Bitcoin & New Economy

byManuel Pettersen Lains

Presentation at Gran Canaria Business Week 2016January 2 – 9, Gran Canaria

Satoshi's Vision

● Satoshi Nakamoto (2008): Bitcoin: A Peer-to-Peer Electronic Cash System

● Electronic Cash allowing direct payments without going through a financial institution

● Commerce not relying on third parties● Electronic Payment System relying on

Cryptographic Proof instead of trust

Mysterious Creator of Bitcoin

Image: BitCrystals

What is Bitcoin?

● Digital Cash / Gold● Backed by nothing (gold)● Value purely from supply & demand (gold)● P2P direct transactions (cash)

● Decentralized Ledger● Common agreed truth (consensus)● In the cloud● History of transactions● Record of ownership

How does it work?

Ownership & Transactions

● Public Key cryptography

● Private Key never exposed, only signature

● Sum of all transactions = Status quo

Transaction

Verify

Sign

Owner 1's Public key

Hash

Owner 0's Signature

Owner 1's Private Key

Transaction

Verify

Sign

Owner 2's Public key

Hash

Owner 1's Signature

Owner 2's Private Key

Transaction

Owner 3's Public key

Hash

Owner 2's Signature

Owner 3's Private Key

The Network

● Full nodes● Verify the ledger● Verify and relay transactions● Service the network

● Miners● Build blocks of transactions● Proof-of-Work race to sign block● Difficulty adjustment to ~10 min block time● Block reward

Creation of new coins

Security

● Open Source security by design

● Continuosly under attack, robust

● Proven Cryptography Technology● Endorsed by the US National Institute of Standards and

Technology and National Security Agency

● Proof-Of-Work Mining● Enormous ASIC mining industry, high barrier to entry● 2013: 1 exaFLOPS, 8 times faster than top 500

Bitcoin Network Hash Rate

Bitcoin Evolution

● Forks and free innovation● Namecoin (DNS)● Litecoin ("Silver")● Peercoin (POS)● Dogecoin (memecoin)● 1000s of cryptocurrencies● Online Coin Generators

Empowering the individual

● The PC (1980s): decentralized computing● The Internet (2000s): decentralized information● Bitcoin (?): decentralized finance

● Unhindered P2P communication of value● Liquid, efficient channeling of resources● Become your own economic entity● Producer = Consumer

Money as a language

● The language to communicate value● A transaction is a statement● Commerce is a dialogue● Rewarding valuable (desired) actions

● Free communication means● Value flows freely where we want it● Value flows to the right place!

Usecases

Bitcoin Benefits

● Low effort transactions

● No sensitive information

● Low cost implementation

● Low resistance flow of value

● Uncensored transactions

● Privacy for the small

● Voluntary Transparency

● Multi-signature escrow

● Global currency

Online Services

● NameCheap

● Domain Registration and Webhosting

● Fiverr

● Global marketplace for tasks and services● Beginning Cost of $5 per job● Design, Marketing, Translation, Media Production, etc.

● Specific Benefits

● Low effort transactions● Low resistance flow of value● Global Currency

Micropayments

● Joystream● BitTorrent Client (P2P)● Sell uploads and buy downloads

● ChangeTip● Tipping on social media● Reddit, Youtube, Google+, Tumblr

● Specific Benefits● Low effort transactions● Low resistance flow of value

Direct Donations

● NPOs, Foundations and Charities● The Document Foundation (LibreOffice)● Wikimedia Foundation● Sean's Outpost (>162000 meals served)

● Political Movements (WikiLeaks, Pirate Party)

● Specific Benefits● Low effort and uncensored transactions● Voluntary Transparency● Privacy for the small

Travel

● Expedia● Hotels, Flights, Car Rental

● Tourism opportunities● Global currency● Low cost implementation● No sensitive information● Multi-signature escrow

Free Marketplace

● P2P decentralized marketplace● No fees, no restrictions● Not for profit, not controlled by anyone

● Bitcoin Benefits● Global Currency● Low effort transactions● Multi-signature escrow

BitSpace

● We can help your business● Bitcoin and Cryptocurrencies● Bitcoin 2.0 / BitShares / Crypto-Finance● Building the Future with Blockchain technology

● Find us● bitspace.no● YouTube - BitSpace● Facebook – BitSpace community

Liquid Economy

● Bitcoin is the Heart of the new Economy● First and biggest, but not alone

● Dynamic market● No artificial fences● Value flows easily● Become your own economic entity● Create your own ecosystem● True Voluntaryism

Beyond Bitcoin

Beyond Bitcoin

● Bitcoin 1.0 (Currency)● Bitcoin 2.0 (Crypto Finance)● Bitcoin 3.0 (Beyond Finance)

Crypto-Finance (Bitcoin 2.0)

● Crowdfunding

● Microfinance

● Exchange financial instruments● Currencies / Tokens● Derivatives / Commodities

● Records of Trading/Spending/Loans

● Smart Contracts● Automated execution of agreements

Crypto-Finance Examples

● BitShares● Exchange● Financial Instruments

● PeerTracks● Crowd-funding● Artist Shares

PeerTracks

● Front End● Streaming, Download, Merchandize, ArtistCoin

● Back End● ArtistCoin/Token

– BaseBall Card – Token– Token-Controlled Access – VIP pass

● Crowd-funding with equity

PeerTracks Benefits

● Benefits from Smartcoins and IOUs● Transparent Transactions / Accounting● Programmable functions

● Benefits from ArtistCoins● Talent discovery● The case of Oculus

BitShares Exchange

● SmartCoins, derivatives● Stocks● Create private asset with equity● The need for a Decentralized Exchange

● The unbanked – Half of the of the world's population– More than one in four Americans– No access to trading financial instruments

● Blockchain technology is a new and highly effective model of organizing activity in general, not just financial activities.

● Blockchain technology enables decentralized consensus and decision-making on an unprecedented scale.

Beyond Finance (Bitcoin 3.0)

Bitcoin 3.0 Applications

● Decentralized (blockchain based) applications, communities, organizations and companies that go beyond crypto-finance● Identification: Passport, voter registrations● Intangible assets: Patents, trademarks, copyrights● Public records: Property titles, marriage certificates● Attestation: Proof of existence, ownership● Physical asset keys: Home, hotel rooms, rental cars

Examples of Bitcoin 3.0

● Augur / Truthcoin ● Prediction Market

● Namecoin● Decentralized DNS

● Follow My Vote● E-Voting Solution

Augur / Truthcoin

● Prediction Market● Rewards users for correctly predicting events

● Wisdom of Crowds● Incentive to bet if you have information● Incentive to find information

● Decentralized● Judged by the crowd● Regulation and assassination markets

Namecoin

● Accessing a Website● Domain Name System (DNS)

– Internet Corporation for Assigned Names and Numbers (ICANN)

● Top-Level Domains– .com (USA)– .cn (China)

● Decentralized DNS● Namecoin

Follow My Vote

● Problem of E-Voting● How to vote remotely, while being able to verify

your vote and keeping anonymity?

● Blockchain-based solution● Remote voting via internet● Get your voting token without revealing identity● Vote anonymously● Verify that the vote was registered as cast