Brave New World An Introduction to Cryptocurrency Part
Brave New World: An Introduction to Cryptocurrency Part 2 BY RHONDA S. BINDA, ESQ. This OER material was produced as a result of the PIT-UN network Challenge Grant – New America Creative Commons License This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 4. 0 License.
Nodes • Any Device or data points on a larger network • Used to fully validate transactions and blocks • A node for Bitcoin is any computer that connects to the Bitcoin network • A full node is a node that fully enforces all the rules of the Bitcoin network
Nodes • The benefits to running a full node: • • • Help protect the network As a wallet helps ensure rules aren’t broken like no bitcoins were spent twice Full node wallets are most private way to use Bitcoin • Number of nodes various from 5, 000 to 10, 000 depending on the source
Nodes
Fork • What happens when a blockchain diverges into two potential paths • Bitcoin split on August 1 st into two product: • Bitcoin (BTC) = $5, 514 as of 10/25/17 • 1 MB (1, 000 KB) block size (causes problems with speed, scalability, and fees. • • Bitcoin cash (BCH) = $328 as of 10/25/17 • Increases block sizes and speed up digital transactions • A full block size Bitcoin Gold (BTG) is the 3 rd split – Launched 11/12/17 (~$460 11/12/17)
Wallet • Software program where “Bitcoins” are stored • Bitcoins aren’t stored but your private keys are saved in the wallet • Helps facilitate sending and receiving bitcoins • Four main types • • Desktop Mobile Web Hardware
Private Key, Public Key & Address • Private Key – Your key to get access/ownership to your wallet • Public Key – Your account number and an address
Private Key, Public Key & Address • Private – Where bitcoin is stored • Public – Used to prove ownership and is created from the private key and is your address
Bitcoin Address
Wallet
Issues facing Bitcoin • • • Rise of Application – Specific Integrated Circuits (ASICs) Selloffs, regulation and minding in China Exchange collapses – Mt. Gox Hacking Unregulated Exchanges Anonymous accounts – mickey mouse at 123 Main Street Environmental Issues Fake Volume Price Volatility Price Manipulation
Where does Bitcoin get its Value? • How Foreign Countries view product • Working in different countries • Anonymous Transactions • Overall Technology and Network itself
Cryptocurrency Exchanges… to name a few • Binance • Bitmex • Bitfinex • Bittrex • Poloniex • Kraken • Bitmax • Coinbase • Bithumb • Okex • Houbi • Gemini
Where to trade Bitcoin futures • Bit. MEX ( Bitcoin Merchantile Exchange) • Futures & Volatility used liquidity and hedging needs up to 100 x leverage • • Deribit • • Futures & Spot up to 20 x leverage Quoine • • Futures & Options up to 100 x leverage OKCoin • • Buy 100 Bitcoin worth of contracts = required 1 Bitcoin of Initial Margin trading up to 25 x leverage Simple. FX • Contract for Differences (CFD)/Derivatives on various financial markets for Bitcoin for up to 500 x leverage
Who regulates these Exchanges? • Bit. MEX • • Deribit • • Chinese Government Quoine (Quoinex) • • Unsure at this time OKCoin • • No regulatory body controls Bit. MEX as its incorporated in Seychelles, East Africa, which does not regulate cryptocurrencies Japan Financial Services Agency (as of 09/27/17) Simple. FX • Offshore FX Broker with its founding company registered in St. Vincent and the Grenadines (Caribbean) which means very little to no regulations
Regulation by State
Gemini • Continuously operated, full-reserve exchange • • • Can buy/sell/deposit BTC/USD, ETH/USD and ETH/BTC • Also offer block trading Orders: Market, Limit, Immediate-or-cancel, maker-or-cancel Host continuous order book and two daily auctions (for greater liquidity and price discovery) • Fiat funds held in omnibus accounts at FDIC insured banks • Digital assets are held and maintained by Gemini
CBOE and CME • CBOE offered Bitcoin Futures (“XBT”) on December 10, 2017 but ended in March 2019 • CME offered Bitcoin Futures (“BTC”) on December 17, 2017 • Difference • • 1 XBT = 1 bitcoin 1 BTC = 5 bitcoins
Ledger. X • First federally regulated bitcoin options Exchange and clearing house • Trading and clearing physically-settled put and call options and day-ahead swaps • Began trading Oct 16 th • Traded over $1 Mil first week • To participate, you need to satisfy the following: • ECP • US-based and US-banked • Have two representatives for authorization purposes
BAKKT • Aimed for institutional investor • From the company that made the New York Stock Exchange • Many big names invested in them, some of note are Microsoft and Starbucks • Physcially settled
What other cryptocurrencies are out there? • There are currently over 1, 000 cryptocurrencies available • The most well know include • • Ethereum Litecoin Ripple Dash NEM ZCash Omise. Go
Ethereum • Largest blockchain platform • Vitalik Buterin, Gavin Wood, Joseph Lubin are the original authors • Smart contracts • Function as 'multi-signature' accounts, so that funds are spent only when a required percentage of people agree • • • Manage agreements between users, say, if one buys insurance from the other Provide utility to other contracts (similar to how a software library works) Store information about an application, such as domain registration information or membership records.
