Here is the Bitcoin Report. The report involves every aspect of Bitcoin that one need to understand Bitcoin from scratch. Following are the contents that are being covered by the report:- · Abstract · Introduction · History and its Creation · Working of Bitcoin · Advantages · Disadvantages · Challenges to Bitcoin · Scope of Bitcoin · Conclusion Hope this will help

1. Maharishi Markandeshwar Engineering College-
Mullana
Dept: Electronics & Communication
SEMINAR REPORT ON :-
Bitcoin (Digital Currency)
Submitted To:- Submitted By:-
Dr. Tarun Gulati HITESH KUMAR SINGH
11151111 ( ECE 5th
Sem )

2. TABLE OF CONTENT
 Abstract
 Introduction
 History and its Creation
 Working of Bitcoin
 Advantages
 Disadvantages
 Challenges to Bitcoin
 Scope of Bitcoin
 Conclusion

3. ABSTRACT
Bitcoin is a form of virtual or digital money, a peer-to-peer, electronic cash system. Bitcoins
are based on an open-source cryptographic protocol that is independent of any central authority
like a Central Reserve Bank or another administrative institution. Bitcoins are created and
administrated decentralized within a computer based network. They can be transferred through
a computer or smartphone without an intermediate financial institution. The currency exists
since 2009 and is in the meantime accepted as a legal instrument of payment in various
countries but first of all for world wide Internet transactions. In June 2011, Wikileaks and other
organizations began to accept bitcoins for donations. That became very important after Master-
Card, Visa, PayPal and other tried to block WikiLeaks from money transfers obviously because
of political pressure by the US-government.

4. INTRODUCTION
Bitcoin is a peer-to-peer payment system introduced as open source software in 2009 by
developer Satoshi Nakamoto. The digital currency created and used in the system is also called
bitcoin and is alternatively referred to as a virtual currency, electronic money, or
cryptocurrency. The bitcoin system is not controlled by a single entity, like a central bank,
which has led the US Treasury to call bitcoin a decentralized currency. Economists generally
agree that it does not meet the definition of money.
Bitcoins are created as a reward for payment processing work in which users who offer their
computing power verify and record payments into a public ledger. Called mining, individuals
engage in this activity in exchange for transaction fees and newly minted bitcoins. Besides
mining, bitcoins can be obtained in exchange for other currencies, products, and services. Users
can buy, send, and receive bitcoins electronically for a nominal fee using wallet software on a
personal computer, mobile device, or a web application.

5. HISTORY AND ITS CREATION
This Bitcoin was first mentioned in a 2008 paper published under the name Satoshi Nakamoto.
In 2009, an exploit in an early bitcoin client was found that allowed large numbers of bitcoins
to be created.
The price of bitcoins has fluctuated wildly since its inception, going through various cycles of
appreciation and depreciation, which have been referred to by some as bubbles and busts. In
2011, the value of one bitcoin rapidly rose from about US$0.30 to US$32 before returning to
US$2. In the latter half of 2012 and during the 2012-2013 Cypriot Financial Crisis, the bitcoin
price began to rise, reaching a peak of US$266 on 10 April 2013, before crashing to around
US$50. In the end of 2013, the cost of one bitcoin rose to the all-round peak of US$1135, but
fell to the price of US$693 three days later.
Some mainstream websites began accepting bitcoins c. 2013. WordPress started in November
2012 followed by OKCupid in April 2013, TigerDirect in January 2014, andOverstock.com
that same month. Certain non-profit or advocacy groups such as the Electronic Frontier
Foundation allow bitcoin donations.
Bitcoin is the first implementation of a concept called "crypto-currency", which was first
described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new
form of money that uses cryptography to control its creation and transactions, rather than a
central authority. The first Bitcoin specification and proof of concept was published in 2009 in
a cryptography mailing list by Satoshi Nakamoto. Satoshi left the project in late 2010 without
revealing much about himself. The community has since grown exponentially with many
developers working on Bitcoin.
Satoshi's anonymity often raised unjustified concerns, many of which are linked to
misunderstanding of the open-source nature of Bitcoin. The Bitcoin protocol and software are
published openly and any developer around the world can review the code or make their own
modified version of the Bitcoin software. Just like current developers, Satoshi's influence was
limited to the changes he made being adopted by others and therefore he did not control Bitcoin.
As such, the identity of Bitcoin's inventor is probably as relevant today as the identity of the
person who invented paper.

