Bitcoin is a digital currency that operates without a central authority and uses cryptography to control transactions. It allows value to be transferred over the internet instantly without an intermediary. Some key aspects include: 1) there is a finite supply of 21 million bitcoins that are released gradually, 2) transactions are verified and added to the blockchain through mining every 10 minutes, 3) it is decentralized with no single entity in control. The document then discusses how bitcoin works, why it is popular, how the price is set, and principles like being scarce and impossible to copy that make it different from traditional currencies.

1. Revolution in electronic
payments: Bitcoin
Pavel Kravchenko
Lecture 1

2. Plan
What is Bitcoin?
What is the difference from PayPal etc?
Why is it so popular?
How Bitcoin price is set?
How emission is implemented?
What are the principles of Bitcoin?
How does Bitcoin work?

3. What is Bitcoin?
It is like electronic gold:
Scarce
Hard to find
Impossible to copy
Nobody controls

4. Major differences from other e-money
Currency but not just a payment system
Cannot be “printed”
Cannot be destroyed by attack on some server
There is no company behind Bitcoin
Bitcoin is electronic cash and not debt notes from some
issuer
Bitcoin is the first system that allows moving value over the
internet

5. Why Bitcoin is so popular?
No inflation
Decentralized
Relatively anonymous
You can pay to
anybody, anywhere,
instantly

6. How price of Bitcoin is calculated?

7. Numbers
> 3000000 users worldwide
~ 100000 businesses accept Bitcoin
$10-100M daily trade volume
> $3.3B capitalization (May, 2015)

8. How emission is set?
1. Maximum amount in circulation: 21 million (by 2140 year)
2. In the beginning there were 0 bitcoins
3. Every ~10 minutes new bitcoins are coming to existence

9. Principles of Bitcoin
Each participant stores all transactions in the system at their own
database
Order of transactions in this database is fixed
Adding new transaction to the chain requires verification and
execution of some hard work
Everybody should do transaction verification – which is the key to
system's stability
Transactions are verified every 10 minutes, only one participant
becomes the first to do that
New coins appear in the system as reward for transaction verification

10. Principles of Bitcoin
Code of Bitcoin is open source
Only owner of the private key can spend funds
All decisions are made by simple majority
Fees are taken by participants and set on their
own decision

11. Questions?
kravchenkopo@gmail.com
ideateam_macuser
ua.linkedin.com/in/pkravchenko/