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Global Future of Blockchain


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Blockchain 3.0, the Encryption of Innovation. This talk looks beyond the immediate economic benefits and risks of distributed ledgers and considers the broader societal innovations implied by blockchain technology. The possibility of innovation and creating and participating in different and multiple self-determined political and economic systems could mobilize how we create ourselves as individuals and societies. Blockchain technology invites the possibility of creating a social world that gives greater weight to the values we apparently care about: freedom, trust, and dignity

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Global Future of Blockchain

  1. 1. Global Future of Blockchain Melanie Swan Philosophy, Purdue University Blockchain 3.0, the Encryption of Innovation Seoul, South Korea, May 17, 2018 Slides: 좋은 아침
  2. 2. 1 Melanie Swan, Technology Theorist  Founder, Institute for Blockchain Studies  Philosophy Department, Purdue University, Indiana, USA  Singularity University Instructor; Institute for Ethics and Emerging Technology Affiliate Scholar; EDGE invited contributor; FQXi Advisor Traditional Markets Background Economics and Financial Theory Leadership New Economies research group Source:,
  3. 3. Blockchain 2 Source:  To inspire us to build this world 2015
  4. 4. basics. 3
  5. 5. internet content. 4 information. email. voice. video. money.
  6. 6. 5 Conceptual Definition: Blockchain is a software protocol; just as SMTP is a protocol for sending email, blockchain is a protocol for sending money Source: What is Blockchain/Distributed Ledger Tech?
  7. 7. Blockchain Technology: What is it? 6  Blockchain technology is the secure distributed ledger software that underlies cryptocurrencies like Bitcoin  “Internet of Money” leapfrog technology; Skype is an app allowing phone calls via Internet without POTS; Bitcoin is an app allowing money transfer via Internet without banks; ‘decentralized Paypal’ Internet (decentralized network) Blockchain Bitcoin Source: Application Layer Protocol Layer Infrastructure Layer SMTP Email VoIP Phone calls OSI Protocol Stack:
  8. 8. Two Fundamental Eras of Network Computing 7 Source: Expanded from Mark Sigal, I. Transfer Information II. Transfer Value 6 7 2020s 2030s Simple networks Smart networks
  9. 9. blockchain. 8 software. secure transfer of money. via the internet.
  10. 10. killer apps. 9 secure transfer of value, of… money & securities. property. contracts. identity credentials.
  11. 11. 10 public blockchains. private blockchains. trustless. mined. p2p software. trusted. not-mined. enterprise software.
  12. 12. How does Bitcoin work? Use eWallet app to submit transaction 11 Source: Scan recipient’s address and submit transaction $ appears in recipient’s eWallet Wallet has keys not money Creates PKI Signature address pairs A new PKI signature for each transaction
  13. 13. P2P network confirms & records transaction 12 Source: Transaction computationally confirmed Ledger account balances updated Peer nodes maintain distributed ledger with consensus-based mining Transactions submitted to a pool and miners assemble new batch (block) of transactions each 10 min Each block includes a cryptographic hash of the last block, chaining the blocks, hence “Blockchain”
  14. 14. mining. Source: 13 Proof of Work: secure but expensive.
  15. 15. What is Bitcoin mining? 14  Mining is the accounting function to record transactions, fee-based (120,000,000 KRW)  Mining ASICs “find new blocks” (proof of work)  Network regularly issues random 32-bit nonces (numbers) per specified cryptographic parameters  Mining software constantly makes nonce guesses  At the rate of 2^32 (4 billion) hashes (guesses)/second  One machine at random guesses the 32-bit nonce  Winning machine confirms and records the transactions, and collects the rewards  All nodes confirm the transactions and append the new block to their copy of the distributed ledger  “Wasteful” effort deters malicious players Sample code: Run the software yourself: Fast because ASICs represent the hashing algorithm as hardware
  16. 16. adoption: hype vs. value-creation. 15 $2.1 billion 2018 global spend (IDC). 57% global corporations (Juniper). $325 billion USD asset class. 1551 cryptocurrencies. 1206 token projects. Sources:,,,
  17. 17. When to use Blockchain Technology 16  Blockchain is enterprise software  Solid business use case  How does a decentralized solution improve over a centralized one?  Ideal use case:  Many parties in the value chain  Intensity of information and monetary exchange Use Case Example: Factom: Health insurance claims billing • Automated claims billing, validation, payment, and settlement • Multi-party value chain: patient, service provider, billing agent, insurance company, payor, government, collections adoption: hype vs. value-creation.
  18. 18. sample applications. 17
  19. 19. 18 financial services. quantified risk: 2.5 yr payback (securities clearing 3-days to 2-days).
  20. 20. 19 food supply chain safety monitoring. chain of custody.
  21. 21. 20 vaccine cold storage tracking.
  22. 22. 21 birth registry, QR code resumes. MIT Digital Certificates (diplomas); Criminal Records
  23. 23. 22 vehicle information chains.
