An introduction.

William K. Santiago (william@wksit.com)

Twitter (#williamsantiago)
Certified Bitcoin Professional (CBP ID 69d4e6)

Think about it for a second:

The internet is killing the worlds
most powerful mediators, slowly but
surely.

Think about it for a second:

The internet is killing the worlds
most powerful mediators, slowly but
surely.
Yet it has barely touched finance.

We will discuss...

We will discuss...
What is money?

We will discuss...
What is money?
What makes bitcoin a different kind of money?

We will discuss...
What is money?
What makes bitcoin a different kind of money?
How does bitcoin work? (micro + macro)

We will discuss...
What is money?
What makes bitcoin a different kind of money?
How does bitcoin work? (micro + macro)
Fresh numbers from the bitcoin economy

We will discuss...
What is money?
What makes bitcoin a different kind of money?
How does bitcoin work? (micro + macro)
Fresh numbers from the bitcoin economy
Why bitcoin is so good, that it simply cant fail

We will discuss...
What is money?
What makes bitcoin a different kind of money?
How does bitcoin work? (micro + macro)
Fresh numbers from the bitcoin economy
Why bitcoin is so good, that it simply cant fail
Why bitcoin can fail

Lets talk about money first.

Lets talk about money first.

Money is a medium to store and exchange economic
value
Was invented to replace barter (inefficient)
Money can be exchanged for goods and services (including
other money)
Historic examples: shells, boards, gold

Lets talk about money first.

Money is a medium to store and exchange economic
value
Was invented to replace barter (inefficient)
Money can be exchanged for goods and services (including
other money)
Historic examples: shells, boards, gold

7 things that a good currency must be:

Acceptable, Divisible, Durable, in limited supply, Portable, Uniform,

Stable

Lets talk about money first.

Money is a medium to store and exchange economic
value
Was invented to replace barter (inefficient)
Money can be exchanged for goods and services (including
other money)
Historic examples: shells, boards, gold

7 things that a good currency must be:

Acceptable, Divisible, Durable, in limited supply, Portable, Uniform,

Stable

Value of a currency: balance between supply and

demand

Lets talk about money first.

Money is a medium to store and exchange economic
value
Was invented to replace barter (inefficient)
Money can be exchanged for goods and services (including
other money)
Historic examples: shells, boards, gold

7 things that a good currency must be:

Acceptable, Divisible, Durable, in limited supply, Portable, Uniform,

Stable

Value of a currency: balance between supply and

demand
Does money come with guarantee of value?

Lets talk about money first.

Money is a medium to store and exchange economic
value
Was invented to replace barter (inefficient)
Money can be exchanged for goods and services (including
other money)
Historic examples: shells, boards, gold

7 things that a good currency must be:

Acceptable, Divisible, Durable, in limited supply, Portable, Uniform,

Stable

Value of a currency: balance between supply and

demand
Does money come with guarantee of value?
Strong guarantee: intrinsic (Gold)

Lets talk about money first.

Money is a medium to store and exchange economic
value
Was invented to replace barter (inefficient)
Money can be exchanged for goods and services (including
other money)
Historic examples: shells, boards, gold

7 things that a good currency must be:

Acceptable, Divisible, Durable, in limited supply, Portable, Uniform,

Stable

Value of a currency: balance between supply and

demand
Does money come with guarantee of value?

Strong guarantee: intrinsic (Gold)

Medium guarantee: convertible into a resource with intrinsic value

Lets talk about money first.

Money is a medium to store and exchange economic
value
Was invented to replace barter (inefficient)
Money can be exchanged for goods and services (including
other money)
Historic examples: shells, boards, gold

7 things that a good currency must be:

Acceptable, Divisible, Durable, in limited supply, Portable, Uniform,

Stable

Value of a currency: balance between supply and

demand
Does money come with guarantee of value?

Strong guarantee: intrinsic (Gold)

Medium guarantee: convertible into a resource with intrinsic value

Big B, little b
Bitcoin (BIG B) is the technology.
bitcoin (little b) is the currency.
Currently is only the first wave of innovation coming
fromt the technology.

bitcoin is money.

bitcoin is money.
From the Washington Post:

bitcoin is: an electronic cash

system that allows online payments
to be sent directly from one person
to another without going through a
financial institution (like a bank) or a
third party (like PayPal).
It has (almost) all the properties of a good currency.

bitcoin is money.
From the Washington Post:

bitcoin is: an electronic cash

system that allows online payments
to be sent directly from one person
to another without going through a
financial institution (like a bank) or a
third party (like PayPal).
It has (almost) all the properties of a good currency.
The Problem of Double Spending Solved

But its a different kind of money.

