SKASC

TECHNICAL PRESENTATION REPORT ON :-

SUBMITTED BY :

-Arun.P (13bca005)

INTRODUCTION

Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Bitcoin is a network that enables a new payment system and a completely digital money.

In detail, 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 Treasuryto 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.

HISTORY

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. (Although this organization subsequently stopped accepting bitcoin.) October 31, 2008 The white paper publishes… Nakamoto publishers a design paper through a metzdowd.com cryptography mailing list that describes the Bitcoin currency and solves the problem of double spending so as to prevent the currency from being copied.

CREATION OF BITCOIN

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.

WORKING OF BITCOIN

Introduction

The basics for a new user- 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.

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.

PAYMENT METHOD

Using Bitcoin as an Individual

Install the official Bitcoin client on your computer.

To get started using Bitcoin, whether you want to set it up on your phone or online, you'll need to download the client and visit the main Bitcoin page to set up your account on the computer. The client is suitable for Mac, Windows, and Linux. Set up your wallet: Like regular money, you've got to have a place to keep your digital money. Wallets are basically programs that sort and track your digital currency via your account settings. There are a variety of options available, depending on your intentions for using Bitcoin. Software wallets don't run on a third-party service after download. These wallets are operated from your computer, where you'll have to run a local blockchain to keep your transactions anonymous. This is the wallet for which the Bitcoin was originally conceived. Software wallets include:

BitcoinQT

Armory

Multibit

Software Wallets For PC For Mobile Web wallets are always available online, making them probably the most convenient and user- friendly. All you need to do is set up an account and log in. They are, however, potentially somewhat less secure than hardware wallets, though each of these is also compatible with most Mobile phone providers. Web wallet options include: Blockchain Coinbase

Coinjar

Coinpunk

BitGo

ADVANTAGES AND DISADVANTAGES

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.

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.