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How Bitcoin Works Under the Hood

How Bitcoin Works Under the Hood

http://www.youtube.com/watch?v=Lx9zgZCMqXE

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What Is Bitcoin and What Can I Do With It? I think there is a lot of odd questions and misinformation about bitcoins that people still don't understand. 1. While exchanges have been hacked (think of these like stock trading companies but they only buy and sell bitcoins) the base protocol is still secure and is in itself a form of security. 2. A simple explanation of how money moves around the banking system Twitter went mad last week because somebody had transferred almost $150m in a single Bitcoin transaction. This tweet was typical: There was much comment about how expensive or difficult this would have been in the regular banking system – and this could well be true. But it also highlighted another point: in my expecience, almost nobody actually understands how payment systems work.

The reward for mining Bitcoin was just cut in half It’s Halvening!!! Bitcoin just experienced a major milestone in its short little lifespan. The reward for mining a block (a block = a ledger of transaction data) was just cut in half from 25 bitcoins to 12.5 bitcoins. This means that assuming a price of $650 per coin, going forward miners will make ~$8,125 per block they mine, compared to $16,250 before the halving. Lighthouse About a year and a half ago I gave a talk in London titled “The future of Bitcoin and rebuilding the financial system”. Although there were only about a hundred or so people in the room, that talk went on to be watched nearly 36,000 times online. Huge numbers of people have been inspired by how Satoshi planned years ahead; how he didn’t stop at merely moving money around, but went on to imagine astonishing new capabilities …. and plant the seeds of their implementation in the Bitcoin protocol. Since then I get email nearly every day from people who want to talk or learn about Bitcoin’s advanced features. But one question comes up more often than any other – where are all the apps you promised?

The Demographics Of Bitcoin With the growing popularity and perhaps relevance of a globally decentralized currency system in a world adrift in fiat devaluation death-matches, it is perhaps interesting to understand just who these Bitcoin'ers are? The ongoing survey of Bitcoin users (here) has some intriguing results already: The 'average Bitcoin user' is male (96%), 32.7 years old, libertarian / anarcho-capitalist (37%), non-religious (61%), with a full time job (43%), and is in a relationship (56%). The biggest motivation for new users are curiosity, profit, and politics; and 39% of users do not drink, smoke, gamble, or take drugs. Just over half of users have mined bitcoins and the greatest community fear for Bitcoin is “regulatory/legal intervention” followed by ”reputation problems”.

A Strategist’s Guide to Blockchain An expensive work of art changes hands. Neither the buyer nor the seller is named publicly, but the exchange is verified, the provenance of the painting travels with it, and the artwork is automatically insured against theft. A voting machine records votes in a frontier country known for past political corruption. Though there is no central government repository, each vote is tagged to an individual with no duplication. Bitcoin 'Miners' Face Fight For Survival As New Supply Halves - Slashdot SpzToid quotes a report from Reuters: On Saturday, the reward for [bitcoin] miners will be slashed in half. Written into bitcoin's code when it was invented in 2008 was a rule dictating that the prize would be halved every four years, in a step designed to keep a lid on bitcoin inflation. From around 1700 GMT on Saturday, instead of 25 bitcoins up for grabs globally every 10 minutes, worth around $16,000 at the current rate BTC=BTSP, there will be just 12.5. That means only the mining companies with the leanest operations will survive the ensuing profit hit. "The most important thing is to be the most efficient miner," said Streng, the 26-year-old co-founder of German firm Genesis Mining, which has "mining farms" in Canada, the United States and eastern Europe, as well as in Iceland. "When the others drop out, that means that they leave the market and give you a bigger share of the pie."

Bitcoin: It’s the platform, not the currency, stupid! This research is courtesy of Sander Duivestein, professional speaker and trendwatcher at VINT, the International Research Institute of Sogeti, and Patrick Savalle, founder and technical director at Mobbr crowd payments. Bitcoin is big news again. The digital cryptocurrency is on the frontpage of every major newspaper. The Beginners Guide To Bitcoin – Everything You Need To Know - Monetarism - A UK Money and Personal Finance Blog In February 2013, version 0.8.0 of Bitcoin was released. This virtual payments system is the financial equivalent of Latin, the language with no native speakers. In the case of Bitcoin, though, what you are dealing with is a financial structure with no central bank, no one regulatory body as such, and no physical form. That may sound odd – so let’s look in more detail at Bitcoin, how it works, and what its future might be. What is Bitcoin?

Distributed ledger technology: Blackett review This report sets out the findings of a review exploring how distributed ledger technology can revolutionise services, both in government and the private sector. It covers the: technology governance and regulation security and privacy disruptive potential applications in government global perspectives It recommends 8 actions for government to maximise the opportunities and reduce the risks of this new technology. We have made a short video to accompany the report. Accessible Media Player by Nomensa

Bitcoin drops 20% after $70M worth of Bitcoin was stolen from Bitfinex exchange Bitfinex, one of the most popular cryptocurrency exchanges online, has suffered a major hack. The company has posted a note on its website detailing the security breach, and while it doesn’t mention a total amount, one of their employees confirmed on Reddit that the total amount stolen was 119,756 bitcoins. That amount converts to about $77,000,000 based on a price of $650 USD per bitcoin, which is about what bitcoin traded at over the course of the last week.

Game Theory, Assurance Contract and Crowdfunding via Bitcoin One of my majors in college was international politics, and among the course requirements were a number of classes on game theory. It was one of the most interesting parts of my coursework, but I am sure I wouldn’t have believed it if I’d been told that a few years later I’d be spending an afternoon, of my own volition, writing about using the Bitcoin protocol to create assurance contracts. The free rider problem in game theory posits that there are situations in which the creation of a public good (for example, building a road) will provide utility to a group of people and leave everyone better off. However, if there is no way of excluding those who did not contribute, many will make the rational decision to not pay and yet still reap the benefits of others’ contributions. In some cases this means that the public good will not be created, and utility is lower for everyone.

Bitcoin rises - Opinion About a year ago I wrote an article, published on this site, titled "Understanding Bitcoin". It was an attempt at introducing Bitcoin technology and analysing its social implications. Now Bitcoin markets are trading at record prices of over $40. This increase, along with a series of recent developments, marks a new overall state of affairs for this project. To make better sense - beyond the mere market numbers - of the current state of the Bitcoin economy, it is worth it to make a brief recount of the way Bitcoin has evolved in recent months.

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