Blockchain 101: Cryptocurrencies, Digital Assets and Blockchains - NYC Blockchain Week: 'All Things Blockchain' - nyc ...
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Blockchain 101:
Cryptocurrencies, Digital Assets and
Blockchains
NYC Blockchain Week: ‘All Things Blockchain’
15 May 2019
New York, New York
Sandra Ro, CEO, Global Blockchain Business Council (GBBC)
Session 101:
• Brief Introduction
• Blockchain 101: Let’s Start from the Beginning…Money, Bitcoin, a Brief History
• Trading, CryptoCurrencies, & Digital Assets, a Primer
• Blockchains, the Inspiration Technology: Paradigm Shifts, Risks, and ‘Data as Value’
2
What is ‘Money’ to you?
Source: Time Magazine 3
Evolution of Transfer of Value
Barter Gold Fiat Currency 2008: White Paper
2009: Bitcoin protocol
released
4
Financial Crisis 2008
5 5
Perception vs Reality:
The World of ‘Magic Internet Money’
6
Bitcoin: a Network, a System
“Announcing the first release of Bitcoin, a new electronic cash system
that uses a peer-to-peer network to prevent double-spending. It’s
completely decentralized with no server or central authority.”
– Satoshi Nakamoto, 09 January 2009, announcing Bitcoin* on
SourceForge
* Significant breakthrough: Bitcoin solved the ‘double spend’ problem (using the same
money more than once)
7
Bitcoin Explained, BBC Video
8
9
Bitcoin: Proof of Work (SHA 256 Hash Algo, Miners,
Core Developers, Hodlers, Maximalists)
Miners: computers that validate bitcoin network
transactions and are compensated by receiving bitcoins
when a ‘block is mined’
Proof of Work: type of consensus algorithm in which
output is difficult to produce but easy for others to
verify, allows ‘trustless’ consensus without a third party
Bitcoin Core: is an open source project which maintains
and releases Bitcoin client software called “Bitcoin
Core”. Anyone can contribute to Bitcoin Core
https://bitcoincore.org/en/about/
Source: https://blockgeeks.com/guides/what-is-cryptocurrency/
10Ethereum: Launched 30 July 2015
Ethereum took the basic elements of bitcoin and advanced it by launching a
decentralized platform that runs smart contracts for decentralized
applications (DAPPs)
Ether is the unit of cryptocurrency on Ethereum and is also the ‘gas’ for
building smart contracts
August 2014: Crowd sale raised $18MM in bitcoin to fund the project
The Ethereum Foundation (https://www.ethereum.org/) is a Swiss
nonprofit and is a valuable source of information / technical updates
11Blockchain Technology Benefits and Challenges
Benefits: Challenges:
✓ Distributed, decentralized ➢ Public vs private
architecture blockchains
✓ P2P trustless transaction ➢ Scalability
system ➢ Confidentiality
✓ Security: encrypted key ➢ Privacy
signatures ➢ Private key vulnerability
✓ Timestamping, linear ➢ Inter-operability of
recording of records multiple blockchains
✓ Transparency
✓ Fraud mitigation
12The Blockchain? No, many blockchains...
13Smart Contracts: the Humble Vending Machine
14Misunderstanding Crypto…
On top of that, the Governor is concerned that “one
of the main reasons for their use is to shield illicit
activities” and wants to take steps to end this
“anarchy”.
“The time has come to hold the crypto-asset
ecosystem to the same standards as the rest of the
financial system,” he said.
“Being part of the financial system brings
enormous privileges, but with them great
responsibilities.”
The Governor of the Bank of England, Mark Carney,
speaks to the Scottish Economics Forum, via a live feed,
in central London, Britain March 2, 2018.
REUTERS/Peter Nicholls
1516
Session 101:
• Brief Introduction
• Blockchain 101: Let’s Start from the Beginning…Money, Bitcoin, a Brief History
• Trading, CryptoCurrencies, & Digital Assets, a Primer
• Blockchains, the Inspiration Technology: Paradigm Shifts, Risks, and ‘Data as Value’
17Let’s get some
perspective…
18And some more perspective… Source: https://howmuch.net/articles/visualizing-the-biggest-economic-bubbles 19
Cryptocurrencies
New Asset (e.g. bitcoin, ether, litecoin, zcash, monero)
Class?
