A CIO Roundtable briefing on the disruptive nature of the Blockchain, Bitcoin and Ethereum. We'll take a look at Smart Contracts, Digital Tokens and a dozen or so use cases within Financial Services, IOT, Healthcare and Government. Topics Covered: What is the BlockChain Economics behind Digital Currencies Blockchain Trivia Use Cases

1. CHUCK RUSSELL
PRESIDENT & CEO
TECHNOLOGY COUNCIL OF CENTRAL PA
JULY 12th, 2017
@cichuck

2. TOPICS WE’LL COVER
• THE BACKGROUND
• BLOCKCHAIN TECH
• ECONOMICS
• IMPLEMENTATION
• DISRUPTION & USE CASES
@cichuck

3. DIGITAL CURRENCY OBJECTIVES
WHY DO WE CARE?
• It must be perceived to have value.
• A DIGITAL CURRENCY must be a digital TOKEN exchanged between two parties.
• There must be no CENTRAL AUTHORITY, like a bank that facilitates the exchange.
• Instead a peer to peer NETWORK ensures that debits and credits are accounted
for.
• The NETWORK ensures that the TOKEN can only be exchanged once, in other
words an entity can’t make copies of the digital token and exchange it ad
infinitum.
• The NETWORK must ensure that all PARTICIPANTS in the NETWORK trust each
other even though their IDENTITIES remain anonymous.
• A mechanism must exist that permits PARTICIPANTS come to a CONSENSUS –
agreeing upon the validity of a transaction. This is sometimes known as the the
BYZANTINE GENERALS PROBLEM.
• The SUPPLY of TOKENS is controlled. The marginal increase in the supply of
TOKENS will diminish over time. There is a MAXIMUM limit to the number of
tokens that will be created during the EPOCH.
@cichuck

4. BACKGROUND
• The BITCOIN system, describing these objectives
was detailed in a white paper by an anonymous
architect: Satoshi Nakamoto.
• Bitcoin: A Peer-To-Peer Electronic Cash System
(https://bitcoin.org/bitcoin.pdf)
• While BITCOIN was not the first proposed DIGITAL
CURRENCY it was the first successful
implementation.
@cichuck

5. TIMELINE
• October 2008 – BITCOIN White Paper Published
• January 2009 – Financial Crisis Puts Banks in Spotlight
• May 2010 – Retailers Begin Accepting Bitcoin (BTC) Online
• July 2012 – Hackers Steal Coins from Exchanges
• April 2013 – The Value of all BTC In Circulation Reaches $1 Billion. The
Winkelvoss twins begin to amass a large BTC stash.
• July 2013 – The Winkelvi Propose to Create an ETF Based on BTC Holdings.
• January 2014 – BTC (Blockchain) Becomes the FINTECH Poster Child
• June 2015 through today– Heavy Investment in BTC and Other Digital Currencies
• Today – The Value of all BTC in Circulation Exceeds $55 Billion.
• More on the History OF BITCOIN – (http://historyofbitcoin.org/)
@cichuck

6. GOALS FOR BITCOIN
• A DIGITAL CURRENCY must be a BITCOIN exchanged between two parties.
• There must be NO CENTRAL AUTHORITY, like a bank that facilitates the
exchange.
• Instead a PEER-TO-PEER NETWORK ensures that debits and credits are
accounted for.
• The NETWORK ensures that a BITCOIN can only be EXCHANGED ONCE, in other
words an entity can’t make copies of the digital token and exchange it ad
infinitum.
• The NETWORK must ensure that all PARTICIPANTS in the NETWORK trust each
other even though all IDENTITIES of the PARTICIPANTS remain ANONYMOUS.
• A mechanism must be created so that all participants come to a CONSENSUS –
agreeing upon the validity of a transaction. This is sometimes known as the the
BYZANTINE GENERALS PROBLEM.
• The SUPPLY of BITCOIN is controlled. The marginal increase in supply must
diminish over time. There is a MAXIMUM limit to the number of BITCOIN that
will be created during the EPOCH.
@cichuck