But its a different kind of money.

bitcoin has all the properties of a good currency,

remember?

But its a different kind of money.

bitcoin has all the properties of a good currency,

remember?
What makes it different?

But its a different kind of money.

bitcoin has all the properties of a good currency,

remember?
What makes it different?
Its completely digital (owning bitcoin is cryptographic
digital information)

But its a different kind of money.

bitcoin has all the properties of a good currency,

remember?
What makes it different?
Its completely digital (owning bitcoin is cryptographic
digital information)
Its completely decentralized and not owned by anyone
(company, country)

But its a different kind of money.

bitcoin has all the properties of a good currency,

remember?
What makes it different?
Its completely digital (owning bitcoin is cryptographic
digital information)
Its completely decentralized and not owned by anyone
(company, country)

But its a different kind of money.

bitcoin has all the properties of a good currency,

remember?
What makes it different?
Its completely digital (owning bitcoin is cryptographic
digital information)
Its completely decentralized and not owned by anyone
(company, country)

Micro: how do you use bitcoin?

Micro: how do you use bitcoin?

Install an open source wallet software (or choose an
online wallet)

Micro: how do you use bitcoin?

Install an open source wallet software (or choose an
online wallet)
The wallet will create:

Micro: how do you use bitcoin?

Install an open source wallet software (or choose an
online wallet)
The wallet will create:
Your address: 13v8NB9ScRa21JDi86GmnZ5d8Z4CjhZMEd

Micro: how do you use bitcoin?

Install an open source wallet software (or choose an
online wallet)
The wallet will create:
Your address: 13v8NB9ScRa21JDi86GmnZ5d8Z4CjhZMEd
Your private key:
5KJvsngHeMpm884wtkJNzQGaCErckhHJBGFsvd3VyK5qMZXj
3hS

Micro: how do you use bitcoin?

Install an open source wallet software (or choose an
online wallet)
The wallet will create:
Your address: 13v8NB9ScRa21JDi86GmnZ5d8Z4CjhZMEd
Your private key:
5KJvsngHeMpm884wtkJNzQGaCErckhHJBGFsvd3VyK5qMZXj
3hS

Receiving bitcoin is like receiving email: just give

your address to someone else.
else
Sending bitcoin is like sending email: just put the
recipients address, choose amount and press send

Micro: how do you use bitcoin?

Install an open source wallet software (or choose an
online wallet)
The wallet will create:
Your address: 13v8NB9ScRa21JDi86GmnZ5d8Z4CjhZMEd
Your private key:
5KJvsngHeMpm884wtkJNzQGaCErckhHJBGFsvd3VyK5qMZXj
3hS

Receiving bitcoin is like receiving email: just give

your address to someone else.
Sending bitcoin is like sending email: just put the
recipients address, choose amount and press send.
How to buy bitcoin in the first place?

Macro: bitcoin in numbers

Macro: bitcoin in numbers

BTC/USD rate: 291 USD

Macro: bitcoin in numbers

BTC/USD rate: 291 USD
Total bitcoins today: ~13.9M

Macro: bitcoin in numbers

BTC/USD rate: 291 USD
Total bitcoins today: ~13.9M
Market cap today: ~4.06 bn USD

Macro: bitcoin in numbers

BTC/USD rate: 291 USD
Total bitcoins today: ~13.9M
Market cap today: ~4.06 bn USD
Total active bitcoins wallets (accounts): 3.5M~

(source: reddit)

Macro: bitcoin in numbers

BTC/USD rate: 291 USD
Total bitcoins today: ~13.9M
Market cap today: ~4.06 bn USD
Total active bitcoins wallets (accounts): 3.5M~ (source: reddit)
bitcoin transactions daily: 85-107k (100k-200k BTC, 50-100M USD)

Macro: bitcoin in numbers

BTC/USD rate: 291 USD
Total bitcoins today: ~13.9M
Market cap today: ~4.06 bn USD
Total active bitcoins wallets (accounts): 3.5M~ (source: reddit)
bitcoin transactions daily: 85-107k (100k-200k BTC, 50-100M USD)
Businesses accepting bitcoins globally: ~80k

Macro: bitcoin in numbers

BTC/USD rate: 291 USD
Total bitcoins today: ~13.9M
Market cap today: ~4.06 bn USD
Total active bitcoins wallets (accounts): 3.5M~ (source: reddit)
bitcoin transactions daily: 85-107k (100k-200k BTC, 50-100M USD)
Businesses accepting bitcoins globally: ~80k
You can divide 1 bitcoin down to the level of 0.00000001
BTC

