary went
Mary went, Mary went, everywhere
that Mary went
The lamb was sure to go.
He followed her to school one day,
school one day, school one day,
He followed her to school one day,
Which was against the rules,
It made the children laugh and play,
laugh and play, laugh and play,
It made the children laugh and play,
To see a lamb at school.
82,944,583,940
Hash Functions
We're no strangers to love
You know the rules and so do I
A full commitment's what I'm thinking of
You wouldn't get this from any other guy
I just want to tell you how I'm feeling
Gotta make you understand
Never gonna give you up, never gonna let you down
Never gonna run around and desert you
Never gonna make you cry, never gonna say goodbye
Never gonna tell a lie and hurt you
28,486,668,569
Hard to Solve, Easy to Verify
How hard can it be?
-
Current Bitcoin Difficulty (1011 different possibilities)
-
The number of bits on a computer hard disk (typically about 1013, 500-1000 GB)
-
The number of cells in the human body (more than 1014)
-
The number of neuronal connections in the human brain (estimated at 1014)
-
Maximum Bitcoin Difficulty (1077 different possibilities)
-
The estimated number of atoms in the observable Universe (1080)
-
The lower bound on the game-tree complexity of chess (estimated at around 10120)
What is mining?
It's like Sudoku
- it works. today. right now.
- global reach
- objective inference
- inexpensive and swift
- irreversible transactions
- consensus and security
- psuedonymous
But...what is the blockchain?
header
Alice -> Bob
1 BTC
.0001 fee
Reward: 12.5BTC
header
Alice -> Charlie
5 BTC
.00005 fee
Reward: 12.5BTC
header
Bob -> Alice
1 BTC
.000678 fee
Reward: 12.5BTC
- previous block hash
time
Miner Process
- no double spends
- sources
- destinations
- values
- miner fees
- miner rewards
header
Alice -> Bob
1 BTC
.0001 fee
Reward: 25BTC
header
Alice -> Charlie
5 BTC
.00005 fee
Reward: 25BTC
header
Bob -> Alice
1 BTC
.000678 fee
Reward: 25BTC
time
Wallets do not hold your bitcoin
- it works. today. right now.
- global reach
- objective inference
- inexpensive and swift
- irreversible transactions
- consensus and security
- psuedonymous
Consensus
The Nash Equilibrium
| Stag | Rabbit | |
| Stag | A:4 B:4 | A:2 B:0 |
| Rabbit | A:0 B:2 | A:1 B:1 |
Alice
Bob
A Hunting Game
| Defend | Attack | |
| Defend | A:12 B:12 C:∅ | A:∅ B:24 C:∅ |
| Attack | A:24 B:∅ C:∅ | A:∅ B:∅ C:∅ |
Alice
Bob
| Defend | Attack | |
| Defend | A:8 B:8 C:8 | A:∅ B:12 C:12 |
| Attack | A:12 B:∅ C:12 | A:∅ B:∅ C:24 |
Alice
Bob
Charlie
Defend
Attack
- it works. today. right now.
- global reach
- objective inference
- inexpensive and swift
- irreversible transactions
- consensus and security
- psuedonymous
Pseudonymity
Almost anonymous
not like http://zerocash-project.org
- it works. today. right now.
- global reach
- objective inference
- inexpensive and swift
- irreversible transactions
- consensus and security
- psuedonymous