7. WALLETS AND ADRESSES
• Bitcoin ADDRESS – 34 characters Long. Think of it as a ‘bank account’.
• WALLET – encrypted, password protected and contains one or more
addresses. WALLETS (clients) can generate new addresses.
@cichuck

8. • A new ADDRESS is a cryptographic key pair. A
private key and a public key.
• An ADDRESS is a uniquepublic key.
• The private key is stored in your WALLET.
• Every TRANSACTION signed by the private key
can be VERIFIED by the network as coming
from a VALID ADDRESS. NONREPUDIATION.
@cichuck

9. • All Transaction are grouped together into a new BLOCK.
• The MINERS are instructed to create a HASH
(mathematical function) that must fit a certain format
and requires a substantial amount of computing power.
This is the NONCE.
• The HASH incorporates the prior BLOCKS data in the
function so that the current and prior BLOCKS are linked.
• Once a valid NONCE is constructed by a MINER
that MINER is REWARDED with 50 BITCOINS.
• The NONCE and BLOCK are transmitted to all MINERS on
the network for VERIFICATION and CONSENSUS.
@cichuck

10. TERMINOLOGY
• WALLET – stores ADDRESSES.
• ADDRESS – a cryptographic key pair that stores a balance.
• CLIENT – software that initiates a TRANSACTION.
• TRANSACTION – transfer of a BITCOIN from one address to another.
• BLOCK – one or more TRANSACTIONS occurring within a specified period of
time.
• MINERS – computers on the NETWORK and create BLOCKS and
cryptographically sign each block with a hash.
• HASH – a one-way mathematical function that takes an input and produces a
unique output.
• NONCE – a special HASH designed to seal a block.
• REWARD – a quantity of cyber currency (BITCOIN) is awarded to the MINER
that identifies the NONCE that seals a block. It may take considerable time for
a MINER to reap a reward.
• VERIFICATION – agreement amongst all nodes on the network that a valid
BLOCK has been created and added to the CHAIN
@cichuck

11. Address Management
• Think of an ADDRESS as a unique identifier. It is created and signed cryptographically.
• It is owned by the entity that can unlock it.
• It can be used to identify a valid entity. Although we probably will never know who
that entity is
@cichuck

12. • The NETWORK is responsible for transferring the BITCOIN
from Alice’s ADDRESS to Bob’s. The NETWORK handles
debits and credits.
• MINERS on the NETWORK may be individuals acting alone
or they may POOL their resources and share the
cryptographic workload. We call them MINING POOLS.
• MINERS mine BITCOIN with special hardware (FPGA) called
ASICS. They are designed to perform the HASH function
(hashcash) efficiently.
@cichuck

13. • MINERS are located all over the globe and work in a
DISTRIBUTED, DECENTRALIZED fashion
• All MINERS have a copy of the entire VALIDATED
BLOCKCHAIN
• In BITCOIN, the act of HASHING is known as PROOF
OF WORK. We know that the BLOCKCHAIN is VALID
because a forgery would take a massive amount of
computing power to complete.
• Based on current computing architecture a majority
of MINERS would need to collude in order to forge a
block. This is known as the 51% attack.
@cichuck

14. MINING HARDWARE – RATED in the
NUMBER OF HASHES performed per
second.
MINERS can purchase their own hardware
and run it at home or buy mining capacity
in the cloud.
CURRENT total NETWORK HASHRATE FOR
BTC:
5.1 EH/s. (exahashes – 5.1 X 10**18)
@cichuck

15. • Once written no BLOCK on the BLOCKCHAIN
can be altered. It is an IMMUTABLE LEDGER.
• The BLOCKCHAIN ensures that a coin (or a
fraction of a coin) can be spent only once thus
solving the SINGLE SPEND problem.
• DECENTRALIZED TRUST solves the BYZANTINE
GENERAL’s PROBLEM.
• ADDRESS ANNONYMITY hides all parties in the
transaction.
@cichuck

