The Emergence of Bitcoin & Digital Currencies

Transcription

1 The Emergence of Bitcoin & Digital Currencies Presented by: Anthony Di Iorio Bitcoin Alliance of Canada

2 So what is Bitcoin? The world's first decentralized currency Payment system Protocol Open source software project that implements the protocol Peer to peer network that uses the protocol to create and manage the Bitcoin currency

3 What s with the Hype? Global currency No need for third party Lower payment processing cost Accounts cannot be frozen Doesn't rely on a central authority No prerequisites or arbitrary limits (cont.)

4 What s with the Hype? Micropayments (easy donations) Transparent accounting ledger Fixed, predictable, & diminishing inflation rate Provides privacy for users Silicon Valley and Wall Street approval Media hype

5 Bitcoin Price History Price Feb 2014: $850 / Bitcoin

6 How are Bitcoins created? Bitcoin software and network technology Miners solve problem of creating currency and payment network that does not rely on a central authority Miners manage the Bitcoin network and are rewarded with Bitcoins Relay transaction information Verify transactions Prevent double spending Collect transaction fees Create the money supply

7 But I can't hold them! Where are my Bitcoins? The Bitcoin network maintains a common ledger, known as the blockchain Public and private key encryptions allow access to Bitcoins Based on cryptography Mathematical theory, computer science practice and algorithms Not based on intermediation of any central authority

8 Bitcoin Wallet Systems Multiple wallet systems: Web Wallets Software Wallets Paper Wallets Brain Wallets Mobile apps

9 So How do you Buy & Sell Bitcoins? Exchanges, Bitcoin ATMs, localbitcoins.com, craigslist, etc.

10 Can I Buy Anything with Bitcoins? Bitcoins can be spent at thousands of locations worldwide Flights and hotels Electronics Beer in China Alpaca socks Pretty much anything

11 Benefits for Merchants Reduces payments friction (mobile payments) Lower transaction costs for businesses Option to pass along savings to customers Readily able to convert to fiat No chargebacks Micropayments (charities) Media attention

12 Is Bitcoin anonymous? Pseudoanonymous Operates like cash for the Internet Users can generate new addresses Blockchain is transparent

13 Problems Commonly Associated with Bitcoin Hard to trace Price volatility New technology Network scalability Ease of use

14 Current State of Bitcoin Price explosion Growing use in China, publicity in the media, and Bitcoin ATMs are all contributing factors to the sudden growth Governments determining how to react Technology and economy considerations Regulations

15 Government Reaction in Canada Only statement had been from the Canada Revenue Agency Bitcoin aren t money Taxable as a barter item effected when any two persons agree to a reciprocal exchange of goods or services and carry out that exchange usually without using money. Value the goods or services that were exchanged for the Bitcoins Example - purchas a movie for bitcoins and in valuing the transaction, you would look at the value of the movie, not the value of the Bitcoins Seller must include the value of the movie in their income for tax purposes Many questions still to be answered

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