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

8. Total hosts connected in previous 24hours 8

9. Exchange Volume Distribution 9

10. Primary Bitcoin Apps Wallets Local client wallets Lightweight wallets Web-based online wallets Merchant Processing BitPay Bitcoin 24/7 Paysius Mining Pools Deepbit BTC Guild Slush 10

11. Merchant Deposit Alternatives 11

12. Bitcoin Mining Rigs (or de-centralbanks) 12

13. Hashrate Distribution An estimation of hashrate distribution amongst the largest mining pools 13

14. Security Issues For bitcoin users: Wallet.dat attack vector Online wallets Backups (USB stick, offline computer) For bitcoin companies: Recent Linode incident Deterministic wallets Multi-signature capability Offline backups Policies and procedures 14

15. Watch bitcoin robbery in slow motion 15

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