Digital Assets
(e.g. UK’s Royal Mint Gold (RMG), Digix Gold)
Crypto Asset
Digitized Fiat Currencies
Classification
(e.g. digital central bank money)
20Cryptocurrenies,
largely ignored
until 2017…
Source:
https://coinmarketcap.com/
Source: https://coinmarketcap.com/ 21Rise of Crypto Trading Platforms
Fiat-focused platforms Crypto-focused platforms
Coinbase Bittrex
GDAX Binance
Kraken Shapeshift
Bitstamp (acquired) Poloniex (acquired)
Gemini Bitfinex
CryptoFacilities
Major crypto-platforms have established brand presence and limited services such as margin trading
22
Source: Ajit Tripathi @chainyoda 22Initial Coin Offering (ICO), Paradigm Shift
Source: https://www.icodata.io/stats/2018
23STOs: Security Token Offerings, 2019 Version?
● Security Token Offering (STO)
Characteristics: a compliant form
of ICOs?
[xyz] project is a STO
raising funds under
Regulations D & S in the
USA
For US citizens to
contribute, each contributor
must be an accredited
investor
Citizens of other countries
must be equivalent
accredited investors
24What are Stablecoins?
A Stablecoin is a digital currency pegged to another asset e.g. USD or Gold or Algo
Physical
Digital asset
asset
Dematerialized Digital
e.g. Gold Token
asset currency
e.g. US treasury e.g. Bitcoin Utility token Asset token
e.g. ICO Native Non-Native
e.g. issued in Claim
DLT (future) on Peg
“The [..] key issue with cryptocurrencies is their unstable tender
value. This arises from the absence of a central issuer with
a mandate to guarantee the currency's stability.”
e.g. USC e.g.
(BIS Annual Economic Report June 2018) Tether
25
25Crypto Trading is NOT 100% User Friendly Yet…
Wallets:
Coinbase
Blockchain.info
Bitgo
Jaxx
MyEtherWallet
Paper (yes, literally on a piece of paper)
Cold Storage / Custody Solutions:
Ledger
Trezor
Xapo
Crypto Insurance:
Virtually non-existent – work in progress
Tax & P&L Reporting:
Messy – work in progress
2627
Enter Financial Services…
28Session 101:
• Brief Introduction
• Blockchain 101: Let’s Start from the Beginning…Money, Bitcoin, a Brief History
• Trading, CryptoCurrencies, & Digital Assets, a Primer
• Blockchains, the Inspiration Technology: Paradigm Shifts, Risks, and ‘Data as Value’
29Blockchain Technology: Where are We Going?
Blockchain 2018: Blockchain 2019++: Commercial and
Crypto Winter & Crash of ICO Mania Growth Opportunities
• Blockchains’ infrastructure evolution
• Real world use cases, including
‘blockchain for good’
• Impact across industries and
geographies
2018 2019
30Governance Audit and Repair Trust Protect Sensitive
Financial Controls Data
Promote Safeguard Property Shape the Assist in Workforce
Sustainability Rights Future of Work Development
31Blockchain Technology Benefits and Challenges
Benefits: Challenges:
✓ Distributed, decentralized ➢ Public vs private
architecture blockchains
✓ P2P trustless transaction ➢ Scalability
system ➢ Confidentiality
✓ Security: encrypted key ➢ Privacy
signatures ➢ Private key vulnerability
✓ Timestamping, linear ➢ Inter-operability of
recording of records multiple blockchains
✓ Transparency
✓ Fraud mitigation
32The Blockchain? No, many blockchains...
33Geographic distribution and
growth
Blockchain
Government and regulatory
2019-20 engagement
Trends
‘Going mainstream’ across
industries – use cases
34Countries Advancing Blockchain
Technology Development
3511 Years Ago: Forbes Front Cover…
36Mobile (smart)
phones: the
most valuable
real estate of
the future
37Technology &
MegaTrends
01 02 03
Demographic Environment & Governments
Changes – Age Climate Change and Conflicts
and Population
Growth
38
Source: http://www.worldometers.info/world-population/africa-population/Blockchain Government and
2019-20 regulatory engagement
Trends
39Blockchain Consortia & Regulatory Sandboxes
40Digital Assets & Blockchain Technology: Benefits & Risks
Potential Benefits: Potential Risks:
• Non-siloed Information Sharing • Multiple Blockchains’ Interoperability
• Increased Data Security Issues
• Transparency • Regulations & Jurisdictional Arbitrage
• Fraud Mitigation (similar to financial services)
• Cost Reduction • Technology Convergence Implications
• Payment Efficiency (AI, IoT, Quantum Computing, Robotics,
• Enhanced Customer & Provider Blockchain)
• Predictive, Proactive Decision Making • New Technology Leapfrogs Blockchain
• Too Much Hype, Not Enough Doing!
• We Recreate GAFAA World
41Blockchain
2019-20
Trends
‘Going mainstream’ across
industries – use cases
42Potential Use Cases for Blockchain
Real World Use Cases for Blockchain
44Identity Management
• People
• Employees / Contractors
• Suppliers / Partner Institutions
• Regulators / Safety Groups
45Major Sectors / Industries
Energy
How to help create secure, sustainable and low cost energy for all?
