There are plenty of bitcoin and blockchain intro decks, so why create another one? Because they are either too technical or too vague on how blockchain actually works! This talk is prepared for audiences who have good educational background and general knowledge about internet. It is used during my trip to Taiwan so some Chinese translations are included. It starts with a basic definition and a functional description of how bitcoin solves the double spending problem, how it was implemented in blockchain, what is mining and why it is critical to the bitcoin ecosystem. Based on these understandings, it goes up a level to talk about how to use cryptocurrencies, the characteristics of a blockchain, and why it has the potential to disrupt financial services and beyond. The talk finishes with an overview of the cryptocurreny market, the rise of Ethereum, and the recent ICO phenomenon. There are several versions of this presentation. This particular version is for financial services professionals so there is more emphasis on blockchain adoption. The CS version covers the math behind mining in more depth, and the general public version provides some cautionary notes regarding speculating on cryptocurrencies. LINE characters are used in illustrations due to their popularity in Taiwan. The American version uses the Simpsons.

1. 1
Bitcoin and Blockchain
比特幣 與 區塊鏈 簡介
Dr. Ansel Teng (鄧揚品)
 A speculative asset class that returned 36x in 4 months!
四個月內賺三十六倍的投機管道
 The technology that will disrupt financial services and beyond
顛覆金融業未來的新科技

2. About Me
2
• BSEE, National Taiwan University
• Ph.D in CS, University of Maryland –
College Park
• High performance computing research
at NASA Jet Propulsion Lab
• Dot Com roller coaster at eToys.com
(VP Engineering)
• VP of IT at Capital Group Companies
• MIT FinTech Program
• Currently an independent consultant

3. What is Bitcoin?
3
• A digital currency that circulates over the
internet (symbol: BTC)
• Operated by a peer-to-peer network of
computers without a central authority
• Uses public-key cryptography (密碼學) to
ensure authenticity  crypto-currency
• Blockchain is the technology behind bitcoin
(and its P2P network)

4. A brief history of bitcoin
4
Source: 99bitcoins.com
10/31/2008: Bitcoin white paper published under the pseudonym Satoshi Nakamoto
01/03/2009: Bitcoin became operational (Genesis Block mined)
02/09/2011: Bitcoin price
reached $1 USD
June 2011: Mt.Gox hacked.
BTC price went from $31 to
$10 in four days
October 2013: Silkroad
shutdown
11/29/2013: Chinese
interests sent price to
$1,242 USD
02/24/2014: Mt.Gox
shutdown
July – Dec. 2014:
Increasing acceptance by
Dell, PayPal, Microsoft
04/01/2017:
Japan accepts
bitcoin as a
legal payment
Jan. 2017: price
over $1,000 again.
PBoC warning.

5. Who’s buying bitcoin?
5
Bitcoin trading volume by currency

6. The challenge for digital money
The double spending problem
6
Some potential solutions
• A centrally managed ledger -- banks, Alipay, WeChat Pay, etc
• Give each coin an ID and track where it is
This can be copied easily if it
is just a bunch of 1s and 0s
Is this the same coin that
was given to Cony?
Gives Sally 1 coin
Gives Cony 1 coin
Brown
Cony
Sally

7. 7
Bitcoin’s Solution
Store the chain of transactions to prevent double spending
James
Gives Brown 1 BTC Gives Cony 0.7 BTC
JamesBrown: 1
BrownCony: 0.7
BrownBrown: 0.3 BrownSally: 0.3
1
1
2
2
3
3XJames: 1
Brown
Cony
Sally
* Transaction fee omitted for simplicity

8. Blockchain
8
How this chain of transactions is stored over the P2P network
Source: PwC
Security Measures:
• Each transaction signed with cryptography, and validated by network nodes
• Each node will validate the blocks created by other nodes

9. Bitcoin Mining
9
The mining process solves two key issues:
1. Whose new block should the network accept?
2. What’s the incentive for people to contribute computing resources
to support bitcoin operation?
 Whoever solves the Proof-of-Work problem first gets to create the
new block and receives the mining reward
Proof of Work:
A mathematical puzzle that can only
be solved by trying every integer
until a solution is found. The
difficulty is adjusted periodically to
control the rate of new block
creation to 10 min/block.
Mining Reward:
A pre-determined number
of new bitcoins that will be
created and given to the
node (miner) who
successfully created the
new block.

10. Bitcoin Circulation
10
7/9/2016
11/28/2012
1/3/2009
Current circulation: 16.4M BTC as of 6/17/2017
Mining reward: 12.5 BTC/block ~= $33,000 USD  $1,000,000 NTD

11. Who wants to be a bitcoin miner?
11
Source: CryptoCompare.com
Anyone with a computer can join the bitcoin blockchain,
but bitcoin mining is not for the amateurs anymore!
7/6/2017: 5 x 10^18 H/S
FPGA

12. Bitcoin Ecosystem
Wallets
12
Exchanges
Developers
Miners
Source: bitcoinworldwide.com

13. How to use bitcoin
13
Wallet Exchange

14. How do I get bitcoins from NT$?
• Wallet providers
14
Source: coinatmradar.com
• Bitcoin ATM

15. Benefits of blockchain:
 Secure: public-key cryptography
 Immutable: append-only data store
 Global: accessible to anyone on the internet
 Resilient: highly distributed p2p network
 Transparent: transactions visible to anyone
 Privacy*: only address is shown
All of these without trust in a central
authority!
15
The Benefits of Blockchain
*Bitcoin is pseudonymous, while some cryptocurrencies provide higher level of privacy

16. 16
Blockchain’s Disruptive Potential
• A paradigm shift: “Trust in Authority”  “Trust in Technology”: Dis-intermediation
• Internet of Information vs. Internet of Value
• Killer App #1: Cross-border P2P payments ($48 via Western Union vs. <$1 via bitcoin
for sending $1000 USD to Taiwan)
• Killer App #2: ICOs (Initial Coin Offerings. $327M via ICO vs. $295M VC funding of
blockchain start-ups. 2017 YTD to June 8)

17. 17

18. 18

19. The Road Blocks
19
• Technology maturity – scalability and reliability
• Business case – blockchain vs. centralized solution
• Regulation – legality of blockchain transactions
NYSE: avg. 4.3 Million trades per day (Jan 2017)
Visa: avg. 442 Million per day (2016)
Bitcoin daily transaction growth

20. 20
The Cryptocurrency Landscape
Types of cryptos
• Currency: Bitcoin,
Litecoin
• Privacy-oriented
currency: Dash,
Monero, Zcash
• Toll for a platform:
Ether
• Membership: DAO
Source: CoinMarketCap.com
900+ Tokens, $100B USD Market Cap

21. The Explosive Growth
21

22. The Ethereum Blockchain (以太坊)
• White paper by Vitalik Buterin in 2013. Operational since
July 30, 2015.
• Blockchain as a computing platform (Ethereum Virtual
Machine)  smart contract & Dapp
• Ether (以太幣) : gas for the network
• The most popular platform to launch new tokens and ICOs
22
2/12/2017
low of $11.24 USD
6/12/2017
high of $404.99 USD
ETH price: 36x growth in 4 months!

23. Connect with me on LinkedIn
https://www.linkedin.com/in/anselteng/
23