Virtual Worlds
Blockchain and distributed ledgers-------So much more than just
bitcoin
Professor Robin Teigland Stockholm School of
Economicswww.slideshare.net/[email protected]
@RobinTeiglandApril 2016www.hhs.se
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Time will tell..The Blockchain is the glue that is going to
drive a productivity revolution across the globe on par with what
Henry Ford did with the automobile.
Paul Brody, Americas Strategy Leader, Technology Sector, Ernst
& Young
>USD 1 bln invested in Bitcoin/Blockchain
https://www.cbinsights.com/blog/largest-blockchain-deals-strategic/
https://www.cbinsights.com/blog/largest-blockchain-deals-strategic/3
What is money?
Challenging our mindsetMoney = Fiat currencyCountrys primary
currencyDerives value from government backing
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A vocabulary list of currenciesFiat currencyNational
currencyAlternative currencyBonus points/vouchers, e.g., frequent
flyer milesDigital currencyIn-game currencies, e.g., Stardollars,
Farmville cashVirtual world currencies, e.g., Linden dollars,
PEDsMobile currency, e.g., M-pesaCryptocurrency, e.g., Bitcoin
>6000 alternative currencies
Real cash economy in Entropia
Universehttp://blogs.forbes.com/oliverchiang/2010/11/13/meet-the-man-who-just-made-a-cool-half-million-from-the-sale-of-virtual-property/
GDP >USD 440 mlnPEDs USD, EURRecord virtual good: USD
625,000
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https://bitcoin.org/bitcoin.pdf
an electronic payment system based on cryptographic proof
instead of trust, allowing any two willing parties to transact
directly with each other without the need for a trusted third
party. The beginnings of Bitcoin on the internet in 2008-2009
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Bitcoin as described on sourceforgeBitcoin is a decentralized
P2P (peer-to-peer) electronic cash system without a central server
or trusted parties.
Users hold the crypto keys to their own money and transact
directly with each other, with the help of the network to check for
double-spending.
Banking is essential, but banks are not.Bill Gates
Self-organizing, global community of
strangersLibertarianEfficiencyProfitChallengeCommunity
November 2009 is the month when the first message to the forum
was posted. Therefore, we have the complete forum between day 1 and
beginning of Jan 2013.12
InstitutionsEmergent CollectiveVSE.g., Central Bank~
Long-standing financial institutions and regulationsE.g., Bitcoin
Community ~ Emergent collective of users across globe connected
through internetTeigland, Yetis, Larsson 2013
No one knows everything, everyone knows something, all knowledge
resides in humanity.
networks.Adapted from Lvy 1997
Image: Krebs
14Here is a quotation from Pierre Levy, a researcher who studies
collective intelligence, or . He says, No one knows, but I have
adapted this to be that all knowledge resides in networks. What
good is knowledge if you cannot access it? Knowledge is created and
transferred through networks. How many of you have heard of six
degrees of separation? (raise hands)this means that we are
collected to all other human beings on the face of the planet
through six links, where a link is from me to person x in audience.
Thus, each of us actually has access to all knowledge and resources
that exist. (Next slide)
mobile phone, internet, here could have farmer in Asia,
President Obama, Zlatan,
http://www.youtube.com/watch?v=MbX_I2fuqJk&feature=PlayList&p=079F3CFE9701D083&index=0Pierre
Lvy, Collective Intelligence: Mankind's Emerging World in
Cyberspace, 1997
My example of how this presentation was made. Asked a question
on Socnet and received many good answers with peoples presentations
and links to interesting sources
Continued growthOn April 27, 20161 BTC = USD 463 15.5 mln
bitcoins in circulationMarket capitalization of USD 7.1 bln245,000
transactions
https://blockchain.info/charts
How does Bitcoin
work?https://99bitcoins.com/get-your-first-bitcoin/
https://bitcoin.org/en/
https://bitcoin.org/en/how-it-works: The block chain is a shared
public ledger on which the entire Bitcoin network relies. All
confirmed transactions are included in the block chain. This way,
Bitcoin wallets can calculate their spendable balance and new
transactions can be verified to be spending bitcoins that are
actually owned by the spender. The integrity and the chronological
order of the block chain are enforced with cryptography.