Financial Services
How to expand financial inclusion? How to improve existing financial services system?
Agriculture / Food / Commodities
How do we help reduce fraud and inefficiencies?
Healthcare
How to help deliver better, lower cost healthcare to more people with better records?
Land / Real Estate
How to recognize ownership of land? Reduce fraud and provide fractional ownership?
46Agriculture / Food / Commodities
Sources: https://www.ibm.com/blockchain/solutions/food-trust, https://which-50.com/alibabas-blockchain-food-tracking-program-launches-in-new-zealand/ and various
47Proliferation of Healthcare Use Cases
Top Use Case Areas:
1) Provider Licensing &
Credential Verification
2) Payer Administration & Big
Data Management
3) Invoicing and Payment
Reconciliations => cost
reduction
4) Medication monitoring &
supply chain tracking (+IoT)
5) Public Health Surveillance
& Population Health
Management
6) Predictive Markets & Price
Transparency 48Aviation and Potential Blockchain Applications:
Photo Credit: https://www.acsi2000.com/supply-chain-management
PEOPLE SUPPLY CHAINS & LOGISTICS SAFETY, SECURITY & REGULATIONS
• Identity Management • Identity / Credentials Management - • Flight Records Systems Security –
(customers, employees, Identify & verify ‘credentials’ of e.g. Malaysia Airlines Flight 370
suppliers, partners) people and institutions) March 2014
• Tokenisation - Loyalty Miles • ‘Real Time Track & Trace’ – • Data Sharing & Analytics –
as Digital Money and Gaming Counterfeiting / Fraud Mitigation, Enables faster info flow across
Increase Transparency agencies & stakeholders –
• Bundled Services ‘BUREAUCRACY KILLER’?
Management – Improve • Data Analytics – Improve information
customer experience; sharing for regulatory & ROI benefits • Insurance & Financing -
mitigate overbooking issues Integrated digital financial services
• Aircraft Leasing / Insurance to improve risk analysis;
49
fraudulent claims reductionTo the Cynics…
who may think crypto / blockchain is just a fad
technology…
5051
52
53
Together,
We Can Make Positive Change for a Better
Society and Create Opportunities for Many
Thank You!
Sandra Ro
Sandra.Ro@gbbcouncil.org
USA: +16462705113
UK: +447867970913
WeChat ID: coredigitiser
Twitter: @srolondon
54APPENDIX: Blockchain Resources
If Interested, Going Down the Rabbit’s Hole… Satoshi Nakamoto’s White Paper: https://bitcoin.org/bitcoin.pdf Andreas Antonopoulos’ videos and Internet of Money (Vol 1 & 2), Mastering Bitcoin (editions 1 & 2) books Chris Burniske & Jack Tatar, CryptoAssets book (valuation and basic of crypto trading) Michael Casey & Paul Vigna’s Age of Cryptocurrency & The Trust Machine books CoinCenter.org resources on crypto currencies https://coincenter.org/ Global Blockchain Business Council https://www.gbbcouncil.org/ (curated content) John Hargrave, Navroop Sahdev, Olga Feldmeier paper on crypto value creation (I still need to read this) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3146191 Universities with crypto thought leadership: MIT Media Lab/DCI, Berkeley, Cornell, Imperial, Cambridge and many more 56
Basic Crypto Terms
• Consensus Algorithm: a process used to achieve agreement regarding a certain set of data and its validity across a
distributed network
• Distributed Autonomous Organisation (DAO): an organization that is run through rules encoded as computer programs called
smart contracts
• Digital Signature: a code attached to an electronic document to verify its contents and the sender ID
• Genesis Block: the first block of data in a chain
• Hard Fork: is a permanent divergence from the previous version of the blockchain requiring miners and nodes to upgrade
protocol software to newest/latest version of the blockchain
• Hash Function: a cryptographic mechanism used to verify and authenticate the integrity of information by producing a value
for a specific object
• Node: A point in a network where there is an intersection (e.g. a computer connected to the network that ideally performs a
function)
• Oracle: a bridge between the outside world and blockchain which verifies real world information and submits it to the
blockchain
• Permissioned / Permissionless: types of blockchains which are private or publicly accessible
• Private Key: A form of cryptography that provides access, similar to a password
• Smart Contracts: code that are executed by a network of computers, which facilitates the self execution of previously
agreed upon conditions
• Smart Laws: a concept which allows human logic to intervene in smart contract execution where necessary
• tps: transactions per second: the speed at which a network can record data
5758
59 59
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