Macro: bitcoin in numbers

BTC/USD rate: 291 USD
Total bitcoins today: ~13.9M
Market cap today: ~4.06 bn USD
Total active bitcoins wallets (accounts): 3.5M~ (source: reddit)
bitcoin transactions daily: 85-107k (100k-200k BTC, 50-100M USD)
Businesses accepting bitcoins globally: ~80k
You can divide 1 bitcoin down to the level of 0.00000001 BTC
$335M are expected to be invested in bitcoin startups in
2014 (source: Bloomberg, Coindesk)

Macro: bitcoin in numbers

BTC/USD rate: 291 USD
Total bitcoins today: ~13.9M
Market cap today: ~4.06 bn USD
Total active bitcoins wallets (accounts): 3.5M~ (source: reddit)
bitcoin transactions daily: 85-107k (100k-200k BTC, 50-100M USD)
Businesses accepting bitcoins globally: ~80k
You can divide 1 bitcoin down to the level of 0.00000001 BTC
$335M are expected to be invested in bitcoin startups in
2014 (source: Bloomberg, Coindesk)
Biggest bitcoin wallet (account) contains 144,000 BTC.
And it belongs to

Macro: Digital & Decentralized

explained.

3
1

This is the global bitcoin

network.
Its distributed:

Macro: Digital & Decentralized

explained.

3
1

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.

Macro: Digital & Decentralized

explained.

3
1

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions

Macro: Digital & Decentralized

explained.

3
1

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions.
In fact, there are no
servers at all. All nodes
are equal

Macro: Digital & Decentralized

explained.

3
1

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions.
In fact, there are no
servers at all. All nodes
are equal.
Every node holds the
complete state of the

Macro: Digital & Decentralized

explained.
Address

Balance (BTC)

100

200

300

3
1

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions
In fact, there are no
servers at all. All nodes
are equal
Every node holds the
complete state of the

Macro: Digital & Decentralized

explained.
Address

Balance (BTC)

100

3
1
Sender

Receiver

Amount
200

Signature

300

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions
In fact, there are no
servers at all. All nodes
are equal
Every node holds the
complete state of the

Macro: Digital & Decentralized

explained.
Address

Balance (BTC)

100

3
1
Sender

Receiver

Amount
200

Signature

10

300

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions
In fact, there are no
servers at all. All nodes
are equal
Every node holds the
complete state of the

Macro: Digital & Decentralized

explained.
Address
Address

Balance (BTC)
Balance (BTC)

1
1

100
100

3
90

1
Sender
1

2 Receiver
2
2

Amount
200
10

200

Signature

210
1

300
300

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions
In fact, there are no
servers at all. All nodes
are equal
Every node holds the
complete state of the

Macro: Digital & Decentralized

explained.
Address
Address

Balance (BTC)
Balance (BTC)

1
1

100
100

3
90

1
Sender
1

2 Receiver
2

Amount
200

10

10

200

Signature

210
1

300
300

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions
In fact, there are no
servers at all. All nodes
are equal
Every node holds the
complete state of the

Macro: Digital & Decentralized

explained.
Address
Address
Address

Balance (BTC)
Balance (BTC)
Balance (BTC)

1
1
1

100
100
90

3
1
Sender
1

2 Receiver
2
22

90

Amount
200

Signature

10

200 210
200
10 210
1

300
300
300

310

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions
In fact, there are no
servers at all. All nodes
are equal
Every node holds the
complete state of the

Macro: Digital & Decentralized

explained.
Address
Address
Address

Balance (BTC)
Balance (BTC)
Balance (BTC)

1
1
1

100
100
90

3
1
Sender
1

2 Receiver
2
22

2
3

90

Amount
200

Signature

10

30

200 210
200
10 210
1

300
300
300

310

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions
In fact, there are no
servers at all. All nodes
are equal
Every node holds the
complete state of the

Macro: Digital & Decentralized

explained.
Address
Address
Address
Address

Balance (BTC)
Balance (BTC)
Balance (BTC)
Balance (BTC)

1
1
1
1

100
100 90
90
90

3
1
Sender
1

2 Receiver
2
22
2

2
3

Amount
200

Signature

10

30

3
3

200 210
200
10 210
200 1230

300
300
300 310
310 280

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions
In fact, there are no
servers at all. All nodes
are equal
Every node holds the
complete state of the

Macro: Digital & Decentralized

explained.
Address
Address
Address
Address

Balance (BTC)
Balance (BTC)
Balance (BTC)
Balance (BTC)

1
1
1
1

100
100 90
90
90

3
1
Sender
1

2 Receiver
2
22
2

2
3

Amount
200

Signature

10

30

200 210
200
10 210
200 1230

300
3 CONFIRMATION!300
10 MINS:
2
3
300 310
3
310 280

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions
In fact, there are no
servers at all. All nodes
are equal
Every node holds the
complete state of the

Macro: Digital & Decentralized

explained.
Address

Balance (BTC)

90

3
1
Receiver

Sender

Amount

Signature

255 (25 BONUS!)

