Will bitcoin really change the world?
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Wirtschaft & Finanzen
Adriana BelottiFolgen
Front-end Web Developer and Online Marketer
Will bitcoin really change the world?
- WILL BITCOIN REALLY CHANGE THE WORLD? BUZZCONF 2015 @abelotti
- WHAT DOES THIS HAVE TO DO WITH BITCOIN?
- Image credit: The Bitcon Doco – Ep. 1
- WHAT IS BITCOIN? A borderless crypto currency A decentralised trustless peer-to-peer network, the Bitcoin Protocol A public immutable transaction ledger, the Blockchain
- Image credit: desultoryheroics A borderless crypto-currency
- Mining New bitcoins are issued as a reward for processing transactions and keeping the network secure.
- A decentralised trustless peer-to-peer network, the Bitcoin Protocol
- A public immutable transaction ledger, the Blockchain “Nothing is impossible, unless you’re talking about forging the Blockchain” Chris Mountford, Software Developer, Atlassian
- MANY BLOCKCHAINS Concept Credit: Chris Mountford www.yourdomain.bit Counterparty LBTC BAAMembership MaidSafe Omni/Mastercoin Colored Coins Bitgold BitUSD Buildwhateveryouwant
- MANY BLOCKCHAINS Concept Credit: Chris Mountford www.yourdomain.bit Bitgold BitUSD Buildwhateveryouwant Counterparty LBTC BAAMembership MaidSafe Omni/Mastercoin Colored Coins
- Gambling Gaming Voting Systems Decentralised Cloud Storage MANY USE CASES Smart Contracts Maketplaces Auditing Proof of ownership Proof of Identity This list is just a sample, there are many more!
- VC INVESTMENTS OVERVIEW Image credit: Venture Radar Blog 2015 YTD VC Investment $462 m 2014 VC Investment (Jan-Oct) $230 m Total VC Investment in Cryptocurrency startups to date $921 m
- Q3 2015 CATEGORY INVESTMENT DISTRIBUTION Financial Services $14m Mining $20m Payment Services $1m Wallets $1m Universal $4m Infrastructure $39m Exchanges $6m
- Investigate Download a wallet Do a transaction Download Bitcoin core Run a node Play with it Develop a Dapp Have fun!
- QUESTIONS? For more info or to connect Adriana Belotti @abelotti adriana@bitcoin.asn.au Support the Bitcoin Association of Australia Individual membership only $25/year bitcoin.asn.au/membership
- REFERENCES Mastering Bitcoin by Andreas Antonoupolous Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto The People’s Money by Adam Tepper The Bitcoin Doco (Part 1) Money is Now an Image Counterparty Omni Colored Coins Maid Safe Namecoin Bitshares Ethereum Bitcoin: Then End of Money, as we know it CoinGecko Bitcoin Ventrure Capital via Coindesk Blockchain applications chart – Let’s Talk Payments
Hinweis der Redaktion
- Helloooooooo everybody! Wow, this is way more nerve wrecking then I thought it would be. The main objective this morning is to give you an overview of what bitcoin is and what kind of opportunities are out there, hopefully inspire you to find out more. So. Before we dig into bitcoin, let me tell you why I’m interested in it.
- I grew up in Brazil, back when we had a military regime… and dictators much like the politicians that followed them, didn’t have much of a clue about economic policy. Inflation was rampant… I remember supermarkets were always crowded in the mornings, because prices would go up on a daily basis, but for some reason the guy with the price labelling machine had the afternoon shift. That’s a job technology extinguished, by the way, thanks to barcodes. The military regime folded in 85… and between then and 94, Brazil was so plagued hyperinflation that we went through FIVE different currencies in about 12 years. In 93, along a new government, we got a really smart finance minister, with THE solution to hyperinflation… we were to have two parallel currencies. The cash currency and a virtual one. The virtual one was the URV (unit of real value) and it was paired 1 to 1 with the US dollar. Prices were fixed in URN and all day to day transactions needed to be converted at the time of payment… we did this for about year and it was crazy… we’d go to a restaurant for example, and the menu listed prices in URV, with the daily exchange rate written at the top. To pay the bill we had to convert the URV value into the cash currency. We would then pay the bill and go about our business. Prices remained the same in URV during the whole transition period, so a movie ticket that today would cost 5 URVs, would convert to 15,000 in hard cash, tomorrow would convert to 16,000. And the inflation continued only on the cash currency. At the end of the transition period, The Real - was introduced, and that had a one to one to the URV, effectively ending hyperinflation.
