Bitcoin and Blockchain: Relevance to Anti-Poverty Research
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Transcript of Bitcoin and Blockchain: Relevance to Anti-Poverty Research
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