Crypto assets fundamentals

Crypto Assets Fundamentals
Haiyan Alsaiyed, B.E. MBA, PgMP, PMP, TOGAF, GRCP
Fintech and Blockchain Advisor
20 Apr 2019

Agenda
Monday, April 22, 2019 2
Part 1
•Introduction
•What is Bitcoin? Who created Bitcoin? Who controls the Bitcoin network? Bitcoin vs. Internet
•The 3 main functions of a currency and When currency goes wrong? Exercise
•Bitcoin statistics and charts
•Current Regulatory Environment
•Who use Bitcoin? How to get Bitcoin
•Exercise – How to send and receive
Part 2
•Altcoins and ERC20 tokens
•Traditional Assets vs. Cryptoassets
•Crypto Economy
•Cryptoassets statistics and charts
•Wallets
•Exercise
Part 3
•Cash In/Out, Where to buy crypotoasssets, Exchanges
•Important websites
•ICOs
•Factors affecting the success of an ICO
•When to buy
•Basics investment principles
•Where to learn more about crypto economy
•iCryptonia

Agenda
Part 1
•Introduction
Part 2
•Crypto Economy
•Wallets
•Exercise
Part 3
•ICOs
•When to buy
•iCryptonia

What is Bitcoin?
Decentralized open-source peer-to-peer
payment network or protocol that is
powered by its users with no central
authority or middlemen.

Who created Bitcoin?
• The first Bitcoin
specification and proof of
concept was published in
2009 in a cryptography
mailing list by Satoshi
Nakamoto.
• Satoshi left the project in
late 2010 without revealing
much about himself.
• The community has since
grown exponentially
with many
developers working on
Bitcoin.
Bitcoin: A Peer-to-Peer Electronic Cash System
Satoshi Nakamoto
satoshin@gmx.com
www.bitcoin.org
Abstract. A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without going through a
financial institution. Digital signatures provide part of the solution, but the main
benefits are lost if a trusted third party is still required to prevent double-spending.
We propose a solution to the double-spending problem using a peer-to-peer network.
The network timestamps transactions by hashing them into an ongoing chain of
hash-based proof-of-work, forming a record that cannot be changed without redoing
the proof-of-work. The longest chain not only serves as proof of the sequence of
events witnessed, but proof that it came from the largest pool of CPU power. As
long as a majority of CPU power is controlled by nodes that are not cooperating to
attack the network, they'll generate the longest chain and outpace attackers. The
network itself requires minimal structure. Messages are broadcast on a best effort
basis, and nodes can leave and rejoin the network at will, accepting the longest
proof-of-work chain as proof of what happened while they were gone.
1. Introduction
Commerce on the Internet has come to rely almost exclusively on financial institutions serving as
trusted third parties to process electronic payments. While the system works well enough for
most transactions, it still suffers from the inherent weaknesses of the trust based model.
Completely non-reversible transactions are not really possible, since financial institutions cannot
avoid mediating disputes. The cost of mediation increases transaction costs, limiting the
minimum practical transaction size and cutting off the possibility for small casual transactions,
and there is a broader cost in the loss of ability to make non-reversible payments for non-
reversible services. With the possibility of reversal, the need for trust spreads. Merchants must
be wary of their customers, hassling them for more information than they would otherwise need.
A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties
can be avoided in person by using physical currency, but no mechanism exists to make payments
over a communications channel without a trusted party.
What is needed is an electronic payment system based on cryptographic proof instead of trust,
allowing any two willing parties to transact directly with each other without the need for a trusted
third party. Transactions that are computationally impractical to reverse would protect sellers
from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In
this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed
timestamp server to generate computational proof of the chronological order of transactions. The
system is secure as long as honest nodes collectively control more CPU power than any
cooperating group of attacker nodes.

What is Bitcoin?
Internet Protocols Bitcoin
Money Over Internet

Bitcoin vs. Internet
Telcom
Operator
Before Internet After Internet
Internet
Anyone can send information and data
to anyone
Information and data packets must go
through Telcom operator

Bitcoin vs. Internet
Banks
Before Bitcoin After Bitcoin
Anyone can send transactions to anyoneTransactions must go through Banks

Who controls the Bitcoin network?
• Nobody owns the Bitcoin
network much like no one
owns the technology
behind email.
• Bitcoin is controlled by all
Bitcoin users around the
world.