16. Nested Hashes
For More Information on Tree
Structure –Read up on
MerkleTrie(trees) data
structures.
Nested Hashes use SHA256
hashing algorithm.
BLOCKS AND TRANSACTIONS
@cichuck

17. TRANSACTION CONTENTS
• HEADER INFO – timestamps, hash info etc.,
• FIRST PARTY (FROM ADDRESS)
• 2nd PARTY (TO ADDRESS)
• ATTRIBUTES – User defined data that can be inserted
into the TRANSACTION encrypted or in the clear. This
can be additional
INFORMATION ABOUT THE TRANSACTION
• TRANSACTION Size is limited to 100K bytes.
• BLOCK Size is limited to 1M bytes.
@cichuck

18. MORE TERMINOLOGY
• BLOCKCHAIN – the distributed ledger. A list of linked BLOCKS
each consisting of a number of transactions. Think database.
• ANONYMITY – hiding the identity of the transaction’s parties.
• THE NETWORK – computing NODES each of which has a copy of
the BLOCKCHAIN ledger (data file)
• MINING POOL – 2 or more computing NODES working in
tandem to cryptographically sign a block.
• HASHCASH – the BLOCKCHAIN algorithm used to discover the
NONCE.
@cichuck

19. STILL MORE TERMINOLOGY
• DISTRIBUTED – computation power is spread across many NODES in the
NETWORK
• DECENTRALIZED – there is no central arbiter of TRANSACTION aggregation
and BLOCK VALIDATION.
• PROOF OF WORK (PoW) – the notion that a large amount of computing
power (WORK) is required to resolve the NONCE.
• IMMUTABLE LEDGER – TRNASACTIONS and BLOCKS cannot be altered once
written to the BLOCKCHAIN
• 51% ATTACK – A situation where over 50% of the NETWORK colludes to forge
a BLOCK.
@cichuck

20. A WORD ON THE BTC SUPPLY
• Diminishing mining rewards
over time.
• The Bitcoin money supply is
capped.
• The difficulty to calculate
the NONCE rises over time.
• Given diminishing rewards
is the PROOF OF WORK
model in jeopardy?
@cichuck

21. RECAP - THE BLOCKCHAIN IS:
• PUBLIC – anyone can read a list of all transactions and all
blocks.
• PROGRAMMABLE - Applications, via APIs can read from &
write transactions to the BLOCKCHAIN.
• PERMISSIONLESS – Anyone can build an APP on top of the
BLOCKCHAIN
• IMMUTABLE – Once written a BLOCK and its TRANSACTIONS
cannot be deleted .
• ANONYMOUS – All parties are referred to by a 34 character
alphanumeric ADDRESS. Identitesof all parties is private.
• DECENTRALIZED – All PARTICIPANTS of the NETWORK have a
copy of the BLOCKCHAIN and have equal voting rights. There
is no CENTRAL AUTHORITY
• DISTRIBUTED – NODES on the NETWORK are located
throughout the world with provides fault tolerance.
@cichuck

22. WE HAVE FINALLY HAVE A BLOCKCHAIN
DEFINITION. WHAT ABOUT DIGITAL
CURRENCEY?
BUT WHY IS BITCOIN VALUABLE?
@cichuck

23. IN GENERAL, THINGS VALUABLE BECAUSE:
• Importance / Demand
• Scarcity
• Quality
• Uniqueness / Has Few Substitutes
• Assigns Prestige

24. Sold at auction for $115,242 in early 2007
• Importance / In Demand
• Scarcity?
• Quality?
• Uniqueness – There are few substitutes
for a Reggie Rookie card.
• Assigns Prestige – well, not if you’re a
Mets fan.
• Macroeconomic wealth – more money
in circulation chasing ‘objects’.
• It’s worth what someone is willing to
pay for it.
REGGIE JACKSON 1969 GEM MINT ROOKIE CARD
GEM MINT 9 VERSION OF THIS CARD IS SELLING FOR $18,500 today
on EBAY @cichuck

