What is Bitcoin? (May 2011)

What is Bitcoin? A look at the world’s first cryptocurrency.

Stefan Thomas • WeUseCoins.com

physical money

physical money (direct transfer)

physical money “peer-to-peer”

online

online

online

online

intermediary

intermediary

middle man

intermediary

middle man = cost

intermediary

middle man = cost risk

intermediary

middle man = cost risk no choices

intermediary

middle man = problem

intermediary

intermediaries distributed

intermediaries distributed

cost?

intermediaries distributed

cost?

intermediaries distributed

cost?

intermediaries distributed

cost?

intermediaries cost

distributed

intermediaries cost risk?

distributed

intermediaries cost risk?

distributed

intermediaries cost risk?

distributed

intermediaries cost risk

distributed

intermediaries cost risk choices?

distributed

intermediaries cost risk choices

distributed

intermediaries (current situation)

semi-distributed

intermediaries is it possible?

distributed

step 1: Decentralizing identity.

Martin Hellman Ralph Merkle Whitfield Diffie

1976

Solved. Solved. Sincerely,

Martin Hellman Ralph Merkle Whitfield Diffie

1976

Sincerely,

Solved. Solved. (with digital signatures)

step 2: Decentralizing accounting.

step 2: Decentralizing accounting.

step 2: Decentralizing accounting.

step 2: Decentralizing accounting.

step 2: Decentralizing accounting.

step 2: Decentralizing accounting.

step 2: Decentralizing accounting.

step 3: Decentralizing truth.

step 3: Decentralizing truth.

step 3:

A B

Decentralizing truth.

step 3: Decentralizing truth.

A B

Voting?

B

B B B B

B

step 3: Decentralizing truth.

A B

Voting? Problem: Fake nodes!

B

B B B B

B A A

A A A

A A

A A A

A A A A

A A A

A A A A

A A

A A A

A A A

A

A A A A

A A

A A A A A A

step 3: Decentralizing truth.

A B

Bitcoin’s most important idea:

B

B B B B

B

step 3: Decentralizing truth.

A B

Bitcoin’s most important idea:

B

B B B B

B

“1 CPU, 1 Vote”

so... would it take? how much

hashing power

hashing power

Disclaimer: FLOPS ≠ FLOPS

hashing power

hashing power as of 24/5/2011

3500 Ghash/s three-day window estimate

hashing power as of 24/5/2011

3500 Ghash/s three-day window estimate

hashing power as of 24/5/2011

3500 Ghash/s three-day window estimate

hashing power as of 24/5/2011

3500 Ghash/s = 29.05 PFLOPS three-day window estimate

hashing power as of 24/5/2011

4.7 5.14

29.05

Tianhe-1A Folding@home Bitcoin

all values are in PFLOPS

Sources: bitcoin.sipa.be/speed-lin.png fah-web.stanford.edu jcst.ict.ac.cn

hashing power

hashing power A realistic view of hashing attacks against Bitcoin.

hashing power A realistic view of hashing attacks against Bitcoin.

Capital: ~ 8000 Radeon 5870 GPUs

hashing power A realistic view of hashing attacks against Bitcoin.

Capital: ~ 8000 * 250$

hashing power A realistic view of hashing attacks against Bitcoin.

Capital: ~ 2 000 000$

hashing power A realistic view of hashing attacks against Bitcoin.

Capital: ~ 2 000 000$

Power: ~ 220W * 8000

hashing power A realistic view of hashing attacks against Bitcoin.

Capital: ~ 2 000 000$

Power: ~ 1.76 MW

Benefit: Stopping transactions/Double spends

step 4: Decentralizing issuance.

step 4: Decentralizing issuance.

Who gets to spend new coins?

step 4: Decentralizing issuance.

M M ... Money awarded F ... Work provided

F

money supply 21 million max.

15 mil.

10 mil.

5 mil.

money supply

Currently: 6.28 mio

decentralized

identity 

accounting 

truth 

issuance 

decentralized currency 

economy

economy

economy

Source: BitcoinCharts.com

economy

Source: https://en.bitcoin.it/wiki/Trade

Excerpt: Design & Webhosting

economy

Source: https://en.bitcoin.it/wiki/Bitcoin_Map http://www.weusecoins.com/globe-bitcoin/

economy Existing Services • Escrow, e.g. ClearCoin • Online Wallet, e.g. Instawallet.org • Trial Service, e.g. Bitcoin Faucet • Wallet Backup, e.g. Wuala • Press, e.g. Bitcoin Sun • Mining Pools, e.g. Deepbit

Many more in the works...

decentralized

identity 

accounting 

issuance 

truth 

applications DDNS

Other Currencies Notarization

Deeds Web-of-trust

DPKI eVoting

Great Thing: Shared Work

applications

thanks! for listening

questions?