Nick Doiron - @mapmeld - SVBPresented to U. Chicago Poverty Lab

itcoin & Blockchain

Relevance to Anti-Poverty Research

About Me

One Laptop per Child

Code for America

The Asia Foundation

UNICEF

open source e.g. OpenStreetMap

- Origins of Bitcoin and Blockchain

- Where do I get Bitcoin?

- Payment Applications

- Blockchain Applications

- Hazards

Agenda

Origins of Bitcoin

Cyber punks, B-Gold circulate in mailing lists since 1998

Satoshi Nakamoto white paper - Nov 2008

Code - Jan 2009

http://satoshi.nakamotoinstitute.org/ - all verified communication

No controller or sponsor (Nakamoto disappeared 2011)

Key technical advances:

- making consensus through Proof of Work- Byzantine Generals Problem

https://en.wikipedia.org/wiki/Byzantine_fault_tolerance#Byzantine_Generals.27_Problem

- blockchain as a transparent, distributed ledger

Most “cryptocurrencies” now based on these

Why did Bitcoin stand out?

Not only “online payments”

Blockchain is built by consensus - no one has control

With a credit card:

- Retailer - Visa - Bank - You- Trust, legal agreements, fees prevent and reverse fraud

Cryptocurrencies have no central authority, use cryptography to build trust

Where do Bitcoins come from?

No free lunch in Bitcoin - scarcity

Where do Bitcoins come from?

Can buy, or get rewards for mining blockchain

Mining = resolving hashes

Currently 6 quintillion hashes / second (6 million trillion)https://blockchain.info/charts/hash-rate

No profit without special hardware, pools, low-cost electricity

Sichuan Province mining centerhttps://qz.com/1026605/photos-chinas-bitcoin-mines-and-miners/

How about buying Bitcoin?

$1 ~= 0.00025 BTC (1:4100)(+25% since Aug 1)

Find an exchange for your country / currency: http://planetbtc.com/complete-list-of-bitcoin-exchanges/

I use Coinbase as an exchange and bank

https://www.wired.com/2014/05/how-digital-currency-could-end-corruption-in-afghanistan/

Payment Applications: Digital Payments

US State Dept backing digital paymentsFull transparency and accounting?

People in developing world already mobile

- Multiple exchanges for M-Pesa (4 African countries)https://news.bitcoin.com/bitwala-connects-bitcoin-mpesa-sub-saharan-africa/

Bitcoin wallets = vendor-neutral

Payment Applications: Remittances

Western Union:

- $115 to Maldives + $15 transfer fee (13%)$1000 + $48 transfer fee (4.8%)

- $115 in Bitcoin + $1 fee/reward (0.8%)

Higher reward = faster transactions

Other Payment Applications

- Unbanked, Restricted

(Afghanistan, Maldives)

- High-inflation Countries

- Venture Capital (Russian Zirconium)https://www.finextra.com/pressarticle/68523/zrcoin-crowdfunds-commodities-option-on-the-blockchain

https://www.coindesk.com/how-bitcoin-helps-afghan-girls-achieve-financial-freedom/

(more recent, now Code to Inspire)https://bitcoinmagazine.com/articles/code-to-inspire-bitcoin-gives-afghan-women-financial-freed

om-1460652348/

Blockchain Applications

There’s more to a blockchain than money

Ethereum’s runs code called “smart contracts”

- zirconium shares were an example

Some things to keep in mind:

- storage is costly

- keep sensitive info out of the blockchain

- smart contracts cannot see the outside world

Blockchain Apps: Proof of Existence

Store a unique marker in the blockchain

Proves that I had a document / photo, at that time

Blockchain Apps: ID

Asia Foundation and UNICEF were interested in migrant worker IDs

Blockchain Apps: Islamic Finance

Generally approved

- encouraged by opening of a Dubai blockchain accelerator, govt wants to use blockchain tech internallyWall Street Journal https://www.wsj.com/articles/dubai-aims-to-be-a-city-built-on-blockchain-1493086080

Gates Fdn report on Islamic Finance + Microcredit https://docs.gatesfoundation.org/Documents/Islamic%20%28Micro%29%20Finance%20Culture,%20Context,%20Promise,%20Challenges.pdf

Blockchain bank could reduce management costs, reach extreme Muslim-minority countries

Crime?

- Organized crime prefers to “cook the books”, be

untraceablerelated info: http://www.sciencemag.org/news/2016/03/why-criminals-cant-hide-behind-bitcoin

- “currently there is no more than anecdotal evidence” of

terror group interesthttps://twitter.com/valkenburgh/status/872923132880990209

- My concern would be DPRK + WannaCry Ransomwarehttps://www.theguardian.com/technology/2017/jun/16/wannacry-ransomware-attack-linked-north-korea-lazarus-group

Hazards for Bitcoin Adopters

Hacks?

- Buggy Bitcoin exchanges and banks (Mt. Gox 2014)https://www.wired.com/2014/03/bitcoin-exchange/

rival exchange hacker finally arrested in 2017: https://www.cryptocoinsnews.com/suspect-of-mt-gox-hack-and-money-laundering-is-alleged-btc-e-admin-arrested-in-greece/

- Smart contracts can have security bugs

- in mid-2016, 1/6th of all Ether was in the DAO (venture

capital fund concept) May 22, 2016 NY Times

- it got hacked June 17 NY Times

Hazards for Bitcoin Adopters

Investors and Entrepreneurs

- There are a lot of “get rich quick” schemes, few if any sustainable stories outside finance

- Many new coins are being created - ICOs https://www.forbes.com/sites/laurashin/2017/07/12/crypto-boom-15-new-hedge-funds-want-in-on-84000-returns/#7a4af698416a

- SEC warninghttps://www.americanbanker.com/news/sec-report-may-put-an-end-to-ico-boom

- UNICEF considered program to help unbanked refugees, but startup had a ‘private blockchain’- No benefits of public, transferable records- No ability to buy/sell coins (we would still need to use

existing bank wires)

Hazards for Bitcoin Adopters

Thanks!

Thanks - will field your questions now

Will be sending slides with references

Nick Doiron - @mapmeld