25. WHAT IS MONEY ANYWAY?
• A Medium of Exchange (MoE) - A medium of exchange is an
intermediary instrument used to facilitate the sale, purchase or
trade of goods between parties.
• A Store of Value (SoV) - A store of value is the function of an
asset that can be saved, retrieved and exchanged at a later time,
and be predictably useful when retrieved.
• Unit of Settlement (UoS) - A "standard of deferred payment" is an
acceptable way to settle a debt--a unit in which debts are
denominated.
• It Was a Commodity– silver and gold were once considered
money.
• FIAT Currency (minted/papered) – guarantee of ‘value’ by a
government decree.
• The Supply is Controlled by a Central Authority
• It Is Fungible. The USD can be broken down into 1/100
increments.
@cichuck

26. What is a BITCOIN (BTC)
• A DIGITAL TOKEN or DIGITAL CURRENCY
• It Is MINTED via a MINING REWARD
• It Can Be Exchanged for FIAT CURRENCY : today 1
BTC = $2,500 USD
• The Supply is Controlled by the NETWORK – Only
20,999,999.9769 BTC Will EVER BE CREATED
• Ownership Can Be Transferred – Our Transactional
Demonstration
• It Is Fungible
@cichuck

27. TESTING… IS BTC MONEY:
• A Medium of Exchange – YES
• Hundreds of online retailers accept digital coins as payment
• A number of DIGITAL CURRENCY EXCHANGES exist that allow me
to turn BTC into USD and vice versa. (Kraken, Poloniex, Coinbase
etc.,)
• A Store of Value – MAYBE.
• DIGITAL COINS have suffered price volatility and would fail the
predictability test. They often behave more like a stock or
commodity.
• A Unit of Settlement – YES
• Smart, Digital Contracts executed on the BLOCKCHAIN accept the
DIGITAL CURRENCY in order to SETTLE. More on that in a bit.
@cichuck

28. DIGITAL CURRENCIES ARE TRADED
• Electronic Exchanges allow for the conversion of
DIGITAL COINS to FIAT CURRENCIES.
• DIGITAL COINS can be purchased with FIAT
CURRENCY.
• One DIGITAL COIN type can be exchanged for
another.
• Buy / Sell orders are managed by the EXCHANGES
and resemble a FOREX market (or stock market).
• Prices are set by the EXCHANGE acting as MARKET
MAKER for the underlying currency.
@cichuck

29. How Fungible is BTC?
• A Satoshi is the smallest fraction of a Bitcoin that
can currently be sent: 0.00000001 BTC, that is, a
hundredth of a millionth BTC. In the future,
however, the protocol may be updated to allow
further subdivisions, should they be needed.
• For you math buffs: 1 Satoshi = 1 X 10-8 BTC
• One Satoshi is currently worth .000025 USD
assuming a 1 BTC exchange rate of $2,500.
@cichuck

30. Is BITCOIN Money? Well the IRS says…
WASHINGTON (3/25/2014) — The Internal Revenue Service today issued a notice providing answers to
frequently asked questions (FAQs) on virtual currency, such as bitcoin. These FAQs provide basic information on
the U.S. federal tax implications of transactions in, or transactions that use, virtual currency.
In some environments, virtual currency operates like “real” currency -- i.e., the coin and paper money of the
United States or of any other country that is designated as legal tender, circulates, and is customarily used and
accepted as a medium of exchange in the country of issuance -- but it does not have legal tender status in any
jurisdiction.
The notice provides that virtual currency is treated as property for
U.S. federal tax purposes. General tax principles that apply to property transactions
apply to transactions using virtual currency. Among other things, this means that:
• Wages paid to employees using virtual currency are taxable to the employee, must be reported by an
employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
• Payments using virtual currency made to independent contractors and other service providers are taxable
and self-employment tax rules generally apply. Normally, payers must issue Form 1099.
• The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual
currency is a capital asset in the hands of the taxpayer.
• A payment made using virtual currency is subject to information reporting to the same extent as any other
payment made in property.
@cichuck

