Bitcoin 101

the currency, the network, the community

 About Me

By day, I run Earthsite, a web

agency for sustainable brands

By night, I’m a Bitcoin

enthusiast

JoeyShepp.com
 Disclaimer
This lecture is not a pitch to invest
in bitcoin

This information is intended for

informational purposes only

I am not a licensed financial

advisor and this is not investment
advice

That said, I do hope to inspire you

to get involved in the Bitcoin
community
 Roadmap
What is Bitcoin and how does it
work?

The currency, the network, the
platform.

How do you use Bitcoin?


For businesses and individuals.

What’s next for Bitcoin?


The next generation of the Internet.

Discussion:

How can Bitcoin be used for local
economies?
 Some
Perspective
First, came the Computer

Who would want

a computer in
their home?

What would you

do with it?
Then, came the Internet

Let anybody publish?

It would be total
anarchy!

Email anybody in the

world?
 Now Bitcoin
Innovations in the science of
cryptology has lead new
ways of connecting people
in a decentralized network.

The foundations of Bitcoin

technology is laying the
groundwork for a truly
equitable global governance
platform.

“The Internet of Money”

What is Bitcoin?
 What is Money?
A medium of exchange

A unit of account

A store of value: Stable supply,

durable, securable, stable
value

Also… widely accepted,

recognizable, fungible,
divisible, transportable,
transferable, hard to
counterfeit
What is Bitcoin?
Bitcoin Popularity
Google Trends and Search Volume
Bitcoin Perspectives
“Bitcoin is a technological
“Bitcoin is Evil”
tour de force.
~ Paul Krugman, Economist
~ Bill Gates, Microsoft Founder

“I think [each Bitcoin] could

be easily worth $100,000 “A virtual currency scheme”
Chris Dixon, VC with ~ European Central Bank
Andressen Horowitz

“Bitcoin is the beginning of "Disruptive to our economy”,

something great: a currency “Ban Bitcoin”, “Well, maybe
without a government, something it’s ok after all.”
necessary and imperative.” US
~Nassim Taleb, Scholar
 “It may not be the
perfect global currency
of the future yet, but
it’s the pioneer of a
global currency.”
~ Sir Richard Branson
Business magnate and investor

Virgin Galactic
Accepts Bitcoin
 GreenBank Capital Inc.

First Public Company to Invest in Bitcoin

!
“I believe that Bitcoin is in the early stages of becoming a revolutionary
payment medium, and GreenBank intends to be actively involved as a bitcoin
incubator and investor.”
!
Danny Wettreich
CEO of GreenBank
Flourishing Startup
Ecosystem
So, what is Bitcoin?

Bitcoin is a decentralized payment

network and new kind of currency
based on cryptographic innovations.
How Bitcoin Works
Bitcoins are generated by anyone with a
Bitcoin Mining application. A certain
amount of work is required for each block
to be mined.

The total amount of Bitcoins is

predictable and limited.

Bitcoins are stored in a digital wallet,

similar to online banking.

Transactions are verified by Miners and

permanently and anonymously stored on
the network.

Bitcoin software is Open Source, meaning https://bitcoin.org/en/how-it-works

anybody can review the code.
Bitcoin Advantages
Delivered person to person
without a bank

Much lower fees in

transferring money

Can be used in any country

Account cannot be frozen

No prerequisites or
arbitrary limits
 What does Bitcoin

look like?
A 256 bit number of 64 1CC3X2gu58d6wXUWMffpuzN9JAfTUWu4Kj
characters (your wallet
password)

Wallets can be stored as an

encrypted file on your
computer or a hidden SD Card

Online Cloud Storage (requires

you trust a company to hold)

Cold Storage (store offline to

reduce risk of hack)

QR Codes & Paper Notes

Brain-Wallets (Memorization)

Soon: Swipe Cards and Phones

The Bitcoin Blockchain
A distributed asset ledger shared by all
participating in the Bitcoin protocol
(Currently near 10,000 “nodes”)

A full copy of a block chain contains

every transaction ever executed

With this information, one can find

out how much value belonged to each
address at any point in history

The Genesis Block was the very first

block that started the Blockchain we
have today.

The Bitcoin Blockchain is currently

16.6gb in size and contains almost
$10B USD in value.

Animated Visualization
Deflationary Currency
Bitcoin is programmed to have a fixed number of bitcoin
(21m) that will ever exist and a fixed rate of releasing
those bitcoin: 25 bitcoin created every 10 minutes.
Predictable and stable.

The theory is that bitcoin will only gain in value over

time because of the limited supply and increasing
adoption. The last 5 years have proved this albeit a rocky
climb.

We are used to a world where a Dollar can’t buy what it

used to. Infact the US Dollar in inflated over 2275% since
1900. InflationData.com

Argentina’s currency currently loses 30% of value per

year, a decision made by the central bank. - Wall Street
Journal

What would a world look like where saving bitcoin made

you money rather than loosing it?
 Satoshi Nakamoto
Anonymous person or group of people
who designed the original Bitcoin and
goes by the pseudonym Satoshi
Nakamoto.