How are Cryptocurrencies being created? • Initial Coin Offerings (“ICO”) • Initial Exchange Offerings (“IEO”) • An unregulated means by which funds are raised for a new cryptocurrency venture • Used by startups to bypass the regulated capital raising requirements for banks or VC’s. • ICO’s don’t require a pitch desk that startups utilize but its own whitepaper
What is included in an ICO Whitepaper? • What the project is about • What need(s) the project will fulfill upon completion • How much money is needed to undertake the venture • How much of the virtual tokens the pioneers of the project will keep for themselves • What type of money is accepted • How long the ICO campaign will run for
ICO Information • Tokens = what “investors” receive when purchasing the distributed cryptocoins with fiat or virtual currency. Similar to company shares you get with an IPO. • ICO is similar to Kickstarter’s all-or-nothing approach in that if the initial funds goal is not reached, the money is sent back to the investors and the ICO is deemed unsuccessful. • The highest ICO raised is Telegram for $1. 7 Billion
ICO’s hitting mainstream • Trx: “Tron” • Justin Sun bought Bittorrent • Has office in silicon valley • Hundreds of Developers
ICO’s hitting mainstream • ICO: “STOX” • “open source, Ethereum based prediction market platform that leverages the concept of the wisdom of the crowd. It allows users to trade the outcome of upcoming events in multiple categories, including finance, sports, politics and more. ” • Raised $33, 350, 320
ICO’s hitting mainstream • ICO: “Lydian” • “a platform that wants to combine the blockchain with targeted, AI driven digital marketing and advertising services. ” • Has raised over 10, 000
Boom or Bust?
Current aspects • Stable coins (ex. USDT, USDC, TUSD) 1: 1 pegged ratio with the US Dollar • Corporate adoption • Notable companies: Tzero(Overstock), JP Morgan, Facebook, Fidelity • Many Crypto related Start ups have migrated to more friendly countries such as Singapore and Matla
Current aspects and things to consider • General adoption • EU/China 60 billion deal • Military exploration of technology • China digital currency and its advantages for them • China’s national priority • Banks are doing case studies on blockchain technology for effieicncy • Countries can more easily control their currencies and can easily freeze someone’s money (more effective sanctions such as freezing a hostile nation’s entire reserve of U. S. dollar) • • More easy to control inflation and study in-depth of the movement of money Could drastically reduce or end money laundering
Humanitarian Usage with Blockchain United Nations World Food Programme is experimenting with blockchain technology to help regugees Experiment with 2 Jordan refugee camps, $3 million sent to 100 k beneficiaries on a monthly basis. There is an aim to reach 500 k beneficiaries in a short period of time. Easy and safe for refugees to use as their eye iris gives them access to make necessary purchases. They are not able to buy anything not deemed necessary (Alcohol and cigarettes) All purchases are tracked on the blockchain and is fully transparent The money allocated to each refugee can not be easily stolen and depending on design could even be reverted to an earlier version by forking if absolutely necessary.
AI and Blockchain Can be used as a unbias masterbrain where data can be freely shared between different AIs which would help with their learning process. Can help with recording all AI action and be able to learn the exact cause and effect of an AI decision. Currently with AI learning, we generally provide a lot of information and over time it learns from the massive data influx and it can develop in unexpected or potentially negative directions. AI can be used to reinforce the blockchain by watching over it to detect discrpeencies or suspicious movements and transactions.
QUESTIONS?
THE BEST WAY TO PREDICT THE FUTURE IS TO DESIGN IT YOURSELF!! THANK YOU! @rhondabinda Linked. In, FB, IG, Twitter
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