An introduction to Bitcoin I gave at BarCamp Nottingham on 23-July-2011. Blog post here: http://aviewfromafar.net/the-barcampers-guide-to-bitcoin
Note: I've updated this! The new version is just called "Introduction to Bitcoin", and is here: http://www.slideshare.net/ashmoran/introduction-to-bitcoin-30852714
18. Example: Alice pays Bob
Alice wants to send Bob 2BTC
Bob gives Alice his Bitcoin address
eg 175tWpb8K1S7NmH4Zx6rewF9WQrcZv245W
Alice gives her Bitcoin client the instruction to send
2BTC from her wallet to address
Alice’s Bitcoin client broadcasts the transaction to the
peer-to-peer network
24. Bitcoin Node
T8
T9
Block 1 Block 2 Block 3
TX T2 T3 T5 T6 T7
Block chain
Transactions are grouped into blocks
Clients can download the full block chain
25. Alice (Node) TX
Node 1 TX Node 4
B1 B2 B3
B1 B2 B3
TX B1 B2 B3
Node 2 TX Node 3 (miner)
B1 B2 B3 B4
B1 B2 B3 TX
TX
Node 5 Node 6 (miner) TX
Bob (Node)
B1 B2 B3 B1 B2 B3 B4
TX
B1 B2 B3
Mining
Mining nodes will try to create Block 4 that
contains the new transaction
26. Alice (Node)
B4 Node 1 Node 4
B1 B2 B3
B1 B2 B3
B1 B2 B3
B4
B4
B4
Node 2 Node 3 (miner) B4
TX
B1 B2 B3 B4
B1 B2 B3
B4
B4 B4 B4
Node 5 Node 6 (miner)
Bob (Node)
B1 B2 B3 B1 B2 B3
B1 B2 B3
Broadcasting new blocks
Clients that accept the new block will consider
the new transaction valid
27. Alice (Node)
Node 1 Node 4
B1 B2 B3 B4
B1 B2 B3 B4
B1 B2 B3 B4
Node 2 Node 3 (miner)
B1 B2 B3 B4
B1 B2 B3 B4
Node 5
Node 6 (miner)
B1 B2 B3 B4 Bob (Node)
B1 B2 B3 B4
B1 B2 B3 B4
Network acceptance
Bob sees the network has accepted the payment
28. What is a Bitcoin?
Bitcoins are address balances
Individual Bitcoins are not identifiable entities
29. Alice turns evil
Bitcoins are digital, like MP3s and movies
What stops Alice sending the same money to Charlie?
“Double-spending”
How does the network agree on the “true” history of
transactions?
30. Proving a transaction history
Two parts to the problem:
Proving the sequence of transactions
Making it hard to create a false (fraudulent) sequence
37. 2033 - 21MBTC
Creation halves every
4 years / 210k generations
2011 - 6MBTC
Bitcoin generation rate
Difficulty is adjusted by the network every
2 weeks to keep on target
46. Further Reading
Bitcoin: A Peer-to-Peer Electronic Cash System
Original paper - very accessible
http://www.bitcoin.org/bitcoin.pdf
Bitcoin wiki: https://en.bitcoin.it/wiki/
Money as Debt (video by Paul Grignon)
Explains the history of our monetary system
Highly recommended
http://bit.ly/moneyasdebt-full