Bit coin fiat_barcampbangalore BCB11 Feb 2011

About Myself

Akhil Kodali (@akhilkodali)

Work for Lexity Labs, Bangalore - Simple advertising for ecommerce.

My Background

I am no expert on BitCoins

I am reasonable common sense “expert” on monetary system

Cryptography gives me headache

Like http://www.anti-powerpoint-party.com/

Some background

Fiat Money Defined

any money declared by a government to be legal tender

state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard

money without intrinsic value

-wikipedia

So?

fiat itself is not the problem but people in charge of that fiat money

Characteristics of Money

Durability

Portability

Divisibility

Uniformity

Limited Supply

Acceptability

http://www.flickr.com/photos/sokwanele/2073320987

Recently...

The RBI said year-on-year reserve money growth was 11% in the week to Feb. 3, compared with 24.5% a year earlier.

http://economictimes.indiatimes.com/markets/money-markets/january-27-money-supply-grows-14-4-on-year-rbi/articleshow/11806572.cms

>30% CAGR 3 year period before that

asset liability mismatch?

Mother Nature provides real assets all else is 'Maya'

Remember Remember...

Feeling patriotic !?

Geeks fight back

Why should Indians care?

Current perception RBI saved is from the world wide banking crisis...yes true...but

Its has miserably failed to save us from Inflation

It has always favoured the needs of the government of the day rather than save Indians from the monster of Inflation

Look around...significant chunk of the loans are given to entities who can influence the government machinery i.e. Large corporates and realtors

Small businesses still find it extremely hard to raise loans from banks...the reality on the ground and numbers speak for themselves

The banking system is getting more and more derivative based(euphemism for hiding risks) inspite of 2007/08

Answer is self evident

We need a system where individual liberties are up held

No Inflation

No Central Control

Independence form governments and bankers

Low transaction costs

Bankers and financiers should actually “allocate capital” instead of making a killing on transactions

What is Bitcoin?

A digital currency powered by a peer to peer network, used primarily for internet transactions.

Features

Anonymous as Cash...not really but close enough

No rollback

No central control

No Inflation

How does bit coin work

“Owners transfer bitcoins by sending them to another Bitcoin address using a website or program designed for this purpose. Under the hood, the software transfers the coins by generating a digital signature to link the prior transaction with the public key of the next owner. Bitcoin nodes record all data necessary to make any valid transaction in a publicly distributed database called the block chain. Nodes build the block chain using a proof-of-work system that prevents double-spending and confirms transactions”

Do you see disruption?

Postal service – email

Banking system – bitcoin

Why should I care about banking?

Look around

OMO

Customer Support – seriously?

...

Outrageous fees

Pay to store?

RBI's OMO

Tulip Mania?

Govt Vs Math

Rise and fall

Fall and Rise?

Money is information?

Wallet (Desktop and online)

10-8

Black economy

Good drive out bad?

Bitcoin Mining

Generating Blocks used to record bitcoin transactions over the network. Blocks are necessary to prevent double spending.

Miners are awarded Bitcoins for generating Blocks (Currently 50BTC per Block + Transaction Fees)

1 Block is generated every 10 minutes

Bitcoins mining will end at 21 million coins in 2140

The rate of generation is slowing down exponentially

Satoshi Nakamoto – The Mystery?

Pseudonym, no one knows his/her/their real identity and email address

Started working on it in 2007

Published in 2008

First transaction in 2009 – The Genesis Block

Left the project in 2010

Disappeared in 2011

Team of volunteer developers working now

Risks?

No cost transfer (anonymous?)

Control Inflation

Revenge of GeeksGeeks are becoming “Monetary Scientists”

This is a good thing as opposed to government mouth pieces(keyensian economists)

Bitcoin is designed to fight big brother's control on us

Not Anonymous

Does not scale – in the long term

“Let's assume an average rate of 2000 tps, so just VISA …. Shifting 60 giga bytes of data in, say, 60 seconds means an average rate of 1 giga byte per second, or 8 giga bits per second.”

>200MB of history

Switches to a banking model as things get big

Banks Again?

Can't Create Money

Can't Steal Money

Can reject blocks though

SHA risk?

I hate banks

40 – 200 petaflops

Several times largest supercomputer

Pools

#1 41%

#2 30%

“Security through ostracism”

DDOS against #1

Not banks again

Random names equals anonymity

Fights fragmentation

Morphes into a banking system

http://bitcoin.stackexchange.com/

I need to add more sources

Most of the content has been picked up from other source.

Please let me know so that I can(I need to) acknowledge them

Q & A