Digital (nothing new)Decentralized, peer-to-peer (P2P), i.e., no
central, third party (first of its kind)
Uses cryptography to validate/secure transactionsAlso uses
cryptography to generate currency itself
Non-technical explanation of
Bitcoinhttps://www.youtube.com/watch?v=t5JGQXCTe3c
https://www.youtube.com/watch?v=iFChBFoqA8s
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Bitcoin is a ..combination of several innovations, arranged in a
novel way: A peer-to-peer networkA proof-of-work algorithmA
distributed timestamped accounting ledger An elliptic-curve
cryptography and key infrastructure
https://radar.oreilly.com/2013/06/the-crypto-currency-ecosystem.html
A bitcoin transaction
http://www.longfinance.net/images/events/Blockchain_and_Insurance_Webinar_10.14v2.0.pdf18
Bitcoins and the Blockchain
http://www.longfinance.net/images/events/Blockchain_and_Insurance_Webinar_10.14v2.0.pdfWays
to use bitcoinsWays to get bitcoins
http://www.longfinance.net/images/events/Blockchain_and_Insurance_Webinar_10.14v2.0.pdf
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Where can I buy bitcoins?
32 lnder i Europa
Yesterday I bought 1000 SEK of bitcoins
The blockchain underlies bitcoin transactions
Financial Times
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A global network of Bitcoin nodeshttps://bitnodes.21.co/
https://bitnodes.21.co/https://bitnodes.21.co/nodes/live-map/23
https://www.youtube.com/watch?v=K8kua5B5K3IMiners verify the
transactions
https://www.youtube.com/watch?v=K8kua5B5K3I24
Mycelium wallet on my phone
Where can I spend my bitcoins?
DellMicrosoftWordpressOverstockGiftcardsExpedia
On 260+ airlines through Bitnet
http://www.uatp.com/news-and-events/press-releases/2015/02/UATP%20Connects%20With%20Bitnet%20Enabling%20Airlines%20To%20Accept%20Bitcoin%20Payment.html
Where can I spend bitcoin in Prague?
my bitcoin
purchasehttp://www.coindesk.com/information/how-do-bitcoin-transactions-work/
The chances are that when Alice wants to send bitcoins to Bob,
she wont have exactly the right number of bitcoins from other
transactions. Perhaps she only wants to send 1.5 BTCto Bob.None of
the transactions that she has in her bitcoin address are for that
amount, and none of them add up to that amount when combined. Alice
cant just split a transaction into smaller amounts. You can only
spend the whole output of a transaction, rather than breaking it up
into smaller amounts.Instead, she will have to send one of the
incoming transactions, and then the rest of the bitcoins will be
returned to her as change.Alice sends the two bitcoins that she got
from Jane to Bob. Jane is the input, and Bob is the output. But the
amount is only 1.5 BTC, because that is all she wants to send. So,
her wallet automatically creates two outputs for her transaction:
1.5 BTC to Bob, and 0.5 BTCto a new address, which it created for
Alice to hold her change from Bob.
https://en.bitcoin.it/wiki/Confirmation
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What is so novel about Bitcoin?
Distributed timestamped public ledger Decentralized, P2P
networkProof-of-work algorithmAll transactions ever made
loggedChronology and integrity enforced by cryptographyNo third
party overseeingTrust in the network
Screenclip from: How Bitcoin Works under the hood, by Curious
Inventor
https://bitcoin.org/en/how-it-works: The block chain is a shared
public ledger on which the entire Bitcoin network relies. All
confirmed transactions are included in the block chain. This way,
Bitcoin wallets can calculate their spendable balance and new
transactions can be verified to be spending bitcoins that are
actually owned by the spender. The integrity and the chronological
order of the block chain are enforced with cryptography.
Digital (nothing new)Decentralized, peer-to-peer (P2P), i.e., no
central, third party (first of its kind)
Uses cryptography to validate/secure transactionsAlso uses
cryptography to generate currency itself
Non-technical explanation of
Bitcoinhttps://www.youtube.com/watch?v=t5JGQXCTe3c
https://www.youtube.com/watch?v=iFChBFoqA8s
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Bitcoin one of 100s of
cryptocurrencieshttp://coinmarketcap.com/
http://coinmarketcap.com/32
Sluggish growth in bitcoin usage?Users satisfied with current
payment systems that continuously improving Practical difficulty of
purchasing bitcoinsVolatility of bitcoins value relative to
governmentissued currenciesPerception that bitcoin is
insecurePerception that only used for money laundering, drugs,
etc.Questions over bitcoins legal statusIrreversible and
unforgiving nature of bitcoin transactionsLack of support for
bitcoin in mainstream financial
sectorhttp://www.multichain.com/download/MultiChain-White-Paper.pdf
http://www.multichain.com/download/MultiChain-White-Paper.pdf33
The blockchain (Ethereum)
- Andreas Antonopolous Saying that Bitcoin is a currency is like
saying that the internet is email. Currency is just the first app!
http://startusingbitcoin.com/blog/1-what-is-bitcoin/
https://www.provenance.org/whitepaper36
The blockchainDecentralized and distributedRobust, no central
control or authority required to coordinate behavior or interaction
Shared public history of all transactions
Displaces roles of trusted third partiesCant do same transaction
twice No transaction repudiation Initial entry requires trust but
then system operates on trustless basis
http://www.longfinance.net/images/events/Blockchain_and_Insurance_Webinar_10.14v2.0.pdf
https://bitcoin.org/en/how-it-works: The block chain is a shared
public ledger on which the entire Bitcoin network relies. All
confirmed transactions are included in the block chain. This way,
Bitcoin wallets can calculate their spendable balance and new
transactions can be verified to be spending bitcoins that are
actually owned by the spender. The integrity and the chronological
order of the block chain are enforced with cryptography.
