Presentation at ITWebSec on May 16, 2012 in Johannesburg, South Africa.
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1. The Evolution of E-MoneyJon MatonisLydia Group
2. Quest for the Cashless Society Goals of the Cashless Society
No messy paper cash and bulky coins No anonymous transactions above
a certain limit No untraceable transactions No parallel or grey
economy No cash production and handling costs No missing tax
revenue 2
3. Quest for the Cashless Society Scary Aspects of the Cashless
Society Full traceability of all personal transactions Dependence
on electronic networks and gadgets Full unit of account control to
the monetary sovereign Total elimination of the informal shadow
economy Near absolute efficiency in tax collection 3
4. History of Digital Cash E-Money is not regular payments
going online Means of exchange vs. store of value Nomenclature of
digital cash Concept of digital bearer instrument Centralised
issuing mint schemes DigiCash (1990-1998) eCache (1999-2008)
Voucher-Safe (2010-present) 4
5. The Story of Bitcoin Bitcoin is a decentralised electronic
cash system using peer-to-peer networking, digital signatures and
cryptographic proof to enable irreversible payments between parties
without relying on trust. Bitcoin is a reaction to 3 separate
developments Centralised monetary authority Diminishing financial
privacy Dominant legacy infrastructure Launched in January 2009 by
Satoshi Nakamoto Open source built on cryptographic primitives
Elliptic Curve DSA and keypairs RPOW SHA-256 Hash (incorporating
distributed block chain) 5
6. Precursors to Bitcoin Adam Back Hashcash (1997)
Proof-of-work system to limit email spam SHA-1 hash of the header
Wei Dai B-money (1998) Public keys identify pseudonyms Broadcast
solution to computational problem Arbitrator and fine schedule
Broadcasted subset account servers with bail Nick Szabo BitGold
(2001-2005) Public challenge string of bits Client puzzle functions
Securely timestamped Distributed property title registry 6
7. Bitcoin Statistics Exchange Rate ~ 5.00 USD Size of Economy
$43.7 million Total Bitcoin Mined 8,802,250 Maximum Potential
Bitcoin 21,000,000 Total Block Count 176,044 Average Blocks per
Hour 6.0 Host Node Distribution (last 24h) United States 7,535
Germany 1,373 Russia Federation 1,136 Canada 1,004 United Kingdom
969 7
16. Regulatory Issues No direct legislation (similar to air
guitars) Variance in jurisdictional approaches Decentralised nature
inhibits third party shutdown Exchanges will be a focal point of
government scrutiny Pressure on larger merchants 16
17. Future Prospects Bitcoin has the required currency
attributes Two-way convertibility Independent floating exchange
rate Nonpolitical unit of account Opportunities for current
financial institutions Payment processing Foreign exchange
conversion Escrow services Surrogate green addressing Enable mobile
bitcoin transactions 17
18. Future Prospects Digital cash is to legal tender as
BitTorrents are to copyrights 18
19. Thank You - Questions?Follow me on Twitter @
jonmatonisEmail me at matonis@ hushmail.com