19. Resources
Bitcoin.org
Visualizing a Bitcoin Transaction
http://bit.ly/bitcointransaction
NY Times Article: Why Bitcoin Matters
http://nyti.ms/1cQPoqa
Coinbase.com
LocalBitcoins.com
Notes de l'éditeur
Perhaps you’ve heard of Bitcoin.If you haven’t Bitcoin is digital cash designed to enable people to send money over the Internet without credit cards or bank accounts.It’s been getting a lot of attention lately so I thought I’d share this quick presentation with you.There’s a lot to say about Bitcoin and I can’t say it all in 20 slides, so this will be very high-level.
Bitcoin isn’t a physical currency created by a government.No one runs Bitcoin.It’s based on a computer program written by a bunch of brainiacs. Here you can see some of the actual code behind Bitcoin.Because it’s open source, the code has been reviewed by thousands of experts, so there are no secrets or hidden surprises.
Bitcoin is called a cryptocurrency because it is based on very strong cryptography.This cryptography is used to find new Bitcoins and ensure that all the transactions are authentic.Many people think, and I agree, that the cryptography is what makes Bitcoin so powerful and special.
One of the most important parts of Bitcoin is called the block chain.The block chain is a ledger, sort of like this ledger, except electronic.It is a permanent public record of all Bitcoin transactions.That means all Bitcoin activity is visible, although you don’t necessarily know who is behind all that activity.The block chain prevents people from spending Bitcoins more than once.That allows Bitcoin to function without a central authority.
Even though the word “coin” is in its name, Bitcoin is not an actual coin. Remember, Bitcoin is digital.You might see images like this that show Bitcoin as coins.These aren’t spendable coins like the ones you might have in your pocket.These are novelty tokens that are actually Bitcoin wallets.They can hold any value of Bitcoin or no value at all.
Most Bitcoin wallets are on smart phones, computers, or the Internet.A wallet works a bit like email.Every wallet has an address. You can have as many addresses as you want.To send someone some Bitcoin, you tell your wallet to send a specific amount to that person’s address.For more info about wallet addresses: https://en.bitcoin.it/wiki/Address
Since Bitcoin is really just a bunch of numbers, you can have a Bitcoin wallet made out of paper, like this one.If you look closely, you can see the address for loading the wallet with Bitcoin.There is also a private key that you need to keep secret. If someone gets your private key, they can spend your Bitcoin!
One of the reasons why so many people like Bitcoin is they see it as a way to take power away from governments and organizations that they feel are mismanaging our financial system.In fact, a lot of people believe that banks as we know them today would become obsolete in a Bitcoin economy.The more people and business use Bitcoin, the less need there is for traditional banks.
Another advantage of Bitcoin is it is not centrally managed by self-important bureaucrats or bankers.Just like the Internet, no one can turn off Bitcoin.No one can dilute the value of Bitcoin by creating more of them out of thin air.No bank or government can freeze your account or take your money away from you like what happened in Cyprus in 2013.
Some people think that Bitcoin transactions are completely anonymous.They aren’t exactly anonymous, though, because all transactions are on the block chain.They can be very private, though, especially if you use different addresses in your wallet every time someone sends you money.If you use the same address over and over, and it’s linked to you, people can figure out how much money you have and where you spend it.
Bitcoin is a lot more secure than using credit cards.How many times have we heard about credit card data being stolen?Stolen credit card data leads directly to identity theft, which has ruined people’s lives.With Bitcoin, no personal data is ever exchanged during transactions.Also, since Bitcoin is digital, you can back-up your Bitcoin in case you ever lose your primary wallet.Try doing that with cash!
Another reason why people are excited about Bitcoin is they think it will make them rich.The value of Bitcoin to USD has risen significantly over the last year and there are people who have become Bitcoin millionaires. A lot of people believe there is still opportunity for people to benefit from the rising price of Bitcoin.
This chart shows the value of Bitcoin to USD in the last 12 months.You can see that Bitcoin was worth around $20 in February 2013.It had a huge spike to more than $1200 in November, then leveled out to the $900 to $1000 range, where it is today.Some people believe that the value of Bitcoin has a lot higher to go, and this spike in November will look like the small spike back in April.
Meanwhile, more and more online and brick and mortar merchants are starting to accept Bitcoin.Don’t be surprised to see signs like these start popping up at stores this year.Merchants realize they can make more money and won’t get chargebacks if they use Bitcoin.
You can find local stores that accept Bitcoin by going to Coinmap.org.This is a map of Vancouver, BC, showing all the places where you can buy things with Bitcoin.I looked at the map of Seattle, but it didn’t have nearly as many places accepting Bitcoin as Vancouver did. Go figure.Vancouver also has a Bitcoin ATM, where you can buy Bitcoin from a machine and go spend it in one of these shops.
One of the reasons why merchants are embracing Bitcoin is because they pay very low transaction fees, usually fractions of a penny.This saves them a lot of money since credit card companies charge several percent per transaction.Businesses can choose to hold the Bitcoin if they think it will maintain or increase its value.Or they can instantly sell their Bitcoin for USD.
If you want to get started with Bitcoin, it’s pretty easy.One of the quickest ways to do it is to open a free account on Coinbase.com.You’ll connect your Coinbase account to your bank account.Once that’s done, you can easily transfer money from your bank account to Coinbase to buy Bitcoin.Because Coinbase is an online wallet, you can then transfer your Bitcoin wherever you want from there.Coinbase also has buttons you can create to place on your website to accept Bitcoin for products or services.
You can also buy Bitcoin from people in your local area.Just go to LocalBitcoins.com and enter your city. You’ll see a list of people interested in buying or selling Bitcoin. Find the person closest to you with the right price and set up a place and time to meet.I’ve done this several times and it was fun to meet people in the area who are also interested in Bitcoin.
Here are some resources for you to find out more about Bitcoin.Bitcoin.org is a great place to start.You can get a very detailed picture of exactly how a Bitcoin transaction works here: http://bit.ly/bitcointransactionFor an excellent overview of Bitcoin that even your mom could understand, I recommend reading the NY Times article “Why Bitcoin Matters”And to get started with Bitcoin, I recommend looking into Coinbase.com and LocalBitcoins.com
That concludes my presentation.I hope you learned something new about Bitcoin.I strongly encourage you to research this topic further.You’re going to be hearing more and more about Bitcoin and the better you understand it, the quicker you’ll be able to take advantage of it.