280

This is the global bitcoin

network.
Its distributed:
Theres no bitcoin N.V.
There are no servers
that approve
transactions
In fact, there are no
servers at all. All nodes
are equal
Every node holds the
complete state of the

Macro: Digital & Decentralized

explained.
Address

Balance (BTC)

90

3
1
Receiver

Sender

Amount

255 (25 BONUS!)

280

???
What was that
confirmation message?

Signature

Macro: Digital & Decentralized

explained.
Address

Balance (BTC)

90

3
1
Receiver

Sender

Amount

255 (25 BONUS!)

280

???
What was that
confirmation message?
It happens every ~10
minutes

Signature

Macro: Digital & Decentralized

explained.
Address

Balance (BTC)

90

3
1
Receiver

Sender

Amount

255 (25 BONUS!)

280

???
What was that
confirmation message?
It happens every ~10
minutes
Its called mining

Signature

Macro: Digital & Decentralized

explained.
Address

Balance (BTC)

90

3
1
Receiver

Sender

Amount

Signature

255 (25 BONUS!)

280

???
What was that
confirmation message?
It happens every ~10
minutes
Its called mining
It levels the network: it
makes everyone agree on
the transactions by
consensus

Macro: Digital & Decentralized

explained.
Address

Balance (BTC)

90

3
1
Receiver

Sender

Amount

Signature

255 (25 BONUS!)

280

???
What was that
confirmation message?
It happens every ~10
minutes
Its called mining
It levels the network: it
makes everyone agree on
the transactions by
consensus
The winner is random
(proportional to your CPU
power)

bitcoin just cant fail #1

The big 5 trillion-dollar economies that dont like
bitcoin:

bitcoin just cant fail #1

The big 5 trillion-dollar economies that dont like
bitcoin:

1.Credit cards: bitcoin has very low (close

to zero) transaction fees (CC: min $0.2 +
2-3%)

bitcoin just cant fail #1

The big 5 trillion-dollar economies that dont like
bitcoin:

1.Credit cards: bitcoin has very low (close

to zero) transaction fees (CC: min $0.2 +
2-3%)
2.Micropayments: bitcoin is
micropayments-ready

bitcoin just cant fail #1

The big 5 trillion-dollar economies that dont like
bitcoin:

1.Credit cards: bitcoin has very low (close

to zero) transaction fees (CC: min $0.2 +
2-3%)
2.Micropayments: bitcoin is
micropayments-ready
3.Banking & Financial Inclusion: half of
the world doesnt have a bank account

bitcoin just cant fail #1

The big 5 trillion-dollar economies that dont like
bitcoin:

1.Credit cards: bitcoin has very low (close

to zero) transaction fees (CC: min $0.2 +
2-3%)
2.Micropayments: bitcoin is
micropayments-ready
3.Banking & Financial Inclusion: half of
the world doesnt have a bank account
4.Money remittance

bitcoin just cant fail #1

The big 5 trillion-dollar economies that dont like
bitcoin:

1.Credit cards: bitcoin has very low (close

to zero) transaction fees (CC: min $0.2 +
2-3%)
2.Micropayments: bitcoin is
micropayments-ready
3.Banking & Financial Inclusion: half of
the world doesnt have a bank account
4.Money remittance

bitcoin just cant fail #2

bitcoin just cant fail #2

Its anonymous (sort of). So you can do illegal stuff
with it

bitcoin just cant fail #2

Its anonymous (sort of). So you can do illegal stuff
with it
Its inflation free (21M BTC in circulation by 2140thats it)

bitcoin just cant fail #2

Its anonymous (sort of). So you can do illegal stuff
with it
Its inflation free (21M BTC in circulation by 2140thats it)
It has no single point of failure (banking system,
countries)

bitcoin just cant fail #2

Its anonymous (sort of). So you can do illegal stuff
with it
Its inflation free (21M BTC in circulation by 2140thats it)
It has no single point of failure (banking system,
countries).
Its international (globalization-ready)

bitcoin just cant fail #2

Its anonymous (sort of). So you can do illegal stuff
with it
Its inflation free (21M BTC in circulation by 2140thats it)
It has no single point of failure (banking system,
countries)
Its international (globalization-ready)
Chargebacks will be more rare (transactions are
irreversible)

bitcoin just cant fail #2

Its anonymous (sort of). So you can do illegal stuff
with it
Its inflation free (21M BTC in circulation by 2140thats it)
It has no single point of failure (banking system,
countries)
Its international (globalization-ready)
Chargebacks will be more rare (transactions are
irreversible)
It publishes its entire history (easier to track/tax?)