6. WORKING OF BITCOIN
As a new user, you can get started with Bitcoin without understanding the technical details.
Once you have installed a Bitcoin wallet on your computer or mobile phone, it will generate
your first Bitcoin address and you can create more whenever you need one. You can disclose
your addresses to your friends so that they can pay you or vice versa. In fact, this is pretty
similar to how email works, except that Bitcoin addresses should only be used once.
Balances - block chain: The block chain is a shared public ledger on which the entire Bitcoin
network relies. All confirmed transactions are included in the block chain. This way, Bitcoin
wallets can calculate their spendable balance and new transactions can be verified to be
spending bitcoins that are actually owned by the spender. The integrity and the chronological
order of the block chain are enforced with cryptography.
Transactions - private keys: A transaction is a transfer of value between Bitcoin wallets that
gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key
or seed, which is used to sign transactions, providing a mathematical proof that they have come
from the owner of the wallet. The signature also prevents the transaction from being altered by
anybody once it has been issued. All transactions are broadcast between users and usually begin
to be confirmed by the network in the following 10 minutes, through a process called mining.

7. Processing – mining: Mining is a distributed consensus system that is used to confirm waiting
transactions by including them in the block chain. It enforces a chronological order in the block
chain, protects the neutrality of the network, and allows different computers to agree on the
state of the system. To be confirmed, transactions must be packed in a block that fits very strict
cryptographic rules that will be verified by the network. These rules prevent previous blocks
from being modified because doing so would invalidate all following blocks. Mining also
creates the equivalent of a competitive lottery that prevents any individual from easily adding
new blocks consecutively in the block chain. This way, no individuals can control what is
included in the block chain or replace parts of the block chain to roll back their own spends.

8. ADVANTAGES
 Payment freedom - It is possible to send and receive any amount of money instantly
anywhere in the world at any time. No bank holidays. No borders. No imposed limits.
Bitcoin allows its users to be in full control of their money.
 Very low fees - Bitcoin payments are currently processed with either no fees or
extremely small fees. Users may include fees with transactions to receive priority
processing, which results in faster confirmation of transactions by the network.
Additionally, merchant processors exist to assist merchants in processing transactions,
converting bitcoins to fiat currency and depositing funds directly into merchants' bank
accounts daily. As these services are based on Bitcoin, they can be offered for much
lower fees than with PayPal or credit card networks.
 Fewer risks for merchants - Bitcoin transactions are secure, irreversible, and do not
contain customers’ sensitive or personal information. This protects merchants from
losses caused by fraud or fraudulent chargebacks, and there is no need for PCI
compliance. Merchants can easily expand to new markets where either credit cards
are not available or fraud rates are unacceptably high. The net results are lower fees,
larger markets, and fewer administrative costs.
 Security and control - Bitcoin users are in full control of their transactions; it is
impossible for merchants to force unwanted or unnoticed charges as can happen with
other payment methods. Bitcoin payments can be made without personal information
tied to the transaction. This offers strong protection against identity theft. Bitcoin
users can also protect their money with backup and encryption.
 Transparent and neutral - All information concerning the Bitcoin money supply
itself is readily available on the block chain for anybody to verify and use in real-time.
No individual or organization can control or manipulate the Bitcoin protocol because
it is cryptographically secure. This allows the core of Bitcoin to be trusted for being
completely neutral, transparent and predictable.

9. DISADVANTAGES
 Degree of acceptance - Many people are still unaware of Bitcoin. Every day, more
businesses accept bitcoins because they want the advantages of doing so, but the list
remains small and still needs to grow in order to benefit from network effects.
 Volatility - The total value of bitcoins in circulation and the number of businesses
using Bitcoin are still very small compared to what they could be. Therefore,
relatively small events, trades, or business activities can significantly affect the price.
In theory, this volatility will decrease as Bitcoin markets and the technology matures.
Never before has the world seen a start-up currency, so it is truly difficult (and
exciting) to imagine how it will play out.
 Ongoing development - Bitcoin software is still in beta with many incomplete
features in active development. New tools, features, and services are being developed
to make Bitcoin more secure and accessible to the masses. Some of these are still not
ready for everyone. Most Bitcoin businesses are new and still offer no insurance. In
general, Bitcoin is still in the process of maturing.

