current opportunities in blockchain cryptocurrency · cryptocurrency is . . . . a bold new economic...

CURRENT OPPORTUNITIES

IN BLOCKCHAIN &

CRYPTOCURRENCY

Mark R. WaserRichmond Blockchain Consultants

Outline

What are blockchains and cryptocurrency?

What can they do for your business?

What is Bitcoin?

⚫ Digital Currency (aka Crypto-Currency)⚫ Allows True Peer-to-Peer (P2P) Transactions

− Truly Distributed with No Intermediary Third Parties (i.e. Federal Reserve, Banks, PayPal)

⚫ Uses a Digital Wallet & Cryptography− Wallet Address to Receive Bitcoin (Public Key)− Private Password to Authorize Spending (Private Key)

Blockchain is . . . .

a secure, distributed ledger

the blocks are the pages; the chain is the binding

BUT, not all distributed ledgers take the form of blockchains!

Cryptocurrency is . . . .

a bold new economic frontier

the lawlesswild, wild west

Secure & Lawless?!!

When you are

“on the blockchain”

Literally everybody with a “full node” can

easily detect when a transaction is fraudulent.

No one can impersonate anyone else without

possessing their wallet/private key(s).

Secure & Lawless?!!

True anonymity is extremely problematical

(ransomware, black market, etc.)

With exchanges, *you* aren’t “on the blockchain”

Price-fixing and collusion is rampant

None of the software (with the apparent exception

of bitcoin) is mature enough to be truly trustworthy

Only bitcoin appears large enough to be immune

to flash crashes – and two individuals (Jihan Wu &

Wang Chun) could destroy bitcoin

What is Blockchain Technology?

1) Data storage - New type of database

2) Data is replicated across many different computer systems (known as “nodes”)

3) Data is immutable (cannot be changed)

4) Transactions are Peer-to-Peer - No need for a 3rd parties to move money- Safe even if everyone else is an adversary

5) Uses cryptography to prove identity and authorize transactions

Distributed Ledger Technology (DLT)

A distributed ledger is a database spread across various nodes or computing devices.

Each of the nodes/computing devices replicate and save an identical copy of the ledger.

Each participant node in the network is responsible for updating itself independently.

The primary feature is that the ledger is not maintained by any type of central authority.

The updates to the ledger are constructed and recorded independently by each node.

The nodes then have to vote, so that the majority agrees to the conclusion reached.

The voting and agreement is conducted automatically by a "consensus algorithm".

Upon consensus, the latest agreed-upon version is saved on each node separately.

Consensus Protocols

Proof of Work

• Also known as "Mining"

• In order to update the public ledger you must prove that you have completed "enough" computational work.

• This work is performed by machines that trying to solve the puzzle

• You are chosen to update the public ledger based on:• Computing power owned as apercentage of the total amount ofcomputing power in the network

Proof of Stake

• Also known as "Staking"

• In order to update the public ledger you must prove that you have risked enough stake.

• There is no work done to solve any puzzles

• You are chosen to update the public ledger based on:• Your coins owned and staked as a

percentage of the total amount of coins in the network

Blockchain vs. DLT

1. Not all distributed ledgers are organized in the "chain of blocks" form;

a continuously growing list tied together by cryptography.

2. Most importantly, this format requires and ensures that all transactions

are immutable and cannot be erased or altered after the fact.

3. As a result, it is particularly well suited for recording events, managing

records, processing transactions, tracing assets, and voting.

4. However, for internal only use, it is just a very slow database.

Cryptography

is just a means towards an end (or ends).

Primarily, it ensures that transactions (or messages) truly

originate with the claiming entity.

Secondarily, it ties the blocks together into the chain.

Finally, it can obscure identities or even the transaction itself.

Evolving at a Furious Clip

Today’s

View

November 2016 – July 2018

Market Cap Price Market Cap Price MC Factor Price Factor

1 Bitcoin 11,189 701.05$ 141,582 8,244.63$ 12.7 11.8

2 Ethereum 947 11.06$ 48,317 478.69$ 51.0 43.3

3 Ripple/XRP 292 0.01$ 18,143 0.46$ 62.1 56.3

4 -> 7 Litecoin 186 3.86$ 5,005 86.93$ 26.9 22.5

5 -> 15 Ethereum Classic 89 1.04$ 1,779 17.22$ 20.0 16.6

6 -> 12 Monero 65 4.21$ 2,319 142.59$ 35.7 33.9

7 -> 14 Dash 63 9.20$ 2,034 247.54$ 32.3 26.9

8 -> 40 Augur 53 4.80$ 338 30.72$ 6.4 6.4

9 -> 35 Steem 50 0.24$ 420 1.58$ 8.4 6.5

10 -> 55 MaidSafeCoin 35 0.08$ 220 0.49$ 6.3 6.3

The first five years . . . .

But by 2016, innovations were already apparent

Blockchain is Growing More Diverse

Generation Secured By

Fees &

Recipients

Smart

Contracts

Bitcoin 1 PoW miners none

Ethereum 2 PoW miners gas

EOS 3 dPoS none free

Stellar 2.5 FBA voting free

IOTA 2 Tangle/DAC none future

NEO 2.5 FBA rare gas

Steem 2 dPoS none free

PIVX 2 mnPoS burned none

Blockchain >> Cryptocurrency

What can blockchain do

for your business? Blockchain is particularly well suited for immutably recording

contracts and events, processing transactions, managing

records, tracing assets . . . .

Blockchain is designed for distributed operation and

transparent workflows.

At the same time, blockchain can use cryptography and

other measures to preserve privacy while allowing for the

collection of demographic data

Blockchain Investments - Early

Blockchain Investments – More Recent

When is Blockchain an Effective Solution?

Key Pain Points Addressed by Blockchain

Key Blockchain Challenges Myths

Myths

Key Challenges:Public Decentralized Blockchains

• Garbage In --> Garbage Out• How to ensure data on blockchain is correct in the first place?

• Interface with “Off-Chain” Data• How to enable smart contracts to make decisions based on

data that is not stored on a blockchain?

• Transaction Throughput• Bitcoin Network = 3-5 transactions per second (tps)• Ethereum Network = 20 tps• PayPal = 193 tps• Visa = 1,667 tps

When Implementing Blockchain

The critical questions are:

“What would immediately help your business?”

Start small; do NOT re-invent the wheel

“What are your use cases & inefficiencies?”

Low-hanging fruit is always the best place to start

** Do NOT randomly implement blockchain as

“a solution in search of a problem”

Let’s end on a light note

Thank youfor your interest

https://www.logistics.dhl/content/dam/dhl/global/core/documents/pdf/glo-core-blockchain-trend-report.pdf