bitcoin just cant fail #2

Its anonymous (sort of). So you can do illegal stuff
with it
Its inflation free (21M BTC in circulation by 2140thats it)
It has no single point of failure (banking system,
countries)
Its international (globalization-ready)
Chargebacks will be more rare (transactions are
irreversible)
It publishes its entire history (easier to track/tax?)
Its innovation-ready (transparency & protocol)

Well, actually bitcoin can fail

Well, actually bitcoin can fail

PKI cryptography could get hacked (very unlikely)

Well, actually bitcoin can fail

PKI cryptography could get hacked (very unlikely)
Private keys could get hacked (quite likely)

Well, actually bitcoin can fail

PKI cryptography could get hacked (very unlikely)
Private keys could get hacked (quite likely)
Countries and regulators
Can be used for illegal activity
Affects taxing, consumer protection, AML laws
bitcoin is considered barter

Well, actually bitcoin can fail

PKI cryptography could get hacked (very unlikely)
Private keys could get hacked (quite likely)
Countries and regulators
Can be used for illegal activity
Affects taxing, consumer protection, AML laws
bitcoin is considered barter

Consumers & merchants

Software is clumsy and hard to use

Considered too risky, unstable or just a Ponzi scheme

Well, actually bitcoin can fail

PKI cryptography could get hacked (very unlikely)
Private keys could get hacked (quite likely)
Countries and regulators
Can be used for illegal activity
Affects taxing, consumer protection, AML laws
bitcoin is considered barter

Consumers & merchants

Software is clumsy and hard to use

Considered too risky, unstable or just a Ponzi scheme

Crazy volatility (BTC/USD rate) and high sensitivity

Mt. Gox halts closes and bitcoins lost
Apple takes blockchain.info wallet off the AppStore
Regulation talks

Well, actually bitcoin can fail

PKI cryptography could get hacked (very unlikely)
Private keys could get hacked (quite likely)
Countries and regulators
Can be used for illegal activity
Affects taxing, consumer protection, AML laws
bitcoin is considered barter

Consumers & merchants

Software is clumsy and hard to use

Considered too risky, unstable or just a Ponzi scheme

Crazy volatility (BTC/USD rate) and high sensitivity

Mt. Gox halts closes and bitcoins lost
Apple takes blockchain.info wallet off the AppStore
Regulation talks

We dont know what we dont know

However:
The internet is killing the worlds most
powerful mediators, slowly but surely.

However:
The internet is killing the worlds most
powerful mediators, slowly but surely.
I believe that cryptocurrencies will
transform our economy in radical ways.

However:
The internet is killing the worlds most
powerful mediators, slowly but surely.
I believe that cryptocurrencies will
transform our economy in radical ways.
If its not bitcoin, and not today, it will be
another one Basically its time to cut the
middleman

Continuation: bitcoin the Blockchain

Utility
Blockchain 2.0
Other applications (Utilities)

Continuation: bitcoin the Blockchain

Utility
Blockchain 2.0
Other applications (Utilities)
Distributed fair voting

Continuation: bitcoin the Blockchain

Utility
Blockchain 2.0
Other applications (Utilities)
Distributed fair voting
Stock ownership

Continuation: bitcoin the Blockchain

Utility
Blockchain 2.0
Other applications (Utilities)
Distributed fair voting
Stock ownership
Asset registration and notarization

Continuation: bitcoin the Blockchain

Utility
Blockchain 2.0
Other applications (Utilities)
Distributed fair voting
Stock ownership
Asset registration and notarization
Smart Property

Continuation: bitcoin the Blockchain

Utility
Blockchain 2.0
Other applications (Utilities)
Distributed fair voting
Stock ownership
Asset registration and notarization
Smart Property
And others we have not thought about

bitcoin is Money of the Internet? True

or False

bitcoin is Money of the Internet? True

or False
False

bitcoin is Money of the Internet? True

or False
False
bitcoin is the Internet of Money.

Questions?

A (somewhat) decentralized
discussion.

More info?
fiatleak.com
bitcoin.org
https://blockchain.info/