1. Kermit Lowry, John Whatley, Wesley Cooper, and Matthew Eith
Bitcoin
Kermit Lowry, John Whatley, Wesley Cooper, and Matthew Eith

2. What is Bitcoin? Digital currency created in 2009
Peer-to-peer technology with no central authority
No physical bitcoins; seen as property by IRS
Price is volatile
Uses blockchain technology
Anonymous

3. What is Blockchain?
Decentralized database with ledger of all transactions
“Blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value — money, but also titles, deeds, identities, even votes — can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries like governments and banks.” -Don Tapscott
Not only associated to Bitcoin, but that was its first and most prominent use

4. How does it work? To naked eye nothing more than an app or ewallet
Bitcoins can be transferred by providing a digital wallet address
Blockchain keeps ledger of every transaction

5. Bitcoin Exchanges Allow people to buy and exchange bitcoins
Bitcoins can be transferred in matter of minutes
Top Exchanges
Coinbase
Localbitcoins
Mt. Gox
Kraken

6. Bitcoin Value History Jan 2009 - Mar 2010 - $0
Feb April $1.00
July $31.00
December $2.00
April $266.00
June $100.00
Nov $350-$1,242
January $750-$1000
May–June $450-$750
March $1,290+
June 11th, $2900

7. Mining
Mining doesn’t create bitcoins, instead bitcoins are rewarded for validating blocks that are composed of transactions.
Blocks are considered valid if they contain a proof of work.
Bitcoin uses the hashcash proof of work function.
Bitcoin miners compete to find an input that gives a specific hash value
Difficulty is measurable and is increased every 2 weeks

8. Mining
Each block is created in sequence using the hash of the previous block, proving the order of the blocks.
Transactions need to be ordered in order to prevent double spending.
If multiple blocks are created at the same time, then whichever branch generates a new block first is considered valid.

9. Mining
Mining requires processing power which is translated into hardware, time, and energy.
Mining can be done with your computer’s CPU or GPU, but special technology has been made to specifically mine bitcoins, called application-specific integrated circuit, ASIC.
Profitability is hard to determine based on fixed and variable costs and fluctuation in price level.

10. Encryption Fundamental to understanding cryptocurrencies
Encrypting with a password is single-key
Dual-key encryption uses two keys
If one key is used to encrypt, the other key can be used to decrypt and vice versa
However, the key that encrypted CANNOT decrypt

11. Encryption A key (like a password) can encrypt data Key
Unencrypted Data

12. Encryption Use the key to encrypt data Key Unencrypted Data

13. Encryption Use the same key to decrypt the data
Problem is you have to give away the key
Key
Unencrypted Data
Encrypted Data

14. Dual Key Encryption There are two passwords Keys are made in pairs
One key cannot be used to find the other
Key 1
Key 2
Unencrypted Data
Encrypted Data

15. Dual Key Encryption Encrypt with the first Key Key 1 Key 2
Unencrypted Data
Encrypted Data

16. Dual Key Encryption Decrypt with the second Key Key 1 Key 2
Unencrypted Data
Encrypted Data

17. Dual Key Encryption Encrypt with the second Key Key 1 Key 2
Unencrypted Data
Encrypted Data

18. Dual Key Encryption Decrypt with the first Key Key 1 Key 2
Unencrypted Data
Encrypted Data

19. Dual Key Encryption
Remember, If you only have one key you can’t decrypt your own data!
Key 1
Unencrypted Data
Encrypted Data

20. Dual Key Encryption
Although keys are usually made together, one key is kept private (your wallet) and the other is public
Therefore, if you want to receive payment, you tell them your public key to encrypt the data
Now nobody, not even the person who encrypted it, can read the encrypted data except you
This relationship works backwards too. If you want to send a payment you use their public key.
Key 1
Private
Key 2
Public

21. Advantages Reduced transaction costs
Some firms providing protection against volatility (BitPay.com & Coinbase.com )
Makes accounting more transparent
Payouts can be received faster

22. Disadvantages
Volatility still exists for large investors such as banks or hedge funds
Not regulated so the amount in circulation can vary
Cyber Security
A major Government could block internet traffic
Competition from other digital currencies
Taxes (IRS treats it as property)
Failing payout system

23. Ethics Paul Krugman “Bitcoin is Evil” (Nobel Prize Winning Economist)
Taxes
Keeps Funds from Banks
What it is used to purchase

24. Questions?

25. Sources https://www.entrepreneur.com/article/237026
10-arguments-against-as-of-december-2015/#1edae
technology-stocks.html