- At this point, you probably going “what does this have to do with bitcoin?” right? Well, a lot, because when you grow up with hyperinflation, currency change overs, and economical experimentation, it makes it easier to understand that a currency is nothing but a system of money. It’s what you’re used to, what your government tells you it is. So I went my first bitcoin meetup just over a year ago. And up until that point I had heard about bitcoin many times but because back then bitcoin exchange rate was really soaring, most conversations were about investment or bitcoin as a commodity, which I’m not really interested in, so I had always brushed it aside. But I did go the that meetup and I learned that bitcoin was a system of exchanging value over the internet without relying on intermediary and that it also included a decentralised currency issuing mechanism that is based on maths and science. So I wondered… DOES currency really HAVE TO BE WHAT THE GOVERNMENT TELLS ME? The internet made the world borderless in many ways, allowing people to exchange information, which is powerful because collaboration drives innovation, but we still had to use old financial mechanisms to move value around. With Bitcoin we can send value across the globe nearly instantly, irreversibily, with very low fees and no intermediary. And THAT is valuable… So, let’s get to it.
- Bitcoin was created in 2009 by an person or group of people using the alias Satoshi Nakamoto. We don’t really know who he is, but that is kinda irrelevant now, in the same way as who invented email is, because it’s an open source project that has now been contributed by thousands of people. (V.A. Shiva Ayyadurai) So, Satoshi published his whitepaper - which is a really good read - and the opening line of the abstract reads and I quote “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution” As I mentioned before, it is a radical innovation that enables direct value exchange over the internet. So, the network launched in 2009 and during the first couple of years it was very small, with only a few enthusiasts playing around. In 2010, the first transaction that created value for bitcoin was for a pizza. At the time they paid BTC10,000 bitcoins for two pizzas, and that was about $25. This pizza now would be worth over 4 million dollars. Crazy right? Pizza day is on 22 of May, and people in the community buy pizza to celebrate that first transaction.
- Bitcoin is a complete protocol, a collection of concepts and technologies that form the basis of a digital money ecosystem, and it can be split into 3 distinct areas: A decentralized crypto-currency A decentralized, trustless peer-to-peer network – built on the open source Bitcoin Protocol And the Blockchain, the hot thing everybody is talking about. Let’s look at these one by one… first up…
- A borderless cryptocurrency That’s the easiest of the three, it’s the internet’s currency! Essentially an evolution of digital money. The difference with this system of money is that units are created using cryptography, maths and science…. How cool is this?... It is an internet protocol that handles value transfer. Just like email changed the way we communicate, in the sense that can be used by anyone anywhere in the world, and it’s basically free to use and it doesn’t discriminate on where you were born, or what colour your skin is, Bitcoin is an incredible way to reinvent how the world transacts. An important characteristic is that it thrives on the network effect, and becomes more secure, robust and valuable as adoption increases…
- In Bitcoin, a transaction is a record informing the network of a transfer of bitcoins from one owner to another... Ownership of bitcoins is established through digital keys, Bitcoin addresses, and digital signatures. Bitcoins are issued as a reward for processing transactions, through a process called mining… When transactions are broadcasted over the network, a cryptographic hash function is used to verify data integrity, which establishes that data was not corrupted or modified during transmission… All Bitcoin transactions are stored in blocks, which are linked (or “chained”) together in sequence to form the blockchain. One block is mined every 10 minutes… This equals to 144 blocks per day and the reward per block is 25 bitcoins, totalling 3,600 bitcoins per day. Approximately every 4 years, the issuance rate decreases by 50%, in a process call halving, with the next one set to happen when block four hundred and twenty thousand is mined, sometime next year. That will keep happening until all 21 million bitcoins are issued, approximately in 2140. That’s 125 years from now… Can you imagine how different the world will be then?
- Bitcoin runs over a peer-to-peer network of computers called nodes. These nodes are responsible for processing transactions and maintaining all records of ownership, they are the blockchain’s settlement layer. A Proof-of-Work algorithm uses Hash functions to verify block integrity, and establish the chronological order of the blockchain. This solves the issue of double spending, preventing a single unit to be spent twice, which was a weakness of digital currencies that required a centralised clearing house to process transactions. The network self-adjusts to increase or decrease the algorithm difficulty according to how many nodes are online. Anyone can download the free open-source Bitcoin software and run a node. In the network, all nodes are treated equally, and no single one is trusted. However, the system is based on the assumption that the majority of computing power will come from honest nodes.
- The Bitcoin blockchain is a distributed chronological ledger of valid network transactions that can be reviewed and added to by anyone who transacts on the network, but no one can changed it. Once a block has been added, that transaction record is there forever and cannot be reversed. This complete and immutable history is used to obviate trust and middlemen. Two of the most important qualities of the blockchain are the decentralisation and the ability to reach distributed consensus, it trusts no one but it’s open to everyone. The bitcoin blockchain has a proven track record with an establish network effect and a growing ecosystem… but it’s not the only blockchain. You can use blockchain technology to build other applications, going beyond currency. And these applications can be built on top of the any blockchain… using it as the underlying platform… and while bitcoin was built as a payment network, there are many other use cases.
