State of the Coin 2012

Jeff Garzik <jgarzik@exmulti.com>

Bitcoin core developerpynode, pybond (distributed bond project), cpuminer, pushpool, python-bitcoinrpc, …

Linux kernel hackerDunvegan Space Systems

Bitcoin development

Like trying to fix and upgrade a car,

While the car is going 100 m.p.h.,

With users fighting over the driver's seat,

Including one big burly driver named SatoshiDice,

All of whom do not really listen to the mechanic,

Who will lose all their money if the car crashes.

And this is what we call fun!

Bitcoin reference client changes

● User interface rewritten, using Qt

● Internal test suite greatly improved; embedded in testnet chain

● IPv6, SOCKS5, Tor/I2P hidden service

● Native p2pool support (getblocktemplate, then BIP 22)

● Better P2P peer selection (“addrman”)

● Pay-to-script-hash (“P2SH”)

● Multi-Signature transactions are now standard

● Tightening validation of transactions, blocks

● Raw transaction RPC API

● Block download speed-up (better, but still painful)

● Transaction fees – sort by fee-per-kB

● Digital signatures for external messages (prove key ownership)

● Key import, export; improved support for external wallets

Bitcoin ecosystem

● How to quantify success, or failure?● Many premature predictions, from sources

who should know better– Use precise metrics (see next slides)

– How long does it take to bootstrap a new currency from scratch?

● #FAIL: “The Rise and Fall of Bitcoin”, Wired Magazine, November 2011

Bitcoin network “horsepower”

● December 2009: 0.008 Ghash/sec● December 2010: 103 Ghash/sec● December 2011: 8,303 Ghash/sec● September 2012: 19,284 Ghash/sec

Number of transactions, by year

● 2009: 219● 2010: 117,385● 2011: 1,842,138● 2012: 4,964,513

Bitcoins sent, by year

● 2009: 35 trillion BTC● 2010: 1,925 trillion BTC● 2011: 29,497 trillion BTC● 2012: 60,896 trillion BTC

Bitcoin value ($USD), by year

● July 2010: $0.04 (first mtgox quote)● January 2011: $0.30 (pre-bubble)● January 2012: $5.26 (post-bubble)● September 2012: $11.70

Bitcoin ecosystem

● Pools: more diverse. deepbit no longer has 50%+ network strength. Try p2pool!

● Businesses: Bitpay signed their 1,000th merchant. Plenty of new interest.

● Government: BitInstant is a registered MSB with FinCEN

● Users: Difficult to estimate, but probably over 500,000 at this point.

● Exchanges: Learning lessons. Trial by fire. MtGox still volume and transparency leader.

● Websites: Plenty of new interest (including thieves)

Interlude: Bitcoin website best practices

● Try it first on testnet● Create testnet version of your product● Wallet encryption at all times● Multi-signature transactions● Withdrawal delays● Withdrawal alarms

Reality check

● Very new and young, by currency standards

● Very risky – do not dump your life savings into bitcoin

● Programmers do not necessarily make the best businessman

● Websites storing large amounts of money are very difficult to secure

● Do not store massive amounts of money on a single website – use a decentralized client!

● Currencies take many years to develop, even if not a world-changing decentralized one

● Market cap of $116m (bitcoins * USD value) means any big player may manipulate value, similar to penny stocks

● It keeps working – which says a lot

Fini

Download these slides from:

http://bit.ly/stateofthecoin2012

Project plugs:● Distributed bonds (pybond)● Bitcoins in space! (cubesat)