31. Toll to Ride the BLOCKCHAIN
• A TRANSACTION occupies storage space and processing
space within the NETWORK.
• The ENTITY creating the transaction decides what FEE it’s
willing to pay in order for the TRANSACTION to be
collected in a BLOCK and inserted into the BLOCKCHAIN.
• The FEE is paid with, in our examples thus far, BITCOIN.
• The more complicated the TRANSACTION (size in bytes,
code/processing power required to prove) the higher the
FEE
• Self Healing Mechanism – if a spammer wants to spam
the NETWORK they must pay to insert each
TRANSACTION. Miners are very happy to collect those
tolls.
@cichuck

32. The TOLL is Getting More Expensive
• TRANSACTION FEES are incurred with your BTC
TRANSACTION in order to incentivize MINERs to process
and confirmed by the NETWORK.
• A MINER that MINES a BLOCK accrues 50 BTC + all
TRANSACTION FEES within the BLOCK.
• The space available for TRANSACTIONS in a block is
currently artificially limited to 1 MB. This means that to get
your TRANSACTION processed quickly you will have to
OUTBID other users.
• FEE STRUCTURE
• NEXT BLOCK FEE – the TRANSACTION will be included in the next BLOCK
• 3 BLOCKS FEE - the TRANSACTION will be included within the next 3
BLOCKs
• 6 BLOCKS FEE - the TRANSACTION will be included within the next 6
BLOCKs
• The FEE is based on SATOSHIs / BYTE @cichuck

33. TOLL ROAD EXAMPLE:
• Yesterday, a fee of 100 Satoshis/BYTE will clear a
TRANSACTION within 3 BLOCKS or a guarantee BLOCK
insertion time of 30 minutes.
• BITCOIN was trading at $2,500 US
• A 1K BYTES TRANSACTION would cost 100K Satoshis – or
.001 BTC (a Satoshi is .00000001 BTC)
• This translates into a $2.50 TRANSACTION FEE.
• Keep in mind that the average size of a BTC TRANSACTION
is 250 BYTES
• A BLOCK can therefore contain dozens of TRANSACTIONS.
• MINERS receive more coin.
@cichuck

34. DIGITAL CURRENCY BENEFITS
• Can be transferred over long distances without a
financial intermediary (bank, exchange), and clears
within hours.
• The currency transfer is anonymous.
• Provides payment method to the ‘UNBANKED’
around the developing world.
• Impossible to counterfeit.
• Each transaction (transfer) is recorded in a public
ledger that can be inspected by anyone.
• Enables extremely interesting USE CASES as we’ll
see later.
@cichuck

35. THE DOWNSIDE OF DIGITAL CURRENCY
• The transfer is anonymous. KNOW YOUR CUSTOMER (KYC) is
in jeopardy.
• Governments are not in control and are therefore a bit
‘concerned’.
• Can be used to fund ‘nefarious’ organizations.
• TRANSACTION/BLOCK validation may take too long to
support certain time sensitive use cases.
• There are now approximately 34 viable DIGITAL TOKENS
with market capitalizations over $100MM.
• Which leads me to believe that we’re in a BLOCKCHAIN
bubble, which may be the downside of decentralization.
• PROOF OF WORK (PoW) is not ‘GREEN’
• DIGITAL CURRENCIES valuation is volatile. Particularly this
morning… @cichuck

