Is Bitcoin a disruptive innovation? A talk at Portsmouth Business School, UK
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Transcript of 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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Give me control of a nation’s money supply, and I care not who makes its law - Amschel Rothchild
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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.
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Source: The Atlantic
Fragile as a house of cards but growing hugely in importance
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• 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
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A UK/US Credit Card Transaction
Bank
US treatyForex trading
UK treaty
Clearing
Bank
Short term debt
instrument
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Innovation 1:Bitcoin is Peer to Peer
Alice
Internet(Bitcoin Miners)
Bob
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Why First Digital Currency to Go Mass?-
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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
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When Governments control money
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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!
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A currency is based on trust.Innovation in trust
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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
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Bitcoin is not backed by anything!
• Not state-backed fiat currency • Not backed by anything of value
(e.g. gold)
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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
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Innovation 4 : Currency Not via a Country or Company!
Satoshi Nakamoto, disappeared 2009
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Innovation 5 :
• Democratic• Always being improved• Secure: all transactions are monitored collectively by the Bitcoin network.
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Governance?• Bitcoin Foundation- Gavin Andresen, lead developer• Hackers/ coders verifying each transaction and mining for new coins
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Innovation 6: Transparent
• Robust and resilient - data on every single transaction is logged• Anonymity - less personal data needed for transactions• Opposite of Swiss Banks!
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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)
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Disruptive Innovation?
A protocol for money
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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
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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
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Spawned a host of digital currencies
• Ripple• Lite Coin• Name Coin• Peer Coin• Prime Coin
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Bitcoin Ecosystem - innovation
• Chip Manufacturers • Mining as a service• Compliant Exchanges• Secure Wallets
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Bitcoin Ecosystem
Making Bitcoin easier to use
• Dark Wallet• Cash
converters/Bitcoin ATM machines
• Building payment protocol into web browser
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“You can put a bank in your pocket. That’s pretty big”
Gavin Andresen, Bitcoin Foundation
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Parallel Bitcoin Economy
We can buy and sell between us in Bitcoin
Source: On Device Research Survey quoted on Techcrunch
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Links
Bitcoin News Aggregators:• CoinDesk.com• On Bitcoin • Bits of Coin (Android App)
• Blockchain.info• Brain Wallet• cybersalon.org/
cypherpunk