The document discusses the advantages and risks of using bitcoin. It outlines several advantages such as bitcoin being difficult to block, cheaper than wire transfers, and providing merchants protection from chargebacks. However, it also discusses several risks like bitcoin's volatile price, non-anonymous transactions, and lack of buyer protection for irreversible payments. The document also examines applications of bitcoin for online sales, donations, international remittances, and as a potential long-term store of value. It analyzes the economic aspects of bitcoin including how its value and supply are determined through mining new coins and market demand. In conclusion, it suggests bitcoin may have a positive future if its network of users, merchants and developers continues to grow.

1. Topics to be
covered
Advantages of using bit coin
Inherent risks of using bit coin
Applications of bit coin
Economic aspects of bitcoi

2. What are the advantages of

3. Difficult to block

4. Cheaper than wired money
transfer
-$30.0
-$0.001

5. A safe haven for
merchants

6. Bitcoin protects your money from
inflation

7. Other Benefits of Bitcoin

Payment without going to bank

Free acceptance

No fee

No charge-backs

Simple form for transaction

8. 
Digital signature , verification

Transactions can be received at any
time, regardless of whether your
computer is turned on or off.

No Need for Middlemen

Irrevocable Transactions

9. Some more Important
advantages of using a Bit coin
1) An Inflation Hedge for Longterm Savings


This is very helpful for citizens of
countries that are experiencing run-away
inflation.
If they can transfer their earnings to Bit
coins, they can be isolated from the rapid
inflation of their native currency, and only
convert back when needed to purchase
goods or services using their native
currency.

10. 2) A World-Wide System



Unlike current payment processing
systems, Bit coins are inherently worldwide and multi-national.
There are no artificial barriers for making
payments across national boundaries; in
fact, it's impossible to verify a
transaction's country of origin.
A merchant accepting Bitcoins
immediately has access to a world-wide
market, without any risk of non-payment
from those outside his own country's legal
enforcement system.

11. 2) Financial Self-Determinism and
Control



The Bitcoin system is unique because it is
the first digital store of value which can be
safely and securely saved and transacted
by individuals, without having to rely on a
trusted third party.
Once acquired and properly secured,
Bitcoins can't be taken from their owner,
by a thief, a bank, or a government.
Neither can any entity freeze any account,
nor prevent the owner from performing
(essentially free) transactions on the
Bitcoin network.

12. What are the inherent risks of

13. Disadvantages of Bitcoin



Volatile price
Payments are
irreversible
Non anonymous
system (All transactions are
stored publicly and permanently
on the network, so anyone can
see transactions of any Bitcoin
address.)


Less secure
transactions
Taxes are applicable

14. Criticism leveled against the bitcoin
4 reasons why you should think twice before buying bitcoins –
 Losses: No laws (yet) to limit consumer losses.
 Regulation: Extremely resistant to government regulation.
 Scaling: Running the full bitcoin client will only become more and
more resource intensive.
 Lack of applications: How useful is bitcoin really?

15. Some more disadvantages of
using a Bit coin
1) Irrevocable transactions


Merchants do not have to trust their
customers to verify payments, but
customers have to now trust merchants to
deliver the goods or services they have
paid for.
for example, use of third-party trusted
escrow services which require merchants
to post a performance bond and enter into
binding arbitration of disputes.

16. 2) Anti-Inflationary



Economist Paul Krugman wrote an article
in the New York Times criticizing Bitcoin's
anti-inflationary provision (due to the 21M
Bitcoin creation limit).
His argument is that Bitcoins will cause
people to hoard the currency rather than
spend it.
But his argument is not exactly correct
because If Bitcoin values go up, people will
still desire to spend some of their gains
from the currency by using a fraction of
what they own.

17. 3) Risk of Loss



Users of Bitcoin today have to ensure that
they secure their digital wallets from both
loss and theft.
This can be challenging, requiring use of
secure encryption, password management,
and information backup methods.
There have been some high-profile cases
where people made mistakes and lost
hundreds of dollars' worth of Bitcoin.
With no central authority to appeal to,
these funds are truly unrecoverable.

18. Is Bit coin "The One"?

Some competing digital currencies have
been proposed, but with much more
limited adoption than Bit coin has seen.
It seems likely to us, that Bit coin, or
something very much like it, will be a
viable option for many types of
transactions and exchanges in the online
world.

19. Applications Well-suited to
Bitcoin
1) Online sales of digital goods
 Customers can receive delivery
immediately and the merchant gets a
guaranteed irrevocable payment.

20. 2) Online donations
 Payments can optionally be publicly
visible to demonstrate social proof of
support for a charitable cause.

21. 3) Super vault
 A Bitcoin wallet can be created from a
passphrase or stored on one or more USBkeys.
 Bitcoins can be deposited to the generated
public addresses even when the wallet is
offline.
 So there is no risk of loss through online
hacking; money can flow in, but is
impossible to flow out without retrieving
the offline wallet from storage (or the
memory of the wallet creator).

22. 4) Remittances
 Inexpensive money transfer system across
national boundaries.
 Agents could accept cash in a developed
country, and transfer Bitcoins to an agent
in the home country of a foreign worker,
to be picked up by the family of the
worker.

23. Economic aspects of Bitcoin

24. Value of bitcoins
 Bitcoin
has
the
characteristics
of
money
(durability, portability, fungibility, scarcity, divisibility, and recognizability) based on the
properties of mathematics.
 With these attributes, all that is required for a form of money to hold value is trust and
adoption. In the case of Bitcoin, this can be measured by its growing base of
users, merchants, and start-ups.
Determination of exchange rates:
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. There is only a
limited number of bitcoins in circulation and new bitcoins are created at a predictable and
decreasing rate, which means that demand must follow this level of inflation to keep the price
stable. Because Bitcoin is still a relatively small market compared to what it could be, 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.

25. Money Supply
 A miner will record all data floated by all parties and group them into a chunk called a block.
This is equivalent to a ledger entry.
 After creating a block, the miners job is to add it to the blockchain, or connect the ledger page
to the ledger itself.
 Once a miner comes up with a valid proof, his version of the block is attached to the block
chain, and in return the network rewards the miner with coinbase – a special transaction of
some BTC credited to the miner.
 This is how bitcoins are generated. A coinbase is reduced to half every 2,10,000 blocks.
Mathematically infinite:
 Despite an upper limit to the number of bitcoins in circulation, each bitcoin can be divided
into smaller chunks. The smallest recognizable unit, a Satoshi is equivalent to 0.00000001
BTC.

26. Potential fall of the bitcoin economy
Unlike previous currencies, failures due to hyperinflation is made impossible by
bitcoin. However, there is always potential for technical failures, competing currencies,
political issues and so on.

27. Is Bitcoin a bubble?
Bitcoin is a small and volatile
market, so no hard predictions
regarding it’s short term price
movements can be made.

28. The early adoption benefit
Bitcoin has been designed with the “High Risk, High Reward” policy. Some early
adopters have large numbers of bitcoins because they took risks and invested time and
resources in an unproven technology that was hardly used by anyone and that was
much harder to secure properly. This is very similar to investing in an early start-up
that can either gain value through its usefulness and popularity, or just never break
through.

29. What does the future hold?

30. A positive feedback loop

31. 4 sided network effect
Merchants
Consumers
Miners
Developers

32. Going down the rabbit hole
This presentation was a short and concise summary of the system, it’s
economic implications and a projection into the future. To get into the
details, one can read the original paper that describes the system’s
design, and explore the Bitcoin Wiki.