36. BTC/USD
HIGH: June 12, 2017 @ $2,948
July 11, 2017 @ $2,278
BITCOIN (BTC)
@cichuck

37. ETH/USD
HIGH: June 12, 2017 @ $402.20
July 11, 2017 @ $185.10
ETHEREUM (ETH)
@cichuck

38. Description Value
Bitcoin's current estimated annual
electricity consumption* (TWh)
14.43
Annualized global mining revenues $1,859,398,345
Annualized estimated global mining costs $721,420,025
Country closest to Bitcoin in terms of electricity
consumption
Turkmenistan
Estimated electricity used over the previous day (KWh) 39,529,864
Implied Watts per GH/s 0.299
Break-even Watts per GH/s (based on 5 cents per KWh) 0.77
Electricity consumed per transaction (KWh) 167.00
Number of U.S. households that could be
powered by Bitcoin
1,335,963
Number of U.S. households powered for 1
day by the electricity consumed for a single
transaction
5.63
Bitcoin's electricity consumption as a percentage ofthe
world's electricity consumption
0.07%
PoW ENERGY CONSUMPTION
IT’S NOT EASY BEING GREEN

39. BITCOIN TRIVIA
• SATOSHI’s coins were never spent. It’s
expected that 1MM BTC ($2.5billion) are
in wallets/addresses controlled by
Satoshi. Here are the richest:
http://bitcoinrichlist.com/top100
• The search for SATOSHI NAKAMOTO has
extended to the press. News Week got it
very wrong in a March, 2014 expose.
• CURRENT BTC Market Cap: $41.1 Billion
• Today’s Price: $2,280 this morning.
Down from a high of $2,522
@cichuck

40. @cichuck

41. BITCOIN: BELIVE IT OR NOT
• Honey, where’s my BITCOIN?
A hard drive wallet containing 7,500 bitcoins ($18.75MM)
was discarded accidentally by IT worker James Howells.
• The Most Expensive PIZZA in the World
"I'll pay 10,000 bitcoins for a couple of pizzas.. like maybe
2 large ones so I have some left over for the next day. I
like having left over pizza to nibble on later.”
That Pizza is valued at $25MM today
@cichuck

42. MT. GOX Hack
• MT. Gox was the worlds largest BTC exchange
headquartered in Tokyo, Japan.
• On 6/11/2011 - $460MM of BTC stolen by Hackers.
• Another $26MM of cash was also lifted in the hack.
• The 850,000 BTC would be worth $2.1B today.
• In February, 2014 after dozens of lawsuits and
investigations by FINCEN and US Homeland Security,
MT. GOX filed for bankruptcy.
@cichuck

43. The Silk Road
@cichuck

44. BITCOIN ISN’T ALONE
@cichuck

45. BLOCKCHAIN
• Ability to harness the computing power of all
BLOCKCHAIN nodes, performing computation within on
any/all nodes.
• Platform for building ANONYMOUS, DECENTRALIZED,
DISTRIBUTED applications.
• TURING COMPLETE virtual machine running on the ETH
BLOCKCHAIN
• Ability to create SMART CONTRACTS
• Issue TOKENS, that can be exchanged for other CYBER
CURRENCIES
• Open API
@cichuck

46. SMART CONTRACTS
• In 1994, Nick Szabo, a legal scholar, and
cryptographer, realized that the decentralized ledger
could be used for smart contracts, otherwise called
self-executing contracts, BLOCKCHAIN CONTRACTS, or
SMART CONTRACTS.
• CONTRACTS can be converted to computer code,
stored and replicated on the system and supervised by
the network of computers that run the BLOCKCHAIN.
• REMOVE the middleman - Smart contracts help you
exchange money, property, shares, or anything of value
in a transparent, conflict-free way.
@cichuck

