Arzan Irani - M4121

Ameya Samant - M4146

Pratiksha Kokate - M4128
Priyanka Karotia - M4126
Pranjal Prasade - M4144
Nilesh Makwana - M4130
The original Bitcoin software was developed by Satoshi Nakamoto-a Japanese
programmer.

It was founded by Bitcoin core developers in 2008.
Bitcoin is the first decentralized digital currency .
It is useful for transaction of money in any country because it provides money
transfer system in Dollars, Euros, Yens, Rupees etc.
History of Bitcoin
Bitcoin is not just money its an invention that allows people to move value
around the internet.

It democratizes money by separating it from a function of power by governments,
to an exchange between two individual people.

Think of it as the internet of money.
By signing up for a Bitcoin wallet, you can have access to instant peer-to-peer
transactions, worldwide payments, with zero to no transactions fees.

There is no central government or bank managing the money, and nobody owns it
or controls it like a countrys currency.

Everyone can participate whether you are a billionaire or a high school student,
and money can be sent from North America to New Zealand in about 10 minutes.
There are three main
objectives :



1. Instant peer-to-peer
transactions

2. Worldwide payments

3. Zero or low
processing fees
Financial Term Bitcoin Term
Account Balances Block Chain, Wallet
Transactions Private Keys, Public Keys
Processing Miners
Balances in a wallet determine who has Bitcoin, whether thats 0.5, 1.25, or 100
BTC.

Since Bitcoin is digital money, it can be copied. So how do you avoid spending
the same amount of money twice?

Solution:
This is where the block chain comes in, storing all transaction data on the public
ledger. A private key must be matched with your public key for a transaction to
go through.

The block chain is similar to how a bank keeps track of your account balances.
This data is anonymously shared on the ledger, and all confirmed transactions
are included, verified, encrypted, and distributed across the entire Bitcoin
network.




Before


After
1. CoinHQ sends Ameya 5 Bitcoins

2. Ameya receives 5 Bitcoins

3. Total: 5 Bitcoins
1. Ameya sends Arzan 1 Bitcoin

2. Ameya sends Ameya 4 Bitcoins

3. Total: 5 Bitcoins
For example, if I have five Bitcoins and send one to a friend named Arzan, the block chain
would indicate

Transactions
Similar to how PayPal works, transactions happen between two digital wallets that
have a balance.

Every wallet is consisted of two keys one public and one private.

The public key is used to receive and send Bitcoins like an e-mail address, and the
private key is used as a signature and authorization.

Transactions are listed only as addresses, which arent tied to anyones identity
allowing for privacy protection.

Once the transaction has been carried out and confirmed by the entire network, it
cannot be reversed.
Triple entry is a simple idea, albeit revolutionary to accounting. A triple entry
transaction is a 3 party one, in which Alice pays Bob and Ivan intermediates. Each
holds the transaction, making for triple copies. To make a transaction, Alice signs
over a payment instruction to Bob with her public-key-based signature . Ivan the
issuer then packages the payment request into a receipt, and that receipt becomes
the transaction.

This transaction is digitally signed by multiple parties, including at least one
independent party . It then becomes a powerful evidence of the transaction . The
final receipt is the entry. Then, the collection of signed receipts becomes the
accounts, in accounting terms.
Triple Entry Concept

Benefits For Consumers
If youre buying products overseas with Bitcoins, foreign exchange fees can be
avoided.
You can send money between friends and families anywhere in the world without
restrictions.
Unlike a physical wallet that we use to carry cards, cash, and IDs Bitcoin
wallets can be backed up.


Example :
When you lose your wallet at a cafe, instead of cancelling your cards and getting
cash from the ATM again, theres not much you can do.
Theres nobody you can call to retrieve that money and if youre lucky, someone
may bring it back to you.

Bitcoin actually allows you to back up and save multiple copies of the same
wallet, since its digital by nature.
However, you can only spend the money once by unlocking it with the private
key.
Benefits For Merchants
Credit Card Processing Fees: Conventional credit card fees in developed markets
charge anywhere from 2-3% to the merchant. For business models with thinner
margins such as drop shipping, having an extra 2-3% adds a lot to the bottom line
over time.
Bitcoin can also be sent from the United States to India in under 10 minutes, as
they have no physical location, limits, delays, holdings, or banking fees.
Fraud Protection and PCI compliance: As a merchant accepting credit cards,
there are multiple security checks and financial compliance regulations to
adhere to.
Bitcoin still requires wallet security on both sides of the transaction, but
merchants no longer carry the cost and responsibilities that come with
processing or handling sensitive credit card data.
Decentralization: Another interesting attribute of the Bitcoin economy
is that it completely eliminates the role of a central authority to manage
the flow and creation of money. In the United States, the government
via the Treasury Department and the Federal Reserve has various means
of restricting or easing the money supply. In the Bitcoin economy, no
single entity has that kind of power. On the one hand, some people like
the idea of not being at the mercy of a central authority. On the other
hand, the Bitcoin economy foregoes some of the benefits of that
authority, such as mechanisms to curb inflation and fluctuations in the
exchange rate relative to other currencies.
Risks Of Bitcoins
If someone gets access to your private key, theyll have the rights to use your Bitcoins on
the public key.

Currently there are two ways to store your Bitcoin wallet.

One is to have it on your physical hard drive, but the risk is that if your computer breaks
down or is stolen, your Bitcoins will be lost forever

The other solution is to have it hosted on a 3rd party service like Coinbase orBlockchain,
where it functions in a similar way to Paypal.

However, your wallet is at risk if their security measures are ever compromised.
Bitcoin wallets need to be protected in the long term via offline or non-
digital formats. Wallet security can be broken down into two goals:
1. Protecting your wallet against losses.
2. Protecting your wallet against theft.

Paper wallets are a method to store Bitcoins offline in a non-digital
format.
A paper wallet is a physical record of a private key and its
corresponding public key.
The public key can be used to receive Bitcoins anytime, and they will
remain inaccessible until the private key is imported into a wallet. The
private key proves your rights to spend the Bitcoins.

As Bitcoin transactions are irreversible by design, its critical to keep
your private key backed up and secure.
There are more details to wallet security, but as Bitcoin is an open-
source and programmable platform, there are entrepreneurs currently
trying to solve this problem with new products and services.

How To Get Bitcoins


Step 1. Create a Bitcoin wallet.
A bitcoin wallet is website or program which you can use to hold store bitcoins and
make transactions. This website offers a free wallet service, sign up takes a few
seconds and all you need is a password. Simply click the: start a new wallet button at
the top of the page. Alternatively you can use the official bitcoin.org desktop
client however some setup time is involved.

Step 2. Locate Your Bitcoin Address.
Once you have created a bitcoin wallet login and click receive money or receive coins.
On this page will be a "bitcoin address" which is 34 - 36 character long and starts with
1. This address is all you need to receive payments.

Step 3. Buy With Cash.
Go to the Blockchain.info homepage and enter your bitcoin address from Step 2. into
the search box. This will take you to a page which will show all transactions made to
and from your new address, however as this address is new nothing will be displayed
yet.
Click the deposit with cash button and enter the amount you wish to buy in the