Is Bitcoin a disruptive innovation? A talk at Portsmouth Business School, UK
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Bitcoin & Innovation 17 Oct 2013 - Portsmouth Business School (updated 22 Nov 2013) Creativity that pays - innovation in finance session Niki Gomez @nikigomez “Bitcoin is the most important invention in the history of the world since the Internet.” Roger Ver
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This talk explains Bitcoin and its innovations within the fields of politics, finance and technology. I first explain a bit about what Bitcoin is as only about 20 of the 70 attendees knew what it was. None of them had any yet. It is still quite hard to buy Bitcoin. I offered them the chance to go grab some Bitcoin from my digital wallet, if they could figure out how to do so! It's still not that simple to get a wallet and figure it out. First I spoke about why a digital or crypto currency has taken off now, mainly due to the recent financial crises and loss of trust int he banking system. And that it's a very secure system, designed to be a currency. I spoke about the main innovations as I see them of Bitcoin: Innovation 1 Peer to Peer: Bitcoin is simplifying the system. Way less players now get involved in a 'simple' payment transaction between 2 people. This brings down the transaction costs hugely. Innovation 2 Bitcoin has a money supply that grows at a steady rate that is predicted, and is fixed at a certain date in the future. It is non-inflationary. Inflation has crippled our savings. this could really change the way we relate to money. Innovation 3 We are putting our trust in Maths to verify the transactions, rather than in governments or banks. It is non -hierarchical - it is not developed by a company or a government. The founder set up the system and disappeared leaving it for us all to use. Hayek and the Libertarians love it because governments can't manipulate the money supply for political reasons or to win wars. We have moved from a commodity-based currency to a political-based currency to mathematical currency. Innovation 4 It's not created by a country or a company- it's out there for everyone to use freely. Story of Satoshi Nakamoto- its creator, who disappeared. Innovation 5 It's Open Source- which means it's constantly being improved and tested. It's 'the people's job' to peer review the code and make sure it's secure, and that it doesn't favour any one party, or provide back-doors for a minority of vested interests. Innovation 6 It is transparent- there's been a lot of hype about how black money can hide in Bitcoin. However all transactions are publicly available and so it's not anonymous, but rather pseudonymous. Swiss banks are much more anonymous. Innovation 7 Bitcoin is for everyone to use, there is no one controlling the system making it exclusive. Now 1/3 of Kenyans have a Bitcoin Wallet for mobile transactions. The barriers to use Bitcoin are technical- both in knowledge and access to digital technology.
Transcript of Is Bitcoin a disruptive innovation? A talk at Portsmouth Business School, UK
Bitcoin& Innovation
17 Oct 2013 - Portsmouth Business School (updated 22 Nov 2013)Creativity that pays - innovation in finance session
Niki Gomez
@nikigomez
“Bitcoin is the most important invention in the history of the world since the Internet.” Roger Ver
Give me control of a nation’s money supply, and I care not who makes its law - Amschel Rothchild
Bitcoins are ‘mined’ or released to people who crack
complex Maths problems
They need very powerful computing power to do so, like this specialised Bitcoin Avalon machine.
Source: The Atlantic
Fragile as a house of cards but growing hugely in importance
• Economy Total 11m BTC in circulation
• Transactions last 24h 54,958• Bitcoins sent last 24h 927,536.58 BTC• Bitcoins sent avg. per hour 38,647.36 BTC
Recent survey of people who know about Bitcoin • 40% UK respondents trust Bitcoin as much as
Pound • 38% think it’s the currency of the future
* Survey: On Device Research, June 2013
How Big is Bitcoin?On17 October 2013
A UK/US Credit Card Transaction
Bank
US treatyForex trading
UK treaty
Clearing
Bank
Short term debt
instrument
Innovation 1:Bitcoin is Peer to Peer
Alice
Internet(Bitcoin Miners)
Bob
Why First Digital Currency to Go Mass?-
Friedrich HayekNobel Prize in Economics, 1974
“Central banks cannot be reformed. There can never be sound money so long as they are in charge.”
Download Hayek for free:
http://mises.org
When Governments control money
Innovation 2:A money supply that grows steadily and then is fixed
• Every 10 minutes 25 Bitcoins are released into the system currently
• No more than 21m
BTC will exist after 2040 (11m BTC so
far)
Encourages saving!
A currency is based on trust.Innovation in trust
Innovation 3: Cryptography Ensures Trust
“With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.”
Satoshi Nakamoto
Bitcoin is not backed by anything!
• Not state-backed fiat currency • Not backed by anything of value
(e.g. gold)
In Maths We Trust
“We have elected to put our money and faith in a mathematical framework that is free of politics and human error.”
Tyler Winklevoss, Entrepreneur
“There are 3 eras of currency: Commodity based, politically based, and now, math based.”Chris Dixon, Technology Investor
Innovation 4 : Currency Not via a Country or Company!
Satoshi Nakamoto, disappeared 2009
Innovation 5 :
• Democratic• Always being improved• Secure: all transactions are monitored collectively by the Bitcoin network.
Governance?• Bitcoin Foundation- Gavin Andresen, lead developer• Hackers/ coders verifying each transaction and mining for new coins
Innovation 6: Transparent
• Robust and resilient - data on every single transaction is logged• Anonymity - less personal data needed for transactions• Opposite of Swiss Banks!
Innovation 7 :A global currency everyone can use
• Low transaction fees-
1/3 of Kenyans have a Bitcoin Wallet
(Mpesa add-on)
• Sell directly to with no middleman
- Coffee traders in Bali
• Earn bitcoins for online jobs - Homeless people in US (Wired)
Disruptive Innovation?
A protocol for money
Threat to Governments and Banks?
“Doing Banking Better than Bankers.
It's money 2.0, a huge huge huge deal.”
- Chamath Palihapitiya
"Bitcoin will do to banks what email did to the postal industry”
- Rick Falkvinge
[Bitcoin] is a techno tour de force."
- Bill Gates
Show me what you can do!Grab 0.15 BTC
Use the Pass Phrase I mention.
Go to : Brainwallet.org
Get your digital wallet at: www.Blockchain.info
Spawned a host of digital currencies
• Ripple• Lite Coin• Name Coin• Peer Coin• Prime Coin
Bitcoin Ecosystem - innovation
• Chip Manufacturers • Mining as a service• Compliant Exchanges• Secure Wallets
Bitcoin Ecosystem
Making Bitcoin easier to use
• Dark Wallet• Cash
converters/Bitcoin ATM machines
• Building payment protocol into web browser
“You can put a bank in your pocket. That’s pretty big”
Gavin Andresen, Bitcoin Foundation
Parallel Bitcoin Economy
We can buy and sell between us in Bitcoin
Source: On Device Research Survey quoted on Techcrunch
Links
Bitcoin News Aggregators:• CoinDesk.com• On Bitcoin • Bits of Coin (Android App)
• Blockchain.info• Brain Wallet• cybersalon.org/
cypherpunk