- There are several distributed networks offering apps secured by the Bitcoin blockchain. They use bitcoin’s blockchain as a general purpose technology platform where other technologies can build on, and on each of these further assets can be built on, all benefiting from the network effect or the trust that Bitcoin has. Counterparty allows users to launch their own digital assets… They are called coins or tokens and can be used for a wide range of purposes, acting as their own cryptocurrency, while still running on the Bitcoin blockchain. An example is the LBT Coin, used by the Let’s Talk Bitcoin podcast network to reward listeners. And they can exchange their tokens for services on the network, like advertising, or exchange them bitcoins or other lite. Omni is another open-source, fully decentralized asset creation platform. An example is MaidSafe a storage network made up by individual users who contribute their own hard disk space, computing power and bandwidth to form an autonomous system. Colored coins are small unique fractions of a bitcoin, set aside to represent another asset. We use colored coins at the Bitcoin Association of Australia to issue memberships.
- Namecoin was the first fork of bitcoin and is also limited to 21 million coins. It is used for .bit domain registration, which operates independently of ICANN. They claim to be one of the most innovative altcoins and can be used to attach a data value to the names. With BitShares you can open an account with a balance denominated in gold, silver, oil, or other commodities in addition to national currencies… BitShares also serves as an exchange where you can trade currencies, commodities, and stock derivatives. Launched in July and already the 4th altcoin, Ethereum’s blockchain is intended to power not just programmable money (ether) but also all sorts of projects, like voting systems, identity registries, reputation systems, decentralized file storage, decentralized autonomous operation and more. **Turing Complete means in principle (although often not in practice) it could be used to solve any computation problem.
- There two types of blockchain companies, currency and non-currency. ‘Currency’ companies are wallets, exchanges, payment processors and other financial services companies that mainly focus on bitcoin as an alternative payment rail or investment asset. The ‘non-currency’ companies focus on infrastructure and the use of blockchain technology for information management in some way. Smart contracts replace agreements between entities for software that self-executes and self-enforces, when certain conditions are met. For example, a contract between a lender and a car buyer, which specifies that the customer has rights to the car as long as they make their payments, and if they fail, the contract returns the control of the digital keys to the lender. Creating an automatic, transparent process, with much lower costs. Smart contracts use multi-signature, prediction markets, and oracles for things like Ecommerce, Internet of Things, Access Control, Funding, Gambling, Estate Planning, Digital Property (like digital art, music) There’s also proof of identity, for birth certificates and other identity requirements, and proof ownership for titles, deeds, car rego… Gambling and gaming, of course, with Microsoft making headlines earlier in the year for being the first major software company to accept bitcoin in their gaming marketplace. But out of the box, when you think of gaming today, there’s also the opportunity to monitise in-app purchases, which is a huge market.
- A lot of money is being poured into bitcoin, and money usually goes in the direction of most profits… Year-to date investment in crypto startups more than doubled compared to the same period last year. All time bitcoin investment at the closing of last quarter topped $921 million. The new Fintech buzzword is Blockchain… and although the mainstream still doesn’t get a few things right, there’s certainly a curiosity about how this technology works and the disruption it will bring to a variety of industries.
- A quick look through the breakdown of VC investment in the last quarter shows us that most of the investment went to startups operating in the infrastructure, mining and financial services. There are plenty of opportunities out there, projects that need good developers… Granted a lot of these are overseas, so we need the Australian market to grow… Last month a new senate inquiry advised that Bitcoin and cryptocurrencies should be treated as currencies, not commodities. Not sure how long it will take for the ATO to lift the GST on bitcoin, but hopefully once that happens local bitcoin projects will pickup.
- Bitcoin turned 6 two weeks ago, on October 31. It’s an awesome invention, but it’s still very new. It’s like a kid in primary school. And although it provides an opportunity to speak about money again, this innovation is not about shopping, it’s about everything else, everywhere else…. When you think that out of the total population of the planet less than half currently have access to banking… Over 4 billion people don't, and bitcoin can change that… because it gives everyone a chance to interact without those agents, the banks, the western unions, the whatever services they used before… services that excelled only in charging through the nose, in places where money is very scarce. Bitcoin innovation… whether the currency or the protocol… is about bringing services where they are needed, about paying less fees, about disrupting the status quo and the 1% that has been collecting profits for too long. It’s about looking at the whole way we handle digital information and seeing where we can improve it. When you look at IoT, connected devices, automation.. Self-driving cars, that take themselves to maintenance, and to the parking lot during downtime. ……Bitcoin will play a big role in our future. And already here… I could pay for my sister’s birthday dinner today, just by pasting a code into my wallet… That’s already pretty cool. My point is, be curious… There’s your to-do list…Learn! Train yourself, investigate, have fun with it. I am sure, that given time and good development, there will be heaps of opportunities… … Bitcoin will make world economics smarter and hopefully… not only change the world… but make it better… Thank you.