10. CHALLENGES TO BITCOIN
There exist several challenges with the adoption of Bitcoin such as need for an easy way to
exchange Bitcoins for Indian Rupees but their respective solutions are also present to overcome
these simultaneously. Consumers would definitely do well to adapt to this technology quickly.
For say, many beginners generally face the security or privacy issues as they download their
wallet software, create one or two address, and then keep using those addresses for an extended
period of time. If you want privacy, then that is not the best way to use your wallet. The more
you use an address the easier it is for an observer to build up a profile of your activity, whether
for advertising or more sinister purposes, and even to link that activity to your personal identity.
Each time you are going to receive a payment you should create a new address specifically for
that purpose, and then never use that address again afterwards. No matter how many of them
you create, all of your old addresses will still be able to receive payment in case somebody
sends you money using an old address they have on file for you.
Despite the fact that the estimation of Bitcoins has declined pointedly, speculators and industry
professionals believes that with India turning out to be progressively advanced and society
moving toward cashless exchanges, this is going to transform the world of digital transactions.

11. SCOPE OF BITCOIN
In the present digital era, where technology has played a crucial role in transforming the digital
economy of the world, India is no different in taking baby steps while adopting the digital form
of currencies such as Bitcoins. At present, there exist an estimated total Bitcoin turnover of Rs
300 crore in India with a huge user base of around 1,00,000 people. It is also being forecasted
by industry experts that Bitcoin is all set to expand its user base steadily across different parts
of India with their adoption is said to be growing at 200-300 per cent annually in order to bring
a digital revolution.
We are walking ahead in search of a planet where transactions could take place between user
ends digitally and not through the same conventional way. These transactions are verified by
network nodes and recorded in a public distributed ledger called the Blockchain, which
empowers and uses Bitcoin as its unit of account. It is nothing but a smart way to cross
boundaries and check out an innovative as well as quick method to deal with your day to day
financial transactions.
India is painting a picture to become a huge market place where Bitcoin as well as the
Blockchain technology could successfully spread its wings and fly high to reach the destined
place. This innovative step is being backed by both the government as well as private financial
institutions are emphasizing on the growing number of bank accounts for the people. With the
use of this global technology in form of digital currency, everyone can be banked.
A financial infrastructure based on Bitcoin and its underlying technology Blockchain is likely
to herald a revolution like Internet did. India witnesses a history of successfully adopting digital
technologies such as consumption of internet on smartphones, which has seamlessly taken it to
a next level. It shows that people not just want to access internet but to access it on their
smartphones as they are transforming themselves into technologically advanced specimens
who want instant access to everything simply by a touch on screen. It further indicates that
India is ready to adopt digital tools with a very highly-trained, technical workforce and thus, in
turn, suggests that Bitcoin is in the right place at the right time.
India currently has around 50,000 Bitcoin enthusiasts, with 30,000 of them actually owning the
currency. However, being the Bitcoin concept not traditional, some retailers have realized the
advantages of accepting the currency. Apart from that, Bitcoins are quickly transforming from

12. being trading units to shopping currency, eventually giving the Indian e-commerce industry a
boom to avail online transaction with the use of digital currencies.

13. CONCLUSION
Bitcoin is going to gain popularity and might even replace official currencies.
Bitcoins can be helpful to a lot of people. Since they are an international currency, you can use
them in any country without having to convert between currencies. The Blockchain is really
secure and it lets you make sure your money goes to/comes from the right person. People
receiving Bitcoins won't have to pay anything for the transactions, and Bitcoins have a lot of
support. All of these will definitely help Bitcoin get more users, and if everyone uses Bitcoin
it could replace official currencies. Sure, it has some disadvantages, but some of those are
because Bitcoin is a new thing, so as time goes on they will be less of a problem. The others
can easily be avoided.