Escolar Documentos
Profissional Documentos
Cultura Documentos
Reading
Chicago Fed Letter
Bitcoin: A primer by Franois R. Velde, senior economist
http://www.chicagofed.org/digital_assets/publications/c
hicago_fed_letter/2013/cfldecember2013_317.pdf
A casual reading (much less technical)
The original BitCoin paper
http://bitcoin.org/bitcoin.pdf
Published online with source code
BitCoin
Launched in 2009
A Peer-to-peer Electronic Cash System
Why study BitCoin?
BitCoin: Challenges
Validation
Is
BitCoin: Motivation
Buyer pays, but the seller doesnt deliver Solved by using an escrow
(Buyer protection)
Seller delivers, buyer pays, but the buyer makes a claim. VISA refunds; t
he payment is reversed. Either the seller is penalized and/or VISA charg
es more fee to handle these cases. Some behaviors are fraudulent.
BitCoin
gets rid of this trusted middleman, by being able to directly show the cr
yptographic proof that the money is transferred.
Digital signature
Cryptographic Hashes
Authentication
Confidentiality
Integrity
Availability
Concealment of information
Authentication
Integrity
Availability
Confidentiality
Availability
Confidentiality
RSA Keygen
Choose a coprime of (n), e, such that 1 < e < (n), i.e., gcd(e,
(n)) = 1
Solve for d where d
e 1 (mod (n))
Fermats Little
Theorem
Non-repudiation
Hash Fn
Fixed Size
Hash
Back to BitCoins
Validation
BitCoin
Electronic coin == chain of digital signatures
BitCoin transfer: Sign(Previous transaction + New owners p
ublic key)
Anyone can verify (n-1)th owner transferred this to the nth
owner.
Anyone can follow the history
Given a BitCoin
Proof-of-work
Pick a nouce such that H(prev hash, nounce, Tx) < E. E is a variable that th
e system specifies. Basically, this amounts to finding a hash value whos lea
ding bits are zero. The work required is exponential in the number of zero
bits required.
Preventing Double-spending
BitCoin Network
Tie breaking
Two different
block chains (or
blocks) may
satisfy the
required proof-ofwork.
Reverting is hard
3. Recompute
the next nonce
Practical Limitation
Agree to pay
Wait for one block (10 mins) for the transaction to go through.
But, for a large transaction ($$$) wait longer. Because if you wait
longer it becomes more secure. For large $$$, you wait for six blo
cks (1 hour).
Fiduciary currency
No intrinsic value.
Implementation issues
Broadcast
Keeping track of node membership
Creating a block
Optimizations
Merkle Tree
BitCoin Economics
How? Difficulty is adjusted every two weeks to keep the rate fixed as capacity/compu
ting power increases
N new bitcoins per each new block: credited to the miner incentive
s for miners
Thus, the total number of BitCoins will not exceed 21 million. (After this mine
r takes a fee)
Image/data from
http://www.tomshardware.com/reviews/bitcoin-mining-make-money,3514-4.html
FPGA, ASIC
Spartan6150
BFL Single
BFL
miniRig
Avalon
BFL
ASICminer
Type
Xilinx
FPGA
AlteraFPG
A
FPGA
ASIC
ASIC
ASIC
Process
45 nm
45 nm (?)
45 nm (?)
110 nm
65 nm
130 nm
Hash Rate
210 MH/s
Per Chip
415 MH/s
650-750
MH/s
280 MH/s
4 GH/s
300 MH/s
Power
Draw
15 W
40 W
35 W
2.8 W
30 W
2.5 W
Efficiency
(MH/s per
W)
14
10
20
100
133
120
0.75
0.6
Varies
Varies
Varies
Notes
Typically 1
2 FPGAs
to 4 FPGAs
Per Board
2 FPGAs
Priced In
Per Board, BTC
17 to 18
(prices
BFL
Anticipate Priced In
s A Slight BTC
Reduction (prices
https://products.butterflylabs.com/
http://www.butterflylabs.com/
Summary
Nice design
A trait for popular systems
market, etc.
References
http://
www.tomshardware.com/reviews/bitcoin-mining-make-mon
ey,3514.html
Bitcoin: A primer by Franois R. Velde, senior economist FRB
Bitcoin: A Peer-to-Peer Electronic Cash System, Satoshi Naka
moto