Released the ground-breaking White

Paper “Bitcoin: A Peer-to-Peer
Electronic Cash System” in 2008.

The smaller unit of Bitcoin,

1/100,000,000 has been named
“Satoshi” in homage.

Likely has a lot of Bitcoin, maybe

1,624,250 Bitcoin, or close to a $1
Billion USD.
Bitcoin History
• Bitcoin.org registered by “Satoshi Nakamoto”

2008 • “Bitcoin: A Peer-to-Peer Electronic Cash System” paper posted October

• Bitcoin projected registered at Sourceforge

• Satoshi mines “genesis block” of 50 BTC – January

2009 • Bitcoin v0.1 released on cryptography@metzdowd.com and Usenet
• First bitcoin transaction, #bitcoin-dev on Freenode, v0.2 released

• First offline transaction: 10K BTC for two pizzas

2010 • v0.3 announced, Slashdotted, Mt Gox founded – July
• First specialized GPU hash miners and pooled mining operations

• Bitcoin takes parity with US dollar.

2011 • $31 top of first "bubble", followed by the first price drop
• Dec: $2, minimum after few months

2012 • Dec: $13, slowly rising for a year

• Silk Road busted, arrests for money laundering.

2013 • November: Bitcoin breaks $1,000 in second bubble
• December 2013: Price crashes to $600

• Price fell following the shutdown of MTGOX

2014 • Price continued to fall due to a false report regarding Bitcoin ban in China
• Now (April) stabilizing at $450
What gives Bitcoin value?

• Intrinsic Values Current Bitcoin ~$500.00


Price USD (August 2014)
• No or low transaction fees

• Anonymous, if you want

• Public Ledger (Blockchain) Current Market $7

Capitalization Billion USD
• Platform for future Apps

• Adoption and Demand

• Limited Supply (21m) Estimated $400
Network Value Billion USD

• Deflationary Currency (Winklevoss)
 Bitcoin Legal Status
Samples from April, 2014

Germany:
Private Money
United States: China:
Tax as Property Bank Restrictions
Thailand:
Illegal…
Brazil:
Tax as Property

Australia:
Legal, Tax Guidelines

Wikipedia
Using Bitcoin
 Bitcoin Uses
Store Value Transact Move Money

Limited Supply Lower Fees No or Low Fees

60,000+ Businesses International

Compared to Gold
Accepting Remittances

More Fungible Pseudonymous Pseudonymous

Circumvent
No Storage Costs No Chargebacks
Government Control
 Business Benefits
Accepting is free and requires
no approval

Can be converted immediately

into local currency

No chargebacks

No or low processing fees

Open to a global market

Trackable for easy and

transparent reporting

Support the growth of a

“people’s money”
 Bitcoin Wallets

More secure, but more technical Requires trust, but easier

Buy Bitcoin
Currently, the easiest way to buy bitcoin is through Coinbase.

Coinbase is San Francisco based, supported by $25m in VC funding and makes the
process as easy as online banking.

You simply setup an account and verify your bank can support direct transfer of
funds.

Then you can purchase bitcoin for the now current exchange rate.

Coinbase also works as an online wallet to safely store your bitcoin.

In the coming year technologies will advance to make it easier to you to manage
your own bitcoin and not have to trust a company. Until then, I trust Coinbase
with my coin.
 Bitcoin Exchanges
Exchange currency for
Bitcoin and Bitcoin for
currency.

Usually local to nations

and currencies.

Requires connecting a
local bank account to
transfer money to.

Requires trusting
exchange to transact on
your behalf
Support Local Businesses

coinmap.org provides a map of

local businesses that accept
bitcoin.

yelp.com just announced that

businesses can report if they
accept bitcoin.

Bitcoin ATMs are popping up

everywhere and will soon make it
easy to exchange bitcoin for local
currency where ever you are.
 Donations
Scientific Research: Einsteinium
altecoin is dedicated to raising
funding for cutting edge scientific
research worldwide

Natural Disaster: 13 bitcoin ($6,000+)

donated in bitcoin

Tips: Tip small fractions of bitcoin for

good comments or content

Political Campaigns: Federal

Elections Commission just ruled to
allow $100 or less in bitcoin value.
 Retail Shopping

Buy “Gyft" Cards with Bitcoin to

shop at major retailers including
Target, Whole Foods, Amazon, CVS
and more.

http://www.gyft.com/bitcoin/
 Merchant Services
No or low transaction fees

No chargebacks

No exchange rate risks

Easy setup

No minimums

International payments
The Future of
Bitcoin
 Disruption
Category Disrupted Businesses Disrupted

Remittance Western Union

Digital Payment Paypal, Google, Apple, Amazon

VISA, Mastercard, American

Purchasing
Express, Discover

Donations Campaign Finance

Soon… Trusts, Property Transfer, Stocks

AltCoins
There are 20+ “altcoins” (alternative
bitcoin-inspired) with market caps over
$1 million USD.

