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Understanding Bitcoin

Leslie Bayona
Leslie Bayona

What is bitcoin? How does it work? How can you make money out of it? The bitcoin basics for Filipinos who want to understand and invest in the new digital currency.

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BITCOIN UNDERSTANDING Financial Management Ateneo Graduate School of Business Leslie Bayona 29 May 2017
BITCOIN UNDERSTANDING What is bitcoin? How does it work? Is it safe and how can you make money out of it? The bitcoin basics for Filipinos who want to understand and invest in the new digital currency.
Source: www.bitcoin.org Bitcoin is a cryptocurrency and a digital payment system introduced 8 years ago by an unknown programmer. This digital currency is created and held electronically, no one controls it.
Source: www.bitcoin.org HOW DOES BITCOIN WORK? As a new user, install Bitcoin wallet on your computer or mobile phone, it will generate your first Bitcoin address. You can disclose your Bitcoin addresses to your friends so that they can pay you or vice versa.
Source: www.bitcoin.org BALANCES BLOCK CHAIN The block chain is a shared public ledger on which the entire Bitcoin network relies. Bitcoin wallets can calculate their spendable balance and new transactions can be verified. The integrity and the chronological order of the block chain are enforced with cryptography.
Source: www.bitcoin.org TRANSACTIONS PRIVATE KEYS A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet.
Source: www.bitcoin.org TRANSACTIONS PRIVATE KEYS The signature also prevents the transaction from being altered by anybody once it has been issued. All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes, through a process called mining.
Source: www.bitcoin.org PROCESSING - MINING 端 ENFORCES CHRONOLOGICAL ORDER 端 PROTECTS NEUTRALITY OF NETWORK 端 ALLOWS DIFFERENT COMPUTERS TO AGREE ON THE STATE OF THE SYSTEM Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain.
Source: www.99bitcoins.com HOW TO MAKE MONEY WITH BITCOIN? Setting up your own BITCOIN WEBSITE to generate a passive income MINI EARNINGS A bit of your time, a bit of cash SELLING products and services BITCOIN MINING Mine your own wealth INVESTING Tap into bitcoins ever-growing value GAMBLING If you got some luck you might make some money LENDING Loan some bitcoins, earn some interest WRITING Turn your literary skills into cash BB B B BB B B
The Philippines Officially Legitimize Bitcoin as Payment Method GUIDELINES FOR VIRTUAL CURRENCY (VC) EXCHANGES SOURCE: COINTELEGRAPH.COM BSP CIRCULAR NO.944 FEBRUARY 2017 The Bangko Sentral does not intend to endorse any VC, such as Bitcoin, as a currency since it is neither issued or guaranteed by a central bank nor backed by any commodity. Rather, the BSP aims to regulate VCs when used for delivery of financial services, particularly, for payments and remittances, which have a material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability.
3 Major Bitcoin Platforms in PH, Efficiency Comparison Test Coins.ph Users rank Coins.ph as one of the best and well- rounded Bitcoin applications globally, due to its connections with local banks, remittance networks, corporations, and merchants. Coins.ph allows users to settle utility bills, pay tuition fees, credit card payments, purchase mobile credits, and purchase and sell Bitcoin through remittance branches, ATMs and banks. SOURCE: COINTELEGRAPH.COM
3 Major Bitcoin Platforms in PH, Efficiency Comparison Test Buybitcoin.ph For buyers, Buybitcoin.ph requires an over-the- counter deposit to be submitted on the day of the order. Once the payment is made, Buybitcoin.ph sends the payment in a few hours. For sellers, Buybitcoin.ph requires a bank account number and the holders name for the payment. Once the Bitcoin payment is received by Buybitcoin.ph the payment is instantly sent to the bank account. SOURCE: COINTELEGRAPH.COM
3 Major Bitcoin Platforms in PH, Efficiency Comparison Test Rebit.ph Rebit.ph is a remittance and billing platform which consumers in the Philippines use to send both local and international payments, and to also settle utility bills. SOURCE: COINTELEGRAPH.COM
BITCOIN RISKS 1. Digital currency is not a legal tender. 2. Platform and digital wallets can be hacked. 3. Bitcoin transactions can be subject to fraud and theft. 4. No safeguards for digital wallets. 5. Bitcoin payments are irreversible. 6. Illegal activity use (i.e. drug dealing, money laundering, and other forms of illegal commerce) SOURCE: FINRA.ORG
SOURCE: INVESTOPEDIA.COM BITCOIN PREDICTIONS FOR 2017 1. Increased focus on Bitcoin as dominant digital currency vs altcoins: LITECOIN, ETHEREUM, AND ZEROCASH. 2. Demand growth in China, India. 3. Market cap closing $18B. 4. Price could double to $2,100 by Q4 2017. BITCOIN TRENDS
BITCOIN UNDERSTANDING

