BitCoin Basics: Doing Ordinary Things in Amazing WaysPaul Brody, Americas Technology Strategy Leader

@pbrody Linkedin.com/in/pbrody

December 2015

BitCoin, the first real implementation of BlockChain technology is in many ways not at all revolutionary.

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What bitcoin does is nothing special. How bitcoin works is revolutionary.

BitCoin is the re-invention of the most basic workload in the world of modern computing: transaction processing.

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The Block Chain

CICS in 1966

The Blockchain is the generic name for the database and transaction processing capabilities that power BitCoin

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One individual transaction record.

The Hash is an encryption algorithm that provides a unique result for each block. Tampering with any record in the block will cause the hash to change and show attempted fraud.

A group of transactions that are all approved at once and added to the database are called a Block.

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The Blockchain is the generic name for the database and transaction processing capabilities that power BitCoin

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String multiple blocks together and you get a BlockChain.

Though the results look similar to other systems, the way that BitCoin works is profoundly different

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Distributed processing

Every node in the network checks the work of other notes.

Confirming transactions involves solving a small math problem with random numbers. Multiple parties work on this simultaneously.

Transactions are confirmed by a kind of digital majority vote.

The result is that collusion to approve fraudulent transactions is difficult.

Original

Transaction

Copies for Verification &

Processing

Though the results look similar to other systems, the way that BitCoin works is profoundly different

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Synchronized RecordsEvery participant in the network keeps a copy of all the transactions.

Transactions are secured by encryption to prevent tampering.

Change your transaction history, and your hash numbers will be out of sync with all others, exposing tampering.

Distributed processing

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Though the results look similar to other systems, the way that BitCoin works is profoundly different

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Distributed processing

Synchronized Records

Smart InformationTransactions can be sent with rules attached - small programs that govern when and how money is delivered.

BitCoin may the single most secure piece of commercial information technology ever created

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Secure

Efficient

Open

Commercial

Resilient and reliable.

Using the resources already there.

Open source, transparent.

Designed for commerce.

You can use BitCoin and it’s core technology in number of different ways.

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As A Bank & Currency

As originally intended.#

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You can also use the public BitCoin BlockChain as a kind of digital records & operations platform

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BitCoin As A PlatformYou can insert information and records into transactions and do so in very tiny amounts - $0.00001 cents, for example.

You can take advantage of the public nature of the blockchain and the large number of people securing it with their computing power.

As A Bank & Currency

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Car Ownership

Shipping Records

Notary Records

Power Usage

You can also take the technology and build your own entirely new platform and fresh blockchain

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As A Bank & Currency

BitCoin As A Platform

Blockchain PlatformsYou can replace the currency component with any transactional data you want and build your own programming & transaction platform.

It can be public, private or a hybrid.

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The future is already here, it’s just not evenly distributed.

William Gibson

The computing power required to run Blockchain-based applications is now spreading far and wide

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Powerful System on Chip costs are dropping so quickly, they are converging with traditional embedded chip costs:

Non-Recurring Engineering Cost for Customized Embedded Chips

Shift to SOC with software customization here

Illustrative: As SOCs drop in price, customization will shift to software, not hardware

Time + + + +

Embedded Unit CostAverage Embedded CostAverage SOC Cost

At higher end of the market, this shift has already started:

These high powered SOC chips can run the full technology stack - they are servers in their own right, no need for a data center any more.

Apple Lightning HDMI Adapter

• Full ARM SoC with over 256MB of RAM

• Boots OS X Core when plugged in

• Conducts software conversion of MPEG to HDMI in real time

The computing power in every-day things is already more than everything in every data center.

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Global Installed Base of Computing Devices Millions of Units in 2015

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10

100

1,000

10,000

AWS Servers PCs SmartPhones

2,222890

5.6

Global Installed Base of Computing Storage Estimated Petabytes in 2014-5

1

100

10,000

1,000,000

Dropbox Facebook Microsoft AWS PC Storage

890,000

900300300

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Installed base and company data center sizes are estimates based on limited public information. PC & Smartphone shipments from statistia.com. Storage data estimated assuming 1TB per PC.

The result will be nothing less than a complete shift in how technology solutions and designed and architected

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Modern Era

Expensive Computing

Post-Modern Era

Free Computing

High Trust Environment

Centralized Internet

Low Trust Environment

Distributed Internet

@pbrody linkedin.com/in/pbrody

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