Bitcoin: Creation, Circulation, Usage, Problems & Advantages - Currency of Internet

Expect atleast one question in your exam from this lecture!
Dr. Manishika Jain explains tCreation, Circulation, Usage, Problems & Advantages of Bitcoins - Cryptocurrency
"If you can't explain it simply, you don't understand it well enough." - Albert Einstein
Why Use Bitcoin?
Peer to peer
Account cant be closed
On digital wallet
Simple as email
Secured by Miners (rewarded for maintaining ledger)
Changing finance
Minimize transaction fee
Cannot be frozen & blocked

Cryptocurrency - Anonymous
Crypto = Hidden
Key
Signature
Bitcoin/Altcoins – 1st decentralized cryptocurrency in 2009

Why Use Bitcoin? @4:014
Cryptocurrency – Anonymous @6:49
Double Spending Problem @8:15
Open Ledger @10:27
Distributed Open Ledger @11:47
Miners @12:53
Block Chain @17:37
Block Chain – Public Distributed Ledger @21:30
Bitcoin Circulation @22:48
History of Cryptocurrency @23:04
Algorithms @24:11
SHA-2 @24:14
Scrypt @24:33
Bitcoin (BTC, XBT) @24:48
Satoshi @25:58
Why Bitcoin Fluctuates @27:33
Who Accepts? @29:37
Global Scenario @30:04
Bitcoin in India @31:18
Bitcoin Thefts @32:52
Mt. Gox @33:09
Bitfinex @ 33:49
#Bitcoin #Ledger #Centralized #Anonymous #Decentralized #Transaction #Frozen #Rewarded #Einstein #Manishika #Examrace


Double Spending Problem
Open Ledger
Chain of transactions
Open & public
Decide valid/not valid
Centralized place



Block Chain
New group of accepted transactions
6 times every hour – blocks made
Nonce: Arbitrary number may only be used once

Block Chain – Public Distributed Ledger
Its not bitcoin but backend of bitcoin
Ledger is open and public
Ledger exists in many nodes - decentralized
Removes dependency on 3rd party
No trusted entity
Faster/Immediately
Cheaper
For new block – 12.5 BTC
Every hour 12.5×6=75 BTC
After 2.1 lakh block (4 years), amount of BTC is halved – ultimately zero BTC – only transaction fee
Bitcoin Circulation
21 million bitcoins in 100 years
About over 13 million bitcoins in circulation by 2014
8 million bitcoins will be mined in next 95 years
History of Cryptocurrency
1998: We-Dai – b-money – distributed electronic cash system
BitGold by Nick Szabo
2009: Bitcoin - used SHA-256, a cryptographic hash function, as its proof-of-work scheme
2011: Namecoin
2011: Litecoin - used scrypt as its hash function
Peercoin: proof-of-work/proof-of-stake hybrid
2014: Treasury
Algorithms
SHA-2 (Secure Hash Algorithm 2) by NSA - cryptographic hash functions
Scrypt: Password-based key derivation function – make it difficult to do hardware attacks
Bitcoin (BTC, XBT or )
Key and Signature
Signatures are unique
By Satoshi Nakamoto
31 May 2017: 1 bitcoin = $2257.96 or Rs. 143126.45
Mathematically limited to 21 million bitcoins


Satoshi
Satoshi / Austrian – one hundred million of BTC (smallest unit)
Japanese character シ ("shi") - proposed
Katakana symbol サ ("sa") - proposed
Circled shi (㋛)
Hiragana shi (し)
Why Bitcoin Fluctuates?
Rate in 2010 ($0.08)
USA (buy – uptick)
Zambia (sell – downtick) 30 minutes later
Decrease in Bitcoin rate by:
Merchants accepting Bitcoin
Miners “cashing out” to pay bills with fiat
Redemption of transmission bitcoin
Conversion of bitcoin salaries to fiat (increase in unused bitcoin)
Who Accepts?
More than 1 lakh retailers
Wallet applications
Apple
Dell
Newegg
e-Bay
Dish Network


Global Scenario
Japan – Bitcoin made legal (law passed)
Australia – removed double tax on bitcoin users
Bangladesh – Illegal – 12 years in jail
Kyrgyzstan – Illegal (no prohibition from buying and selling)
Ecuador – banned (creating its own virtual currency)
Bolivia – Banned
Vietnam – prohibits credit institutions from dealing in cryptocurrency
Bitcoin in India
BTCXIndia: 1st bitcoin exchange in India with KYC and AML guidelines
Unocoin
Zebpay – 5 lakh app downloads & 2,500 users per day are added
Fiat is needed to purchase Bitcoin to enter market in India – entry by donations, services or mining
Still researching on bitcoin to make it legal
Market acceptance, customer trust, investment security, money laundering, hawala
Bitcoin Thefts
Mt. Gox –mtgox.com, short for "Magic: The Gathering Online eXchange’ in 2006. World’s leading bitcoin exchange in 2013-14 - 850,000 bitcoins were stolen which amounted to $450 million & finally bankruptcy declared
Bitfinex - $72 million stolen in Hong Kong based exchange - customers would forfeit 36% of their holdings and be given "BFX tokens" instead that could be redeemed by the exchange or converted to shares in its parent company iFinex.


Join our fully evaluated UPSC Geography optional test series at - https://www.doorsteptutor.com/Exams/I..., Post evaluation get personalized feedback & improvement call for each test.

Ready-made fully solved questions for GS at https://www.doorsteptutor.com/Exams/I...

Don't miss preparing for IAS CSAT Paper II - http://www.examrace.com/IAS/IAS-Flexi... #examrace #upsc #ugcnet