PRECARIOUS INNOVATIONCROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

Dr Alexia Maddox (RMIT)

Professor Supriya Singh (RMIT)

Professor Heather Horst (RMIT)

Assoc. Prof Greg Adamson (IEEE & UniMelb)

Image credit: Alexia Maddox

“EXPLORING THE TENSION BETWEEN THE ENGINEERING STORY OF RATIONALLY DISTRIBUTED COMPUTATION AND THE POLITICAL STORY OF INSTITUTIONAL CHANGE THROUGH DECENTRALIZED ARCHITECTURE.”

Philip Agre

Follow me on twitter @alexiamadd

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

PRESENTATION OVERVIEW

▸ Project overview

▸ What are cryptocurrencies?

▸ Research directions

▸ Research methodology

▸ Crowdfunding campaign:

▸ Research stakeholders

▸ Campaign development

▸ Campaign promotion

▸ What next?Artist: Penny Byrne

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

PROJECT OVERVIEW

Through this study we aim to understand why people use cryptocurrencies such as Bitcoin and what the benefits and risks have been for doing so. We also aim to investigate the mechanisms for trust, security and privacy that are deployed and developed within the community of users. In the process we will characterise the role of cryptocurrencies alongside people’s use of other currency forms, digital and non-digital.

In doing so, we anticipate that the ethnographic study of the cryptocurrency movement will more generally shed light on socially generated solutions for current financial inequalities within both local and global contexts.

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

WHAT ARE CRYPTOCURRENCIES?

‣ Cryptocurrencies, such as Bitcoin, are a recent socio-technical innovation designed by their developers to disrupt the existing monetary system.

‣ These newly emergent digital currencies rely upon a decentralised and open source cryptographic protocol to regulate the manner in which currency can be created and exchanged.

‣ They can be described as an electronic cash system that harnesses decentralised networking technologies to enable irreversible payments

‣ Unlike fiat currencies, cryptocurrencies are not the only instance of its kind, given that it is algorithmically generated.

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

WHAT ABOUT BITCOIN?‣ The creation of Bitcoin is attributed to

an anonymous group of developers (Nakamoto 2008)

‣ Bitcoin is commonly positioned as circumventing the centralised control of the current fiat system and the mediation of the banking system through its nature as a distributed verification system (the blockchain).

‣ This distributed verification system is designed to facilitate real-time transfer and transparency through its public access ledger, referred to as the Blockchain.

@thebitcoins

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

WHAT IS THE MARKET SHARE OF BITCOIN?

‣ March 2015 the total value of Bitcoins in circulation was USD3.5 billion (Böhme et al, 2015)

‣ From a European perspective, we can understand that over a very short period of time, Bitcoin had gone from a proof-of-concept to being traded for about EUR78million (Karlstrøm, 2015)

‣ The volume of bitcoin that can be traded is capped, which is how its value is generated.

‣ Bitcoin is characterised by price volatility but has recently (8 Feb, 2017) gone to it’s highest value.

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

WHAT IS THE MARKET UPTAKE OF BITCOIN IN 2017?

“The price of Bitcoin has been buoyed by increased interest from places like Venezuela, where the local currency has lost much of its value, and India, where the government recently removed the largest cash notes from circulation. More broadly, a tilt toward isolationism that has emerged in American and European politics — highlighted by Donald J. Trump’s election victory — has given a new sheen to a currency that can move between countries with little oversight. “ New York Times, Jan 3, 2017

“Bitcoin broke through resistance finding a new price level on February 7 and has continued its upward trend. […] Bitcoin’s price had consolidated during the end of last week but now is pushing above the $1,045 [USD] range. […] Bitcoin continues to hold its position as a significant store of value, and its price volatility has declined quite a bit. Furthermore, as the geopolitical climate gets more chaotic demand for Bitcoin continues to rise exponentially. “ bitcoin.com, 7 February, 2017

https://coinmarketcap.com/currencies/cagecoin/, 8 February, 2017.

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

PROJECT TEAM

Our team is drawn together through our diverse interests in financial inclusion and socio-technical innovation. Professor Supriya Singh contributes insight into money and financial inclusion. Professor Heather Horst contributes a cross-cultural perspective of mobile money. Dr Greg Adamson contributes 25 years working in digital risk experience and financial technologies. Dr Alexia Maddox contributes her understanding of digital frontiers and online activism.

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

WHY CRYPTOCURRENCIES, WHY NOW?

This research is being conducted because there is currently limited understanding of the use of Bitcoin, and cryptocurrencies more generally, across diverse socio-cultural contexts.

It is timely because alternative payment systems gain more appeal during periods of economic instability and resulting waves of political backlash from disaffected groups in countries such as the US, UK and India. Think “Trump”, “Brexit" and economic and political processes such as demonetisation in India.

