Bitcoins and Altcoins
Privacy in a
decentralised world
1
“Bitcoins”
2
Block chain
Altcoins
“Bitcoin 2.0”
Today’s Agenda
• Bitcoins and Altcoins as currencies
• Q&A
• Bitcoin 2.0 and decentralisation
• Q&A
3
A Bit of History
• Precursor: crypto, many ecash technologies
especially David Chaum and Stefan Brands
• November 2008: pa...
Price Volatility, Immaturity
Full price history
Last 3 months
5
Supply Side
• Mimics gold mining
• Fixed supply of BTCs
– 21 million cap
– supply reduces
geometrically
– currently 25 BTC...
Chinese Exchanges Dominate
Source: http://bitcoincharts.com/charts/volumepie/
7
Regulatory Focus on Exchanges
• Increasingly full AML (Anti-Money Laundering)
processes required including KYC (Know Your
...
All the Technical Details
Free version: http://chimera.labs.oreilly.com/books/1234000001802/index.html
9
3 Things You
Need to Know
10
1. Beautiful Design
• Completely decentralised
• No trust in anyone required
• Alignment of incentives for all roles
11
2. Wallets Still Weak Point
• More key ring than cash store
• Bitcoin addresses (where BTCs received) can
be public, unlik...
3. Not Anonymous
• Bitcoin addresses are pseudonymous
• Block chain has an immutable, public record of
every transaction
•...
Altcoins
14
Altcoins
• Alternatives to Bitcoin, modifying it in one or
more ways
• Around 900 but growing all the time
• Not yet signi...
Ripple (XRP)
• Largest Altcoin (?), market cap $440M
• Re-developed in 2011 by the controversial Jed
McCaleb, now with “Bi...
Litecoin
• 2nd largest Altcoin, market cap $66M
• Forked from Bitcoin in October 2011
• Compared to Bitcoin, Litecoin has:...
Darkcoin
• 5th largest Altcoin, market cap $14M
• Focus on privacy by obscuring transactions and
IP (Internet Protocol) ad...
Zerocash
• Under development. Goal: anonymous “origin,
destination, and amount of the payment”
• Extends Bitcoin’s protoco...
Dogecoin
• 4th largest Altcoin, market cap $14M
• Started as a joke currency in 2013
• Gained traction quickly as an Inter...
Summary
• Bitcoin shows decentralised currencies without
trusted intermediaries may work
• Still immature. No mainstream a...
Questions / comments
22
Bitcoin 2.0
23
The Block Chain
• Probably Bitcoin’s major innovation
• Foundation for new decentralised and
distributed systems
The block...
The Block Chain is
• A ledger: an ordered record
of transactions
– verified
– immutable
– public
– anyone can replicate an...
1. Timestamping
• Cryptographic fingerprint of a file put in a
block chain (content not revealed)
• Proof that file
– exis...
2. Sidechains
• Bitcoin network innovation bogged down by
vested interests and stability concerns
• Interconnect with othe...
3. Internet of Things
• Block chain acts as a database, determining
state with smart objects, and adding security
• IBM an...
4. User-centric Identity
29
5. New Wave of Decentralisation
• The Internet provides communication and
cryptocurrencies (Bitcoins, Altcoins) digital
mo...
An Evil DAO
Evil DAO
Runs an evil marketplace
Buys human services from
Amazon’s Mechanical Turk
Pays for hosting
and other...
Summary
• The block chain is a technology step-change
with applications far beyond currencies and
financial systems
• A ne...
Questions / comments
Vikram Kumar © 2015
Co-founder, Swerl IO Ltd.
Email: vikram@swerl.io
Twitter: @vikram_nz
33
Images At...
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Bitcoins and Altcoins: Privacy in a decentralised world

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Bitcoins and Altcoins: Privacy in a decentralised world

