Bitcoin, Blockchain and the Crypto Revolution

Anthony G. Parker

Strategic Director, Digital Disruption

aparker@cuberoot64.com

What is Blockchain?

Merkle or Hash trees used to verify any kind of data stored,

handled and transferred between computers by using

hash-based cryptography (e.g. SHA-256). Blocks received from

other peers are received undamaged and unaltered

Forking a blockchain

Working on the right fork

Blockchain in a nutshell

• A persistence, transparent, public, append-only ledger. A system you can add data to and not change previous data by a mechanism of consensus through distributed parties that do not need to trust each other. They only need to trust the mechanism by which their consensus is arrived at. For Bitcoin, it relies on a computational challenge where only one party can solve the challenge at a time (and add to the block). No one can force an entry on to the ledger that others disagree with.

Combination of 3 technologies

Cryptography

Game Theory (crypto

economics)

P2P Networks / Distributed

systems

Use of public key cryptography hash functions: essential for

transparency & privacy

Nodes of P2P Network validate transactions by consensus,

following economic incentive mechanisms (Proof of Work,

Proof of Stake, etc.)

Every node of the network is a client as well as a server, holding

identical copies of the application state

Distributed Ledger Technology (DLT) Generations 1st - Cryptocurrencies

• Cryptocurrencies – like money and new asset class

• Utility tokens – to use a service

• Anonymous – privacy

• Transparent – Know Your Customer (KYC), Anti-money laundering (AML)

• Microtransactions – small payments per usage

Crypto Currency

Distributed Ledger Technology (DLT) Generations 2nd - Ledgers

• Ownership – land, files, assets

• Revocation – un-authorising e.g. DVLA to revoke licence

• Audit logs, reporting

• Identity – attributes

• Medical – metadata

Ledgers

Crypto Currency

Distributed Ledger Technology (DLT) Generations 3rd - Contracts

• Sales – trusted third party, buy assets with cryptocurrency

• Agreements – non-repudiation of signatures, signed at same time

• Elections – voting and real time results

• Distributed applications and organisations

Contracts

Ledgers

Crypto Currency

Fair Markets

Distributed Ledger Technology (DLT) Generations 4th Markets – Requires fairness

• Match buyers and sellers

• Stock markets

• Dark pools

• Games

• Auctions

• First to file – patents, domain names

Contracts

Ledgers

Crypto Currency

Smart contracts

Advantages of Smart Contracts

Potential application and disruptions

The Blockchain is radically changing the future of transactions

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Recent regulatory developments

UK – FCA: ICOs are “very high

risk, speculative investments”.

– Securities laws may apply depending on underlying rights.

Malaysia – SC of Malaysia: ICOs should be

approached with caution given the potential for “insufficient liquidity or volatile and opaque pricing” upon trading on the secondary market.

Malaysia

UK

US

Singapore – MAS: securities laws may apply

and each ICO should be considered on a case by case basis.

– ICOs present risks relating to foreign and online operators and are “highly speculative investments”.

Singapore

Hong Kong – SFC: securities laws may apply and each

ICO should be considered on a case by case basis.

Hong Kong

Canada – CSA: securities laws and

financial promotion laws may apply.

– Each ICO should be considered on a case by case basis.

Canada

Israel – Israeli Securities Authority panel may

regulate ICOs and formed a new committee to establish whether ICOs constitute the issuing of securities.

EU

Russian Federation

Russian Federation – ICOs, tokens and cryptocurrencies not specifically regulated – Likely to be treated as either foreign security or cash equivalent. – Presidential orders given at end of October 2017 recognise the need

for regulatory development and more detailed analysis in relation to ICOs.

Republic of Korea – Cannot purchase,

acquire, dispose of, subscribe or underwrite tokens in Korea.

Republic of Korea

China

US – SEC: potential risks of fraud, theft

and misrepresentations in order to entice investors.

– The SEC will apply the Howey test to determine if securities laws will apply to tokens.

China – Banned all ICOs.

Israel

EU – ESMA: ICOs are very risky and

highly speculative investments. – Issuers should consider whether

activities constitute ‘regulated activities’.

Australia – ASIC: securities laws may apply and

each ICO should be considered on a case by case basis.

Australia

Key Players

Satoshi Nakamoto

Gavin Andresen

Marc Andreesen Don and Alex Tapscott

Vitalik Buterin Andreas Antonopolos Roger Ver

Charlie Lee The Winklevoss Twins Tim Draper Nick Szabo

Elizabeth Stark

Should you get into Mining?

Bitcoin, Altcoins and Shitcoins

• 1,700 cryptocurrencies on https://coinmarketcap.com/

• Many layers of technology to understand – take your time to research to avoid costly mistakes (DYOR – Do Your Own Research)

• Crypto currencies are a digital asset tied to the value of a particular blockchain protocol. If it’s public, cryptocurrency secures the value of the blockchain

• Bitcoin has gone up ~3,000% in the past 2 years and 500% in the last year, even with this current ’crash’

• Only a tiny fraction of the world’s population owns any cryptocurrency. We are still in the very early stages

• Still highly speculative in an unregulated atmosphere – regulations will/do affect prices. Only invest what you can afford to lose

• The biggest problems in this space (like education, UI/UX, marketing, reliable analysis) haven’t been addressed — You can help solve them.