47. SMART CONTRACT EXAMPLE
• Suppose you rent an apartment from me. You can do this through the
BLOCKCHAIN by paying me in a DIGITAL CURRENCY.
• You get a receipt which is held in our SMART CONTRACT
• I give you the digital entry key to the apartment which comes to you by
a specified date. If the key doesn’t come on time, the BLOCKCHAIN
releases a refund to your ACCOUNT.
• If I send the key before the rental date, the function holds it releasing
both the fee and key to you and me respectively when the date arrives.
• The system works on the If-Then-Else premise and is witnessed by
anyone with access to the BLOCKCHAIN, so you can expect a faultless
delivery.
• If I give you the key, I’m sure to be paid. If you send a certain amount in
bitcoins, you receive the key. The CONTRACT is automatically canceled
after the time expires, and the code cannot be interfered with by either
of us without the other knowing, since all participants are
simultaneously alerted to any all changes.
@cichuck

48. CONTRACT = CODE in ETHEREUM
@cichuck

49. @cichuck

50. PAYMENT SYSTEM USE CASES
• Retail
• P2P Payments
• Remittance
• Financial Inclusion – ‘the UnBanked’
• Interbank Clearing
• Forex
• Trading & Market Making
@cichuck

51. • PRIVATE BLOCKCHAIN & Remittance Network
• BUILT on TRUSTLINES between NODES. NODES are
aware of each other’s REPUTATION
• CONSENSUS LEDGER (AKA BLOCKCHAIN) that is
common and shared.
• USES a PROOF OF STAKE PROTOCOL not PoW
• VALIDATES TRANSACTIONS within a few seconds.
• Primary Uses: Retail, Remittance and FOREX
@cichuck

52. PROOF OF STAKE (PoS)
• An alternate to PoW – algorithm seeks to achieve
consensus through reputation not horsepower.
• VALIDATORS are NODES that hold a DIGITAL
CURRENCY.
• VALIDATORS provide a portion of their ASSETS AS
ESGROW (DEPOSITS) when validating
TRANSACTIONS. This is their ‘STAKE’
• ECONOMIC PENALTIES prevent a 51% like attack on
a PoS BLOCKCHAIN
• Algorithms are still evolving.
@cichuck

53. The Establishment Take Notice
• Money Transfer Operator – Western
Union
• Securities Markets – NASDAQ
• Retail & Commercial Banks – ING, RBS,
JP Morgan, Citi, BOA etc.,
• Card Schemes – Visa, AMEX, Mastercard
• Interbank Networks – SWIFT, earthPort
@cichuck

54. @cichuck

55. Use Case Subject Areas
• IOT – the registration and validation of connected
devices
• Data – distributed storage and access
• E-Identity – registration and validation of individual
identity
• Proof of Ownership – tamper proof registration and
stamping of physical and digital assets.
• Insurance Industry – fraud reduction assigning
provenance / history to insured valuables.
@cichuck

56. Use Case Subject Areas
• Legal – smart contracts
• Crowd Funding & ICOs – raising capital and
distribution of equity
• Market Places – trading / sharing of physical and
digital assets/services
• Publishing – asset rights management, distribution,
payment.
@cichuck

57. WRAPPING UP…
• The BLOCKCHAIN ecosystem has reached an $82
Billion Market Cap. Coins and Companies.
• I have 95 BLOCKCHAIN companies on my radar, with
more added every month.
• FINTECH is being funded by large, multibank
consortiums to the tune of: $1.2 Billion in 2016.
Much of this funding is directed to BLOCKCHAIN
initiatives.
• This is a global movement with thousands of
developers innovating rapidly.
• BLOCKCHAIN will most likely morph into Internet 3.0
– more on that some other time.
@cichuck

58. EMAIL: crussell@collectiveintelligence.com
TWITTER: @CICHUCK
LINKEDIN: https://www.linkedin.com/in/chuckrussell
CHUCK RUSSELL
President, CEO Technology Council of Central PA
President, CEO Collective Intelligence Inc.

