overview of bitcoin - sweden
DESCRIPTION
My presentation providing a general overview of Bitcoin for Länsstyrelsernas betaltjänstkonferensTRANSCRIPT
Bitcoin----
Challenging the fiat money system or catalyzing economic development?
Dr. Robin Teigland Stockholm School of Economicswww.knowledgenetworking.orgwww.slideshare.net/eteigland
@RobinTeiglandwww.hhs.se
March 2014
Today’s presentation
Brief history of BitcoinWhat is a cryptocurrency?How does Bitcoin work?Variations on BitcoinBenefits and drawbacksRecent eventsMoving 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?
DigitalDecentralized, peer-to-peer (P2P), i.e., no
central, third party
Uses cryptography to validate transactionsAlso 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 securityTrust in cryptography rather than
institution(s)Transparency Lower transaction costsCross-border, faster transactionsNo outside intervention No inflation (although market volatility)
Who accepts Bitcoin?
http://coinmap.org/
Bitcoin becoming more mainstream?
Drawbacks of Bitcoin
Tax concernsOnly as safe as wallet holding coins or
exchange’s serversConsumer uncertaintyMarket volatility (commodity or currency?)Potential for illicit useHigh electricity consumption to “mine”
Bitcoin – one of many cryptocurrencies
Currency CodeYearEst.
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 2012Sunny King (pseudonym)
Yespeercoin.net
Yes Yes
Dogecoin DOGE 2013
Jackson Palmer& Billy Markus
Yesdogecoin.com
Yes No
Namecoin NMC 2011 N/A Yes dot-bit.org Yes No
Mastercoin MSC 2013 J. R. Willett Yesmastercoin.org
No No
Primecoin XPM 2013Sunny King (pseudonym)
Yesprimecoin.org
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 BitcoinWill the “real” Satoshi Nakamoto please step
forward?
Optimism prevails among users, new and old
Future scenarios?
We are stuck in our old ways …
Valuecreation
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 [email protected]
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…