Each vary their technology based on

offering different benefits and markets.

Because the technology is open source,

anybody can launch a new type of “coin”.

But the challenge is adoption and that is

where Bitcoin is winning.
 Etherium
Decentralized Contracts
Ethereum can be used to codify,
decentralize, secure and trade just
about anything: voting, domain
names, financial exchanges,
crowdfunding, company governance,
contracts and agreements of most
kind, intellectual property, and even
smart property thanks to hardware
integration. Crowd fund success:
https://www.ethereum.org/ Raised $14 million
and still going
 DACs
Decentralized
Autonomous Communities
/ Corporations

A Distributed Autonomous
Community (DAC) is an
"entity" without any
central point of control,
with a certain agenda,
business plan, and
protocol.
 MaidSafe
Decentralized Internet
The MaidSafe vision is to replace
today's existing server centric and
intrusive systems with a fully
distributed, safe, secure and
private network. A network with
no third party being able to
intercept, copy, steal, sell or
otherwise access the network’s
data.

http://maidsafe.net/ Crowd fund success:

Raised $7 million in 5 hours!
 This Year
Investment Interest

Regulation Welcomed

Reliable Companies ??

Mainstream Adoption ??

Bitcoin ATMs (some)

Price Stabilizing ??
 The Future
Redefining “local”

Developed world leap-

frogs traditional
banking

Integrated with
current payment
systems

DACs
Conclusion
 Bitcoin Summary
Decentralized - No central authority, based on a
networked system

Anonymous - You control your identity

Transparent - Complete transaction history is

stored as a public ledger

Integrity - Transactions are verified by a

distributed network of miners and stored in a
distributed network of user nodes

Distributed - Network is supported by user’s

computers all around the world, cannot be shut
down without shutting down the Internet

Open - Anybody can participate without permission

 A Human Currency
International Currency: Developing world can leapfrogs banks, and developed world
will unBank themselves.

Decentralized: No central bank or government.

Network Effect: The value of the network is greater than the sum of the individuals in
the network.

Deflationary: Because of the fixed number of bitcoin, value will grow over time. No
more printing money to get out of debt crisis.

Math Rules: Current Fiat currency is controlled by a central authority. Bitcoin is

controlled by consensus through equitable mathematical equations.

Beyond Currency: Bitcoin has currency features, but viewing it solely as a currency
ignores its more widespread application
Resources
Bitcoin Foundation

Bitcoin Foundation
standardizes, protects and
promotes the use of Bitcoin
cryptographic money for the
benefit of users worldwide.

Business and Individual

Memberships support Bitcoin https://bitcoinfoundation.org/
development.
Bitcoin Meetup Groups

Local groups to meet

others interested in Bitcoin

Largest groups in: New

York, London, Tel Aviv-
Yafo, San Francisco,
Buenos Aires, Sunnyvale,
Toronto and Santa Monica.

http://bitcoin.meetup.com/
 Let’s Talk Bitcoin
In late April 2013, Adam B. Levine
founded Let’s Talk Bitcoin! as a twice
weekly audio show along with co-
hosts Andreas M. Antonopoulos and
Stephanie Murphy, PhD.

It has now evolved into a content

network of talkshows about Bitcoin.

Highly recommended for Bitcoin

commentary and discussion.

You can subscribe via podcast for

free!
http://letstalkbitcoin.com/
 Bitcoin News

CoinDesk: The Voice of Digital

Currency

NewsBTC: Bitcoin News Service

Bitcoin Magazine: Bitcoin News and

Culture
 Bitcoin Discussion
Bitcoin Subreddit: Links and
Discussion on Bitcoin

Bitcoin Talk: Discussion forum

about all things Bitcoin.
 Video Lectures

Khan Academy: Bitcoin Lectures

Udemy: Bitcoin or How I Learned to

Stop Worrying and Love Crypto

Oditorium University: Introduction to

Bitcoins
 Permacredits
Permacredits are the first true asset-
backed decentralized cryptocurrency,
backed by permaculture.

When you buy Permacredits you are

buying a membership in a global
network of Eco resorts, Sustainable
living spaces, Permaculture farms,
Retreat centers, Eco Developments,
Permaculture Design Schools,
Vegetables, Apps, and more.
http://permacredits.com/
Buy them, sell them, trade them,
vote with them, get paid with them
 Coinality
will work for coins

Coinality is a job board where

employers and job seekers can
connect for job opportunities that
pay in digital currencies such as
Bitcoin, Litecoin, and yes, even
Dogecoin.

Jobs range from one-time to full-

time and negotiations are handled
independently between the two
parties.
https://coinality.com/
 Discussion
How could your business
use bitcoin?