Bitcoin blockchain and cryptoeconomics RMIT Blockchain Innovation Hub
Bitcoin, blockchain and cryptoeconomics RMIT Blockchain Innovation Hub
Why is Bitcoin special? • Money is a ledger – a account of who owns (and owes) what • Bitcoin is a decentralised, distributed ledger • The challenge with a distributed ledger is ensuring everyone agrees what the ledger says Distributed ledger with central, trusted server Distributed ledger with distributed consensus mechanism • In November 2008 ‘Satoshi Nakamoto’ solved the consensus problem RMIT University © 2017 Economics, Finance and Marketing 2
Solving the consensus problem: ‘Proof of work’ and the blockchain • Bitcoin uses a proof of work algorithm to populate a blockchain with transactions • ‘Miners’ compete with each other to solve a puzzle for the right to update the ledger with new transactions – The winner gets a reward in Bitcoin (currently 12. 5 BTC, or AU$68, 148) The blockchain #481345 Block #481346 Block #481347 Block #481348 sactions Transactions RMIT University © 2017 Economics, Finance and Marketing 3
Blockchains beyond Bitcoin Blockchains are cryptographically secure, censor-proof, immutable, always-on, and born-global • So blockchains can be used for more than just Bitcoin – Public or private – Proof of work, or proof-of-stake, or proof-of -burn … • Cryptocurrencies other than Bitcoin • Technologies other than cryptocurrencies – Registries and asset management – More complex programs can be written into the blockchain – ‘Smart’ self-executing contracts – Distributed autonomous organisations RMIT University © 2017 Economics, Finance and Marketing Key use cases (so far): • Internet payments • Trade finance • Capital markets / post trade clearing & settlement • International payments • High value property, provenance & obligation • Structured finance instruments • Supply chain management • Digital identity 4
Blockchain is an institutional technology • Ledgers are everywhere – anywhere we need a consensus about facts – Firms are trusted authorities maintaining ledgers – Governments are trusted authorities maintaining ledgers • Firms and governments can use blockchains to enhance efficiency – But blockchains also compete against firms and governments The economic institutions of capitalism Firms RMIT University © 2017 Markets Governments Economics, Finance and Marketing Blockchains 5
RMIT Blockchain Innovation Hub Director: Prof Jason Potts Key Researchers: Prof Julian Thomas Prof Sinclair Davidson A/Prof Ellie Rennie A/Prof Marta Poblet Dr Chris Berg RMIT University © 2017 Economics, Finance and Marketing 6
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