A cryptocurrency

BITCOIN
It is a digital cryptocurrency.
No one controls it.
Satoshi Nakamoto, a software developer, proposed bitcoin, which
was an electronic payment system based on mathematical proof.

What makes bitcoin different?

Bitcoin is the best known implementation of a concept called "crypto
currency.
It is the first decentralized peer-to-peer payment network that is
powered by its users with no central authority. It doesnt belong to
any nation or region; a universal currency.
It does not have a physical aspect. Different denominations of Bitcoin
does not exist. There is one bit coin or a set of bit coins.
It is not printed or minted but mined that requires huge
computational power making it nearly impossible to spawn.
The bitcoin changes itself on each transaction in order to verify the
sender and receiver and remains traceable yet anonymous.

Bitcoin Mining
Unlike physical currencies, bitcoins are not minted they are mined.
Bitcoin mining can be thought of as a solving a particularly complex
problem of a specific difficulty level, which yields a bitcoin in the end.
Bitcoin nodes use the block chain (a public ledger of all transactions)
to distinguish legitimate Bitcoin transactions from attempts to respend coins that have already been spent elsewhere.
Every two weeks, a new target is set for the total number of bitcoins
being mined, which is determining factor for the difficulty of said
mathematical problem.

How does bitcoin work?

From a user perspective, Bitcoin is nothing more than a mobile app
or computer program that provides a personal Bitcoin wallet and
allows a user to send and receive bitcoins with them. This is how
Bitcoin works for most users.
Behind the scenes, the Bitcoin network is sharing a public ledger
called the "block chain". This ledger contains every transaction ever
processed, allowing a user's computer to verify the validity of each
transaction.

How do Bitcoin transactions work?

Two important concepts: Public Key Cryptography (PKC) & Block
chain.
In a transaction, Bitcoin receivers send their public key to the users
transferring the Bitcoins. Users transferring the coins sign with their
private keys, and the transaction is then made over the Bitcoin
network. The time of every transaction is noted so that no Bitcoin can
be spent twice at the same time. That, along with the sequential
records of all transactions, is maintained in a public ledger called a
Block Chain.

How does one acquire bitcoin?

As payment for goods or services.
Purchase bitcoins at a Bitcoin exchange.
Earn bitcoins through competitive mining.
Exchange bitcoins with someone near you.

What determines bitcoins value?

The price of a bitcoin is determined by supply and demand.
When demand for bitcoins increases, the price increases, and when
demand falls, the price falls.
Because Bitcoin is still relatively new, it doesn't take significant
amounts of money to move the market price up or down, and thus
the price of a bitcoin is still very volatile.
More recently, though, Bitcoin has shown certain signs of stability
owing to gradual acceptance all around the globe, increasing need for
internet freedom, and a strong dollar.

Bitcoin value against the US dollar over the years

Bitcoin is better because

Payment freedom - It is possible to send and receive bitcoins anywhere in
the world at any time.
Security and control - Bitcoin users are in full control of their transactions;
it is impossible for merchants to force unwanted or unnoticed charges as
can happen with other payment methods.
Fewer risks for merchants - Bitcoin transactions are secure and
irreversible. This protects merchants from losses caused by fraud or
fraudulent chargebacks.
Transparent and neutral - All information regarding Bitcoin is available on
the block chain. No individual or organization can manipulate the Bitcoin
protocol because it is cryptographically secure. This allows Bitcoin to be
trusted for being completely neutral, transparent and predictable.

Challenges for bitcoin

Degree of acceptance - Many people are still unaware of Bitcoin.
Volatility The number of businesses using Bitcoin are still very small
thus relatively small events or business activities can significantly
affect the price. This volatility will decrease as its market matures.
Ongoing development - Bitcoin software is still in beta with many
incomplete features in active development. In general, Bitcoin is still
in the process of maturing.

Is bitcoin really used by people?

Answer is Yes.
There is a growing number of individuals and businesses using
Bitcoin. This includes restaurants, apartments, law firms, and popular
online services such as Namecheap, WordPress, and Reddit.
While Bitcoin remains a relatively new phenomenon, it is growing
fast.
At the end of August 2013, the value of all bitcoins in circulation
exceeded US$ 1.5 billion with millions of dollars worth of bitcoins
exchanged daily.

Is Bitcoin fully virtual and, hence, immaterial?

Definitely not.
Bitcoin is as virtual as the credit cards and online banking networks.
Bitcoins can also be used in physical form such as the Casascius coins,
but paying with mobile phones and computers usually remains more
convenient.
Bitcoin balances are stored in a large distributed network, and they
cannot be fraudulently altered by anybody. In other words, Bitcoin
users have exclusive control over their funds and bitcoins cannot
vanish just because they are virtual.

Is bitcoin legal?
Bitcoin has not been made illegal by legislation in most jurisdictions.
However, some jurisdictions (such as Argentina and Russia) severely restrict
or ban foreign currencies, thus like other currencies, it can not be used
there.
Regulators from various jurisdictions are taking steps to provide individuals
and businesses with rules on how to integrate this new technology with
the formal, regulated financial system.
e.g. Fincen, a bureau in the United States Treasury Department, issued a
non-binding guidance on how it characterizes certain activities involving
virtual currencies.
India has no written policy on Bitcoin control and regulation, though
people are discouraged from buying or selling bitcoins.

Presented by

Soumit Banerjee, CSE F2, 13615602712

Pulkit Anand, CSE F2, 15615602712
Saransh Budakoti, CSE F2, 15815602712
Bhagya Behl, CSE F2, 18615602712