Accounting and technical challenges of Bitcoin payments
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Revision as of 19:29, 21 March 2015
 Accounting and technical challenges of Bitcoin payments
workshop formerly known as accounting and security challenges of Bitcoin
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| Type of Event: | Workshop |
| From: | 2015/04/14 19:00 |
| Till: | 2015/04/14 19:45 |
| Recurring: | no |
| Organizer: | syn2cat |
| Cost: | |
| Mandatory registration: | No
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| Attendees: | Martin Log-in to RSVP |
| Contact Person(s): | Martin (mail) |
| Keywords: | |
| Location | |
| Where: | Level2 (87, route de Thionville, Luxembourg, Luxembourg) |
| Map: |
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| Tools | |
| QrCode: | 
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| Add to your calendar: | Download … further results |
| Alternate picture: | View |
| Announce globally: | no |
demonstration of a payment in the bitcoin network (5 min).
importing private keys (5 min).
accounting challenges (5 min).
security risks (10 min).
workshop (15+ min).
the proposed date is just a placeholder! the date, time and duration are variables and will probably change. what should not change is the plan to give out tiny amounts of bitcoin to participants (private keys prints)
disclaimers: the workshop does not endorse the use of digital crypto currencies. as "digital currency" in context of this workshop it is always meant Bitcoin, not to be confused with real money as issued by banks (p.ex. dollars, Euro) nor private, regional or community money like LETS, WIR, Chiemgauer, etc.
objective: bitcoin crash course, frequently given warnings
history: all previous attempts to create digital money failed (pre 2009, are not longer operational, see e-gold, hashcash), probably due to design choices (central points of failure, bindings to other payment means and stores of value) present: since 2009 there is bitcoin, decentralized (p2p), based on public key cryptography and valued by users only (no commodity or financial relation whatsoever) 2011 first fork/alt.coin and since then there are hundreds of other digital crypto currencies. Q: what is it? A: bitcoin is an innovative payment network and a new kind of money. Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system. icon. basically bitcoin is what the majority of network participants think it is. (the list of all past transactions is public and future transactions will be relayed by the network only if they are deemed valid. if I fake my wallet balance but the network consensus knows better, they will not allow me to spend the counterfeit coins). it is an entry in blockchain of which everybody can have a copy
demo: show a bitcoin address, show that it currently has no input; transfer bitcoins to that address, show that it now has valid input that could be spend from that address. show private key of that address
accounting: how? why? at which exchange rate? what date? how to account for spending or capital gains and losses? you can not refuse bitcoin payments. focusing on accounting technicalities and not business decissions (who should bear the risk of exchange rate change after a payment? should incomming payments be automatically converted into euros at the time of payment? who should have knowledge of the private keys? implementation?)
security: keep the keys secret (who knows the keys can spend the coins), keep the keys safe (if lost, you can't spend the coins), make sure you pay to the right address (payments are not reversible, if paid to wrong address the coins are spent/gone). most common incidents involve unauthorized spending (theft), data loss (hw failure, disk formats & reinstalls), payment to wrong addresses or duplicate payments, software errors (bugs causing payments to invalid addresses). possible solutions: deterministic wallets (from one seed can restore all addresses), payments to scripts (m of n scritps for payments), hardware wallets (store private keys away from general purpose computers and perform signing inside themselves, never revealing keys to computers that could be compromised)
key points to take away: bitcoin has value only because others are willing to accept it (see also bag holder, bigger fool, speculative investment, pseudoanonymous digital cash), no central authority providing dispute resolutions about payments, no backing of any kind (money, commodity, guaranteed usability for any purpose). to receive/accept bitcoin payment one does not have to be online, revealing receiving address is enough. many ways to create bitcoin addresses (from 256 times tossing a coin, doing some conversions and math to using services or software). get paid stay paid. on the blockchain nobody knows you're a dog (no need for pre-approved accounts, no compulsory linking of identities to accounts) & also be your own bank. there are many ways it can go wrong (have backups, password protect everything, check twice receiving address and amount sent).
project proposal: accepting bitcoin payments in level2 self service bar simple page dispensing bitcoin addresses (analogue to the cup on the shelf for accepting cash) open questions: who should know the keys? current space custom gives access to the coin cup to all. bitcoin is different, once the private keys leak anyone who knows them can use the disponible coins without being physically present in the hackerspace. this makes tracing the unauthorized spending by corellating time and visitors in space impossible. also in case of deterministic wallets the knowledge of the seed will allow also future bitcoin income to be at risk of theft. how to solve the exchange rate volatility problem?