The lead investigator, Professor Supriya Singh, observes that for socially marginalised groups, unstable economic and political conditions create a climate where governments are no longer trusted to keep value in the currency and people turn to alternative monetary forms not only for trade, but as a store of value and investment return.

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

RESEARCH DIRECTIONS▸ Digital frontiers & community experience

▸ Virtual currencies and #altcurrencies

▸ Trade finance, consumer risks and regulation of emerging Fintech

▸ Financial inclusion and international remittances

▸ Taking an ethnographic perspective into alternative financial practices.

▸ How is value perceived?

Alexia Maddox, Supriya Singh, Heather Horst , Greg Adamson. 2016. An ethnography of Bitcoin: Towards a future research agenda. Australian Journal of Telecommunications and the Digital Economy, Vol 4, No 1, Article 49. http://doi.org/10.18080/ajtde.v4n1.49 .

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

RESEARCH METHODOLOGYHow to study a community that is digital in its DNA?

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

THE “ETHICS EXPERIENCE”

▸ Which ethics committee to put this through? (School of Business or Media and Comms?)

▸ Making a case for this being a low risk research project.

▸ Committee not familiar with a study that combination observation of both online and offline spaces.

▸ Stigma around illegal uses of bitcoin raised by committee lead to clearly defining the study around legal uses.

▸ Forum monitoring and digital data collection proposal provoked prior experiences of the committee to request clarification for how we would collect data in these spaces.

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

THE “ETHICS EXPERIENCE”▸ Challenges in getting “organisational” support letter from a

decentralised, leaderless community.

▸ To get the letter, you need to engage the community in the research, but you can’t start the research till you’ve got ethics approval…when you start to engage the community to get a letter of support, the research begins (repeat loop).

▸ MBTC centre stalled, possibly due to inability of the project to share the research data.

▸ Took 3 months and Greg’s position with IEEE to get a letter of support.

▸ 6 months to get the project approved and 3 amendment rounds… funding runs out.

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

THE CROWDFUNDING CAMPAIGN

▸ Approached by the Experiment to join a network security challenged based upon my prior research into cryptomarkets

▸ “Did I have an unfunded seed project that I was working on that may fit this brief?”…”why yes, I do!”

▸ Argument: Logic consistency - a decentralised funding model to study a decentralised currency and community.

▸ As an ECR, I needed to get some funding experience.

▸ Given my position in the academic precariat, this was hard to achieve.

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

THE CROWDFUNDING PLATFORM experiment.com

Source: experiment.com, Accessed 8 February 2017

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

RESEARCH STAKEHOLDERS AGENDA MATRIX

Research team 4 research agendas

Research publication Knowledge contribution Social impact

Research field Current awareness

Possible collaborations

Funding opportunities

Crowdfunding platform

Commission Success stats

Supporting research

The University Research income

Funding strategies Reputation and

Brand Research promotion

Cryptocurrency community

Open access publications & data Good news stories

Business intelligence

General public and regulatory bodies

Knowledge of new trends

Implications for financial inclusion

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

CAMPAIGN DEVELOPMENT SKILLS▸ Writing for a crowdfunding

audience.

▸ Making a research video that translates in the social media context (jump cuts!).

▸ Identifying which aspect of the research can be funded for $4K

▸ Working out a tangible product that people can get in exchange for suggested donation amounts.

▸ Making a value proposition for a crowdfunding approach within the university.

Footage courtesy of YO MAFIA!, Video editing: Visible Language

Source: experiment.com, Accessed 8 February 2017

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

INSTITUTIONAL SUPPORT FOR THE CAMPAIGN▸ Evaluation of where to run the campaign through:

▸ Would RMIT take it on board with no prior experiences in this?

▸ Initially yes (let’s give this a shot to see what happens).

▸ Eventually, no (risk assessment).

▸ Finally worked out where they would place the funding

▸ philanthropic funding

▸ requirement for contact details of all donors…

▸ They are still working out whether this is classified as research funding

▸ Currently putting together a position paper on this.

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

CAMPAIGN PROMOTION

Source: Twitter, accessed 8 February 2017

PRECARIOUS INNOVATION: CROWDFUNDING, CRYPTOCURRENCIES AND FINANCIAL INCLUSION

WHAT NEXT?▸ Campaign dribbled to an end yesterday with corporate sponsorship now a real

possibility due to the consultation packages.

▸ Kicking off the research slowly and considering all options to keep it rolling.

▸ The crowdfunding campaign provided an alternative way to approach the community and engage their interest in the project.

▸ Already fascinating insights have been shared about how people are engaging with cryptocurrencies.

▸ Dogecoin community

▸ Bitcoin mining during a live performance to fund the performance (monash).

▸ Raising the provocation of financial inclusion and the possibilities of cryptocurrencies is likely to turn the combined attention of the community to this question.

▸ More stories to come, stay tuned….Follow me on twitter @alexiamadd