  1. 1. Bitcoins and Altcoins Privacy in a decentralised world 1
  2. 2. “Bitcoins” 2 Block chain Altcoins “Bitcoin 2.0”
  3. 3. Today’s Agenda • Bitcoins and Altcoins as currencies • Q&A • Bitcoin 2.0 and decentralisation • Q&A 3
  4. 4. A Bit of History • Precursor: crypto, many ecash technologies especially David Chaum and Stefan Brands • November 2008: paper “Bitcoin: A Peer-to-Peer Electronic Cash System” by “Satoshi Nakamoto” • January 2009: network came into existence • August 2010: only major security flaw • April 2011: 1st Altcoin launched (Namecoin) followed by Litecoin • February 2014: Mt Gox collapse (70% of market) 4
  5. 5. Price Volatility, Immaturity Full price history Last 3 months 5
  6. 6. Supply Side • Mimics gold mining • Fixed supply of BTCs – 21 million cap – supply reduces geometrically – currently 25 BTCs per block (10 minutes) which is about US$ 1M per day • Inherently deflationary 13.9M, 66% 6
  7. 7. Chinese Exchanges Dominate Source: http://bitcoincharts.com/charts/volumepie/ 7
  8. 8. Regulatory Focus on Exchanges • Increasingly full AML (Anti-Money Laundering) processes required including KYC (Know Your Customer) and Suspicious Transaction Reporting • Consumer protection laws- lots of scams, full custodial control of money • Taxation laws • Privacy concerns 8
  9. 9. All the Technical Details Free version: http://chimera.labs.oreilly.com/books/1234000001802/index.html 9
  10. 10. 3 Things You Need to Know 10
  11. 11. 1. Beautiful Design • Completely decentralised • No trust in anyone required • Alignment of incentives for all roles 11
  12. 12. 2. Wallets Still Weak Point • More key ring than cash store • Bitcoin addresses (where BTCs received) can be public, unlike credit cards • Lots of security innovation but wallets are still the weak point 12
  13. 13. 3. Not Anonymous • Bitcoin addresses are pseudonymous • Block chain has an immutable, public record of every transaction • Mixing and laundry services are of dubious legality. More common: new address for every transaction 13
  14. 14. Altcoins 14
  15. 15. Altcoins • Alternatives to Bitcoin, modifying it in one or more ways • Around 900 but growing all the time • Not yet significant- just 9 have market cap over $10M compared to Bitcoin’s $3.3B • Many scams including pump and dump 15
  16. 16. Ripple (XRP) • Largest Altcoin (?), market cap $440M • Re-developed in 2011 by the controversial Jed McCaleb, now with “Bitcoin killer” Stellar STRs • Completely separate from Bitcoin but bridge exists between the two 16
  17. 17. Litecoin • 2nd largest Altcoin, market cap $66M • Forked from Bitcoin in October 2011 • Compared to Bitcoin, Litecoin has: – faster confirmation time (2.5 minutes) – 4 times as many currency units – different mining algorithm called scrypt 17
  18. 18. Darkcoin • 5th largest Altcoin, market cap $14M • Focus on privacy by obscuring transactions and IP (Internet Protocol) addresses • Compared to Bitcoin and Litecoin, Darkcoin has different mining algorithm called X11 18
  19. 19. Zerocash • Under development. Goal: anonymous “origin, destination, and amount of the payment” • Extends Bitcoin’s protocol and software • Utilises a special crypto technique called zk- SNARK (zero knowledge Succinct Non- interactive ARguments of Knowledge). Proof that something is true without disclosing it 19
  20. 20. Dogecoin • 4th largest Altcoin, market cap $14M • Started as a joke currency in 2013 • Gained traction quickly as an Internet tipping currency • Completely breached in December 2013. Community then donated to cover all losses in a month • Community funded Jamaican Bobsled Team for the 2014 Winter Olympics 20
  21. 21. Summary • Bitcoin shows decentralised currencies without trusted intermediaries may work • Still immature. No mainstream adoption yet but niches clear, e.g. international remittances • Bitcoin network itself strong and secure but ecosystem has weaknesses • Regulation increasing • Bitcoin is not anonymous. Some Altcoins addressing this • Future? Niches at low cost + digital applications 21
  22. 22. Questions / comments 22
  23. 23. Bitcoin 2.0 23
  24. 24. The Block Chain • Probably Bitcoin’s major innovation • Foundation for new decentralised and distributed systems The block chain is a technology step-change to build a secure, scalable and open coordination platform globally. Not limited to currency or financial systems. 24
  25. 25. The Block Chain is • A ledger: an ordered record of transactions – verified – immutable – public – anyone can replicate and verify it independently – records consensus of the “truth” 25
  26. 26. 1. Timestamping • Cryptographic fingerprint of a file put in a block chain (content not revealed) • Proof that file – existed at particular point of time – hasn’t been altered • Widespread application 26
  27. 27. 2. Sidechains • Bitcoin network innovation bogged down by vested interests and stability concerns • Interconnect with other block chains, including altcoins, as a trust anchor • Best of both worlds: innovation + stability 27
  28. 28. 3. Internet of Things • Block chain acts as a database, determining state with smart objects, and adding security • IBM and Samsung working on ADEPT (Autonomous Decentralized Peer-to-Peer Telemetry) • [Full Disclosure: commercial interest] 28
  29. 29. 4. User-centric Identity 29
  30. 30. 5. New Wave of Decentralisation • The Internet provides communication and cryptocurrencies (Bitcoins, Altcoins) digital money • A new wave of decentralisation is coming – Autonomous Agents – Decentralised Applications – Decentralised Organisations – Decentralised Autonomous Organisations (DAOs) or Corporations (DACs) 30
  31. 31. An Evil DAO Evil DAO Runs an evil marketplace Buys human services from Amazon’s Mechanical Turk Pays for hosting and other services Launders Bitcoins or converts to Darkcoins Bad guys get profit 31
  32. 32. Summary • The block chain is a technology step-change with applications far beyond currencies and financial systems • A new wave of innovative decentralised and distributed services and systems coming • Some of them may require adaptation of current policy instruments but it’s still only a theoretical risk 32
  33. 33. Questions / comments Vikram Kumar © 2015 Co-founder, Swerl IO Ltd. Email: vikram@swerl.io Twitter: @vikram_nz 33 Images Attribution • Cover: Martin Sutovec, Cagle Cartoons, Slovakia http://www.truthdig.com/cartoon/item/bitcoin_not_accepted_20131129 • Altcoins: Fredo&Pid’Jin http://www.pidjin.net/2013/12/09/bitcoined/

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