  24. 24. 23 supply chain asset tracking.  Application-specific views and credentials issued to multiple parties in the value chain using single shared blockchain  Blockchain-registered digital assets, real-time balance sheets
  25. 25. 24 enterprise platform comparison. Source:
  26. 26. 25 blockchains in space. Jan. 13, 2018 - NASA has awarded a grant to the University of Akron for research into data analysis and other topics related to space exploration. The allocation will help a team led by associate professor Jin Wei to pioneer a resilient networking system based in part on the Ethereum blockchain.
  27. 27. network futures. 26
  28. 28. peer-hosted. Source: 27 Bitcoin: 10,493 nodes.
  29. 29. peer-hosted. Source: 28 Ethereum: 15,055 nodes.
  30. 30. store money. 29 old model. networks. banks. new model.
  31. 31. change. 30 “…financial institutions…face the risk that payment processing and other services could be disrupted by technologies, such as cryptocurrencies, that require no intermediation” Annual 10K, Mar 2018
  32. 32. power of the press. 31 old model. networks. newspapers. new model.
  33. 33. power of the wallet. 32 old model. peer networks. banks. new model.
  34. 34. blockchain economics. 33
  35. 35. Blockchain Economics  New economic model’s distinguishing aspects 1. Open platform business model  vs. proprietary platform (GOOG, FB, NFLX) 2. Initial Coin Offerings as a novel and official financing method for projects 3. Token-based money supply 34 Source: Swan, M. Forthcoming. Blockchain Economic Networks. Palgrave Macmillan. Two-way network effects (Metcalfe’s Law (n2 ))
  36. 36. 35 participation. earn money. access resources. vote on decisions. tokens = “money +”. functions of money. store of value. medium of exchange. unit of account. +
  37. 37. participation . 36 information internet: static information social internet: engage with content token internet: participate in the community economy
  38. 38. 37 net settlement. payment channels. digital credit systems. Source: rethink debt.
  39. 39. Rethink Debt with Net Settlement and Payment Channels 38 Source: Extended from Opening Transaction: Broadcast to Network Interim Transactions: Signed between Wallets (both parties agree and are obligated; not Broadcast to Network) USD $50 Alice opens $50 “Monthly Payment Channel” with Starbucks Closing Transaction: Broadcast to Network Alice consumes coffee and Starbucks adjusts the refund balance from the initial deposit USD $5 4/1/18 4/30/18 1 2 Close “Monthly Payment Channel”: Starbucks broadcasts last refund amount to network Starbucks Coffee USD $50 USD $45 Starbucks acknowledges with unbroadcast refund of $50 4/2/18 USD $5 3 4/3/18 USD $5 4 4/4/18 USD $40 USD $35 USD $35 3 0
  40. 40. 39 real-time balance sheets. off-balance sheet obligations disappear. diminished risk. Source: rethink risk.
  41. 41. business networks. 40 digitized assets. instantaneous transactability. shared business processes. single ledger. the world is your VPN Source:
  42. 42. Rethink Risk with Black Swan Smart Contracts  Financial options (put/call) used to control/manufacture exposure  Convexity (Fig. 1): control down-side risk, upside gain, anti-fragile (robust)  Concavity: undesirable risk profile  Taleb: map event probabilities as s-curve (Fig. 2) in medicine, etc.  Convex-linear-concave profile  Use programmable risk dropdown feature of smart contracts to manage risk in more domains 41 Sources: Swan, M. Submitted. Programmable Risk: Black Swan Smart Contracts, IEEE; Taleb, Medicine: Figure 1 Figure 2
  43. 43. smart contracts. 42 Launched: Nov 2017 500,000 sold, total: USD$40 million Source: cryptokitties.
  44. 44. global inclusion. 43 banking & credit. land registry. identity. electricity. vaccines & medicine. Source: Digital health wallet
  45. 45. future-class tech. 44 blockchain networks are a new class of global computational infrastructure.
  46. 46. smart networks. 45  Future of AI: intelligence “baked in” to smart networks  Blockchains to confirm authenticity and transfer value  Deep Learning algorithms for predictive identification
  47. 47. deep learning chains. 46  Autonomous Driving & Drone Delivery, Social Robotics  Deep Learning (CNNs): identify what things are  Blockchain: secure automation technology  Track arbitrarily-many units, audit, upgrade  Legal liability, accountability, remuneration
  48. 48. fleet management. 47 secure automated
  49. 49. data. 48 big data ≠ smart data. clean, standardized, interoperable. Source: 40 EB 2020e
  50. 50. scale. 49 Source: Population: 7.5 bn people worldwide big health data.
  51. 51. 50 automation economy. human-machine collaboration. coordinate fleet-many items.
  52. 52. risks. technology: scalability. political: regulation. social: adoption. Rapid Adoption Unfavorable Regulation Favorable Regulation Slow Adoption Future Scenarios 51
  53. 53. 52  First country with an official blockchain technology policy South Korea leads Proposed Policy toward Blockchain Technology It is the policy of the South Korea to lead in encouraging the development and use of blockchain technology (distributed ledgers) pursuant to the following objectives: • Facilitate industry growth, • Safeguard consumer interest, • Deliver more choice to more persons, • Encourage positive behaviors such as trust, and • Retard harmful behaviors such as resource expropriation
  54. 54. Global Future of Blockchain Melanie Swan Philosophy, Purdue University Blockchain 3.0, the Encryption of Innovation Seoul, South Korea, May 17, 2018 Slides: 당신을 감사하십시오