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Understanding Bitcoin

  • 1. BITCOIN UNDERSTANDING Financial Management Ateneo Graduate School of Business Leslie Bayona 29 May 2017
  • 2. BITCOIN UNDERSTANDING What is bitcoin? How does it work? Is it safe and how can you make money out of it? The bitcoin basics for Filipinos who want to understand and invest in the new digital currency.
  • 3. Source: www.bitcoin.org Bitcoin is a cryptocurrency and a digital payment system introduced 8 years ago by an unknown programmer. This digital currency is created and held electronically, no one controls it.
  • 4. Source: www.bitcoin.org HOW DOES BITCOIN WORK? As a new user, install Bitcoin wallet on your computer or mobile phone, it will generate your first Bitcoin address. You can disclose your Bitcoin addresses to your friends so that they can pay you or vice versa.
  • 5. Source: www.bitcoin.org BALANCES BLOCK CHAIN The block chain is a shared public ledger on which the entire Bitcoin network relies. Bitcoin wallets can calculate their spendable balance and new transactions can be verified. The integrity and the chronological order of the block chain are enforced with cryptography.
  • 6. Source: www.bitcoin.org TRANSACTIONS PRIVATE KEYS A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet.
  • 7. Source: www.bitcoin.org TRANSACTIONS PRIVATE KEYS The signature also prevents the transaction from being altered by anybody once it has been issued. All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes, through a process called mining.
  • 8. Source: www.bitcoin.org PROCESSING - MINING 端 ENFORCES CHRONOLOGICAL ORDER 端 PROTECTS NEUTRALITY OF NETWORK 端 ALLOWS DIFFERENT COMPUTERS TO AGREE ON THE STATE OF THE SYSTEM Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain.
  • 9. Source: www.99bitcoins.com HOW TO MAKE MONEY WITH BITCOIN? Setting up your own BITCOIN WEBSITE to generate a passive income MINI EARNINGS A bit of your time, a bit of cash SELLING products and services BITCOIN MINING Mine your own wealth INVESTING Tap into bitcoins ever-growing value GAMBLING If you got some luck you might make some money LENDING Loan some bitcoins, earn some interest WRITING Turn your literary skills into cash BB B B BB B B
  • 10. The Philippines Officially Legitimize Bitcoin as Payment Method GUIDELINES FOR VIRTUAL CURRENCY (VC) EXCHANGES SOURCE: COINTELEGRAPH.COM BSP CIRCULAR NO.944 FEBRUARY 2017 The Bangko Sentral does not intend to endorse any VC, such as Bitcoin, as a currency since it is neither issued or guaranteed by a central bank nor backed by any commodity. Rather, the BSP aims to regulate VCs when used for delivery of financial services, particularly, for payments and remittances, which have a material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability.
  • 11. 3 Major Bitcoin Platforms in PH, Efficiency Comparison Test Coins.ph Users rank Coins.ph as one of the best and well- rounded Bitcoin applications globally, due to its connections with local banks, remittance networks, corporations, and merchants. Coins.ph allows users to settle utility bills, pay tuition fees, credit card payments, purchase mobile credits, and purchase and sell Bitcoin through remittance branches, ATMs and banks. SOURCE: COINTELEGRAPH.COM
  • 12. 3 Major Bitcoin Platforms in PH, Efficiency Comparison Test Buybitcoin.ph For buyers, Buybitcoin.ph requires an over-the- counter deposit to be submitted on the day of the order. Once the payment is made, Buybitcoin.ph sends the payment in a few hours. For sellers, Buybitcoin.ph requires a bank account number and the holders name for the payment. Once the Bitcoin payment is received by Buybitcoin.ph the payment is instantly sent to the bank account. SOURCE: COINTELEGRAPH.COM
  • 13. 3 Major Bitcoin Platforms in PH, Efficiency Comparison Test Rebit.ph Rebit.ph is a remittance and billing platform which consumers in the Philippines use to send both local and international payments, and to also settle utility bills. SOURCE: COINTELEGRAPH.COM
  • 14. BITCOIN RISKS 1. Digital currency is not a legal tender. 2. Platform and digital wallets can be hacked. 3. Bitcoin transactions can be subject to fraud and theft. 4. No safeguards for digital wallets. 5. Bitcoin payments are irreversible. 6. Illegal activity use (i.e. drug dealing, money laundering, and other forms of illegal commerce) SOURCE: FINRA.ORG
  • 15. SOURCE: INVESTOPEDIA.COM BITCOIN PREDICTIONS FOR 2017 1. Increased focus on Bitcoin as dominant digital currency vs altcoins: LITECOIN, ETHEREUM, AND ZEROCASH. 2. Demand growth in China, India. 3. Market cap closing $18B. 4. Price could double to $2,100 by Q4 2017. BITCOIN TRENDS