59. APPENDICES – ADDITIONAL USE CASES

60. IOT
• The German startup Slock.it, which “gives connected objects an
identity, the ability to receive payments, enter into complex
agreements and transact without intermediary.” The simplest
Slock.it device is a physical padlock that is connected to the
internet. Networked locks are nothing new, thanks to the internet
of things. But a blockchain-backed connected lock offers some
additional capabilities. A distributed-ledger lock could enter into a
“smart contract,” an agreement whose terms are implemented
directly in code. If attached to an AirBnB rental, such a lock could
be programmed to automatically release when a smartphone
belonging to a pre-paid renter approaches. Likewise, it could be
programmed to cease to unlatch after that tenant’s contract had
terminated—or perhaps it could cut off the power or internet
service if a sensor inside the property determined that its
occupants were cavorting too loudly, or rifling through
unauthorized cabinets.
@cichuck

61. Voting
• Eddie Lee Holloway Jr., a 58-year-old Wisconsin
man, couldn’t vote because the state’s new voter-
ID law demanded that he show proper
identification. But an error on his birth certificate
prevented him from getting a new ID. In a future
run by the distributed ledger, a single copy of
Holloway’s identification would be securely stored
on the blockchain, easily verifiable when needed.
For the tech evangelist, it offers a rational solution
that would solve social ills by means of impartial
technology. (On that note, blockchain-based digital
IDs have also been proposed for refugees.)
@cichuck

62. Funding Power
• https://www.forbes.com/sites/nikolaikuznetsov/2017/0
6/28/is-blockchain-disrupting-the-way-startups-raise-
funds/#482bd82123f2
• Startups are now exploring blockchain’s use in fintech
and startup funding. This month alone, there were
around 10 blockchain startups that launched their own
cryptocurrency presales to fund their ventures.
Block.One has joined the likes of Civic, Status, and TenX
to use the Ethereum blockchain network to facilitate
these initial coin offerings (ICOs).
Popular cryptocurrency forum BitcoinTalk.orgis
currently teeming with ICO and presale
announcements for a variety of coins.
@cichuck

63. More Funding - TEZO
• https://futurism.com/the-tezos-ico-is-already-worth-
200-million-making-it-the-largest-crypto-funding-ever/
• An ICO is what you get if bitcoin and Kickstarter had a
baby — a crowdsale of a new crypto asset (with a
cryptocurrency like bitcoin being one type of crypto
asset) that powers some kind of peer-to-peer
blockchain network,”
• But despite its yet unsolved legalities, ICO crowdsales
have become popular. Prior to Tezos, there was that
recent Bancor ICO which raised $153 million. It’s proof
that blockchains and cryptocurrenciesare, indeed,
changing the way we conduct business.
@cichuck

64. CONNECTED DEVICES
• All over town, the parking meters are disappearing. Drivers now pay at a central machine,
or with an app. It’s so convenient I sometimes forget to pay entirely—and then suffer the much
higher price of a parking ticket. The last time that happened, I wondered: Why can’t my car pay
for its own parking automatically?
• It’s technically possible. Both my car and my smartphone know my location via GPS. My phone
already couples to my car via Bluetooth. An app could prompt me to pay for parking upon
arrival.
• Or imagine this: My car, which is already mostly a computer, enters an agreement to lease time
from a parking lot, which is managed by another computer. It “signs” this contract just by
entering the lot and occupying a parking space. In exchange, the car transfers a small amount of
Bitcoin, the currency of choice for computers, into the parking lot’s wallet.
• With computers handling the entire process, I’d never even be able to forget to pay for parking.
The only way to fail would be for my car to run out of Bitcoin, in which case the parking lot has
easy recourse: Because my car’s ignition is managed by a computer, the parking lot could just
shut my vehicle down.
• Scenarios like this are possible when blockchain—the digital transaction record originally
invented to validate Bitcoin transactions—gets used for purposes beyond payment. In certain
circles, the technology has been hailed for its potential to usher in a new era of services that are
less reliant on intermediaries like businesses and nation-states. But its boosters often overlook
that the opposite is equally possible: Blockchain could further consolidate the centralized power
of corporations and governments instead.
@cichuck