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Centralized vs distributed ledgers
Financial Times
Benefits of blockchain for financial servicesLower costs through
shared infrastructureFaster settlement that leads to lower capital
and liquidity needsIncreased transparency, especially with cross
border paymentsGreater security through cryptography,
transparencyCiti Research, Jan 2016
Betting on the blockchain - together
>40 banks and countingGoldman Sachs, JPMorgan, Credit Suisse,
Barclays, Commonwealth Bank of Australia, State Street, RBS, BBVA,
UBS, Nordea, SEB, +
+
+
http://www.coindesk.com/global-investment-banks-back-blockchain-initiative/www.ft.com/intl/cms/s/0/f358ed6c-5ae0-11e5-9846-de406ccb37f2.html
http://www.ibtimes.co.uk/estonias-lhv-bank-chromaway-win-innovation-award-2016-bitcoin-app-1554989
http://uk.businessinsider.com/25-most-exciting-bitcoin-startups-in-the-world-ethereum-21-coinbase-coindesk-2015-3?op=141
What can be decentralized using blockchains?Trading, stocks,
bonds, Contracts, notary services InsuranceLaw, dispute resolution,
Matchmaking servicesCrowdfunding, peer-to-peer
lendingEtc.http://startusingbitcoin.com/blog/1-what-is-bitcoin/
Blockchain insurance applications
Enabling smart contracts?Weather dataalgorithm
Insuranceclaim payout
http://www.iol.co.za/business/companies/crops-going-uninsured-197412944
Enabling smart contractsImagine a blockchain-based script that
is activated when two parties sendbitcoins to an escrow Bitcoin
account controlled by the script, and which willrelease the
bitcoins in the future to whoever wins a bet on the average level
of rainfallover a certain period. This smart-contract is programmed
to read data from weatheragencies, and after a set amount of time
releases the bitcoins from the escrow, sending itto a farmer who
requires protection against low rainfall. This is a
blockchain-basedweather derivatives contract.-Brett Scott
http://bravenewcoin.com/news/bitcoin-could-be-more-to-airlines-than-just-an-asset-for-exchange/
IBM Institute for Business Value (PDF)
http://www.zdnet.com/article/is-blockchain-the-key-to-the-internet-of-things-ibm-and-samsung-think-it-might-just-be/
"In the absence of a centralized server brokering messages,
supporting file storage and transfers, and arbitrating roles and
permissions, any decentralized IoT solution should support three
foundational types of transactions: Trustless peer-to-peer
messaging Secure distributed data sharing A robust and scalable
form of device coordination."
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Worlds first decentralized computer?Commoditizes
trusthttps://www.youtube.com/watch?v=U_LK0t_qaPo
robots
nanok.com
Enablers of a true Collaborative Economy?BlockchainsSharing/
Collaborative EconomyIoT/sensorsP2P/M2M micropaymentsBig data
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All our knowledge is about the past, but all our strategic
decisions are about the future.
What we dont know we dont know
Most of what we need to know to make good decisions today is
outside our comprehension: We dont even know its there.
What we knowWhat we know we dont know
Swinburne University of Technology51Thinking Futures, An
Introduction to Scenario Planning, M Conway, 2003
1950s vision of home PC in 2004
If the rate of change on the outside (of an organization)
exceeds the rate of change on the inside, the end is near.... -Jack
Welch
Business has to be fun. For too many people, it's "just a job."
http://en.wikiquote.org/wiki/Jack_Welch
Of original Forbes 100 in 191761 companies ceased to exist by
198718 of remaining 39 underperformed market by 20%Only 2 beat
market index (GE & Eastman Kodak)Only 1 (1%) today!Of companies
in original S&P 500 in 1957426 companies ceased to exist by
1997Only 12 (2.4%) outperformed S&P 500 index in 1997 Of top
100 companies in Korea in 1955Only 7 still on list in 20041997
crisis destroyed half of 30 largest conglomerates
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Robin
[email protected]/[email protected]
If you love knowledge, set it free
If you like this presentation and would like to contribute to
our research, we accept bitcoins:
1GJR2kE7ebeWwvefHcGCwP2HRfTTjN9ewG.Thank you!!!!!
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