Wallets

• Wallets are a long string of characters called a hash • Public vs private keys • Currency specific

• Online wallets • E.g. Coinbase, Binance, Gemini

• Desktop wallets

• Mobile wallets

• Paper wallets • Printing out your public and private keys

• Hardware wallets • E.g. Ledger, Trezor

Exchanges and Crypto Currency

• Only a few allow purchasing of Bitcoin or Ethereum with Fiat currency • Fiat money is a currency without intrinsic value established as money, often by government

regulation

• You can then use the Bitcoin and Ethereum to buy on exchanges • Exchanges aren’t regulated – but may be in the future • Open 24/7/365, globally

• Coins vs Tokens • Coins – Cryptocurrency that operates independently of any other platform e.g. Ethereum,

Neo • Tokens – Requires another platform like Ethereum to exist and operate

• Good – Binance, Kucoin, Gemini, Gdax, Bittrex, Poloniex • Some have stopped registering new users to scale

• UCASH and Securacoin • Large market cap with limited trading volume • Reddit users not able to cash out • Only traded on one exchange • Wallet issues

Using Coinbase

• Gdax is Coinbases’s online exchange (cheaper fees)

Using Binance

Using Gemini

Making trades

• Limit trade • Set a price and volume in th3 future

• Market trade • Buying or selling immediately based on market price or “ask”

• Stop limit • Trigger and order at a set price

• Margin/Leverage training • Expert level – more experience needed

“Remember, cryptocurrencies are still a new and hyper volatile asset class, and could drop to near zero at any time. Don’t put in more money than you can afford to lose.”

Vitalik Buterin, founder of the Ethereum blockchain network.

Don’t listen to FUD and get FOMO – HODL your way To The Moon for LAMBO! • FUD – Fear, uncertainty and doubt

• FOMO – Fear of missing out

• TTM (To The Moon) – When a currency increases over 200%

• HODL – Hold on for dear life (misspell of HOLD). To hold your currency no matter the swings in volitility

• REKT – When a currency bombs

• Shilling – The act of talking up a particular currency, often to the benefits of the shiller

• Shitcoin – A currency that will not amount to anything

• Lambo - The car you go shopping for once you’ve made your cryptocurrency millions

• Whale – An investor with large pockets who can affect the market with their large buy and sells

• Normie – Everyone not in cryptocurrency (now, not you!)

https://www.coinsheet.org/glossary/

What is an ICO

• Initial Coin Offerings • A way to raise funds for a Blockchain project • Some offer free coins • 2017 was the year for ICOs. Regulation and investors are curtailing the ability for the

general public to get involved • Many companies deciding to roll out permissioned ledgers without ICO • All should have whitepapers, experienced dev team

• Reasons many ICOs are worried • Uncertain regulation globally • Lack of legal and regulatory frameworks locally • Blockchain resources to fullfill roadmap • Dependency on limited access e.g. Apple App store, Google Play store • Cryto may never catch on…

Common mistakes to avoid

• Sending tokens to wrong address

• Sending wrong amount

• Not turning on 2FA

• Using simple passwords

• Believing in free money or the next hottest ICO/Alt coin

• Sharing your private key

• Linking your wallet to a scammers wallet

Scams to avoid

Buyer/Sender beware!

• Fraudulent accounts

• Having Ryan Gosling as your graphics designer?!

• ICO scams – exiting after raising funding

• Stealing private keys or linking wallets

• Pump and Dump schemes

• Example: http://www.kryptonexlabs.com/

• Example: Faithcoin

• Bitconnect, CryptoNick, Trevon James

• There are fake exchanges, mining schemes including cloud mining, HYIP, auto trading robots, fraudulent account managers...etc, etc

General Tips and Advice

• Invest only what you can afford to lose

• FOMOing in to buy a coin on the rise. Never buy at all time highs

• Don’t try to time the market

• HODL (hold on for dear life)

• Diversify your portfolio • Currencies and Payments - Bitcoin (BTC), Litecoin (LTC), Ripple (XRP), Bitcoin Cash (BCH) • Platforms - Ethereum(ETH), NEO, Lisk (LSK) • Supply chain – Waltonchain (WTC), Vechain (VEN) • Privacy focused – Monero (XMR), Zcash (ZCL) • Security focused – Polymatch (POLY), Jibrel Networks (JNT) • AI – Matrix AI (MAN) • Blockchain agnostic – Ark (ARK), Chainlink (LINK)

• Always do your research • Team, reputation, technology, utility value, timeline, working product, git-hub commits

Understanding the Crypto mindset

Crypto is a black hole, right?

• The main sources of information (Reddit, Telegram, Discord, Slack, Twitter) are chaotic

• Listen to a few people on Youtube (Doug Polk, David Hay, Crypto Investor, Crypto Club)

• Read white papers after researching on coinmarketcap

• Medium, Hackernoon, Coincentral, Coindesk and reddit threads are also good sources to start learning

• Cryptocurrency podcasts like Unchained, Let’s talk Bitcoin, Bitcoin and Markets, Epicentre, Decrypted

• Follow key individuals on Twitter

So curate your information diet carefully. A list of sources are on my website www.cuberoot64.com/blog

What next for Bitcoin?

• Sharding – sidechain teams for Bitcoin • Segwit/Lightening adoption – ability to batch transaction fees • MAST (Merkelised Abstract Syntax Trees) – Paid to Merkle root hash which

allows a complex set of conditions implemented in a script. Each condition is a leaf on the tree and you only show the branch and proof of root of the tree. Benefits are optimisation of multi-sig and much more complex scripts without transaction size increase. Also allows more privacy – you don’t know how many conditions exist

• Scnhoor signatures capabilities - considered the simplest digital signature scheme to be provably secure in a random oracle model.

• Side chain/Drive chain changes to allow 2 way pegs by evaluating a SPDP proof within the script

Thank you for listening…

Questions and donations to my ETH address below are welcome

Donate to ETH address: 0xe80d45b3727e5c98f90a66b2d98685f6ac3b453f

Anthony G. Parker

Strategic Director, Digital Disruption

aparker@cuberoot64.com, @antgparker, www.linkedin.com/in/antgparker