Published on March 12, 2014
Bitcoin ---- Challenging the fiat money system or catalyzing economic development? March 2014
Today’s presentation Brief history of Bitcoin What is a cryptocurrency? How does Bitcoin work? Variations on Bitcoin Benefits and drawbacks Recent events Moving forward
Within 5 years: Challenging the fiat money system? Bitcoin – An emergent phenomenon • Open source project on SourceForge in Jan 2009 • Original source code by “Satoshi Nakamoto” – pseudonym? • Developed by self-organizing community of thousands of strangers across globe • Approx USD 7.8 bln in circulation (March 2014) and 80,000 daily transactions • SEK 50 bln of Bitcoin vs Swedish Crown: 91 bln SEK Teigland, Yetis, Larsson 2013 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263707
Bitcoin Online Forums
Bitcoin Foundations across the globe
Institutions Emergent Collective vs E.g., Bitcoin Community ~ Emergent collective of users across globe connected through internet Teigland, Yetis, Larsson 2013 E.g., Central Bank ~ Long-standing financial institutions and regulations
What is a cryptocurrency? Digital Decentralized, peer-to-peer (P2P), i.e., no central, third party Uses cryptography to validate transactions Also uses cryptography to generate currency itself
How does Bitcoin work? Screenclip from: How Bitcoin Works under the hood, by “Curious Inventor” Block chain • Shared public ledger • All transactions ever made included • Chronology and integrity enforced by cryptography
Screenclip from: How Bitcoin Works under the hood, by “Curious Inventor” Transactions between Bitcoin wallets secured through digital signatures
Screenclip from: How Bitcoin Works under the hood, by “Curious Inventor” Verifying a transaction
“Mining” confirms waiting transactions through distributed consensus system Generates new Bitcoins (at decreasing rate) Does coding and de-coding that verifies and stores transactions (increasingly complex)
Screenclips from: How Bitcoin Works under the hood, by “Curious Inventor” Preventing double spending fraud
Mycelium Bitcoin Wallet
Where can I buy Bitcoins in Sweden?
Benefits of Bitcoin Improved transaction security Trust in cryptography rather than institution(s) Transparency Lower transaction costs Cross-border, faster transactions No outside intervention No inflation (although market volatility)
Who accepts Bitcoin? http://coinmap.org/
Bitcoin becoming more mainstream?
Drawbacks of Bitcoin Tax concerns Only as safe as wallet holding coins or exchange’s servers Consumer uncertainty Market volatility (commodity or currency?) Potential for illicit use High electricity consumption to “mine”
Bitcoin – one of many cryptocurrencies Currency Code Year Est. Founder(s) Active Website PoW PoS Bitcoin BTC or XBT 2009 Satoshi Nakamoto (pseudonym) Yes N/A Yes No Ripple XRP 2013 Chris Larsen & Jed McCaleb Yes ripple.com No No Litecoin LTC 2011 Charles Lee Yes litecoin.org Yes No Peercoin PPC 2012 Sunny King (pseudonym) Yes peercoin.net Yes Yes Dogecoin DOGE 2013 Jackson Palmer & Billy Markus Yes dogecoin.co m Yes No Namecoin NMC 2011 N/A Yes dot-bit.org Yes No Mastercoin MSC 2013 J. R. Willett Yes mastercoin.or g No No Primecoin XPM 2013 Sunny King (pseudonym) Yes primecoin.or g Yes No
Variations on a theme Finite (e.g., Bitcoin) or infinite number of coins available to be mined to no mining at all Differing levels of transparence, e.g., of identities of those transacting Proof of work, i.e., show work in order to generate value (mining) Proof of stake, i.e., show legitimate ownership of currency (so possession /= ownership)
Recent events Closure and bankruptcy filing of world’s largest Bitcoin exchange, Mt Gox in Japan − Unclear what happened – Exchange says it was hacked − Others allege CEO, Mark Karpeles, stole millions of dollars of Bitcoin Will the “real” Satoshi Nakamoto please step forward?
Optimism prevails among users, new and old
vs Opportunity? Threat?
We are stuck in our old ways …
People • “Net generation” • 24x7 “mobile” workforce • Social entrepreneurship Technology • Broadband access • Mobile hardware • ICTs • 3D printing • Robotics Open Source • Software • Hardware • Physibles Convergence of….. Finance • Microlending/microfinance • Crowdfunding/equity • Digital, non-fiat currencies
“Made in Africa” 3D printer (Togo) crowdfunded through Ulele Winner of International Space Apps Challenge http://www.engineering.com/3DPrinting/3DPrintingArticles/ArticleID/5712/E-Waste-3D-Printer-to-Mars.aspx
Recommended viewing: How Bitcoin Works under the hood, by “Curious Inventor” http://youtu.be/Lx9zgZCMqXE
Karinda Rhode aka Robin Teigland firstname.lastname@example.org www.knowledgenetworking.org www.slideshare.net/eteigland www.nordicworlds.net RobinTeigland Photo: Lindholm, Metro Photo: Nordenskiöld Photo: Lindqvist If you love knowledge, set it free…
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