Who controls the Bitcoin network?
• Users are free to choose what
software and version they use. In
order to stay compatible with
each other, all users need to use
software complying with the
same rules.
• Bitcoin can only work correctly
with a complete consensus
among all users. Therefore, all
users and developers have a
strong incentive to protect this
consensus.

Blockchain - How does Bitcoin work?
• From a user perspective, Bitcoin is nothing more than a mobile app or
computer program that provides a personal Bitcoin wallet and allows a
user to send and receive bitcoins with them. This is how Bitcoin works for
most users.
• Behind the scenes, the Bitcoin network is sharing a public ledger called the
"block chain". This ledger contains every transaction ever processed,
allowing a user's computer to verify the validity of each transaction.
• The authenticity of each transaction is protected by digital signatures
corresponding to the sending addresses, allowing all users to have full
control over sending bitcoins from their own Bitcoin addresses.
• In addition, anyone can process transactions using the computing power of
specialized hardware and earn a reward in bitcoins for this service. This is
often called "mining".

Addresses

Hash functions

Merkle tree is a hash tree in which every non-leaf node is labelled with the cryptographic hash of the
labels or values (in case of leaves) of its child nodes. Hash trees allow efficient and secure verification
of the contents of large data structures. Hash trees are a generalization of hash lists and hash chains.

The 3 main functions of a currency

When currency goes wrong
https://www.youtube.com/watch?v=cXSs9MDGYnY

Can central banks regulate bitcoin?
https://www.cnbc.com/video/2014/02/27/fed-cant-regulate-bitcoin-yellen.html
The first woman Chair of the globe’s
most powerful central bank, Janet Yellen
Federal Reserve

Bitcoin as store of value

Bitcoin in circulation

Market Capitalization

Current Regulatory Environment

Who use Bitcoin?
• https://spendabit.co/
• https://coinmap.org

What people say about Bitcoin?
https://youtu.be/kpxzLTJHU4chttps://youtu.be/f-N0s0z4gxQ

How to get Bitcoin?
• As payment for goods or services.
• Purchase from online exchange.
• Buy 1 to 1
• mining

How to send and receive cryptocurrencies
Email Bitcoin
Public hndhgjune@gmail.com
Email address to receive emails
1DkGwUZtfPqPnFwZGb9AwzcjBR5uMoAvH
Bitcoin address receive bitcoins
Private Gbd94756*#6y
Password to send email
5KXrwT1Aivdo1tfy7rK8beYYtyJrRPembW3WDxKV
1aNzbnNBpKm
Private key to send/spend bitcoins

Bitcoin Ecosystem

Agenda
Part 1
•Introduction
Part 2
•Crypto Economy
•Wallets
•Exercise
Part 3
•ICOs
•When to buy
•iCryptonia

Altcoins

ERC20 token
• ERC stands for Ethereum Request for Comments. This is an official protocol
for proposing improvements to the Ethereum network. '20’ is the unique
proposal ID number.
• ERC20 defines a set of rules which need to be met in order for a token to
be accepted and called an 'ERC20 Token'. The standard rules apply to all
ERC20 Tokens since these rules are required to interact with each other on
the Ethereum network. These tokens are blockchain assets that can have
value and can be sent and received, like Bitcoin, Litecoin, Ethereum, or any
other cryptocurrency.
• The difference between these tokens and a standalone currency like
Litecoin is that ERC20 tokens piggyback on the Ethereum network, hosted
by Ethereum addresses and sent using Ethereum transactions.
Source: https://support.exodus.io/article/108-what-is-an-erc20-token-and-does-exodus-support-it

ERC20 token
ERC20 tokens examples
• 0x, Aragon, Augur, Adtoken, Aeron, Aeternity, Aion, Airswap, Amber,
AppCoins, Binance Coin, BAT, Bancor, Bread, ChainLink, Cindicator,
Civic, Decentraland, Dent, Dentacoin, DigixDAO, Dragon, District0x,
EOS, Edgeless, Ethos, FirstBlood, FunFair, Gnosis, Golem, Genesis
Vision, ICON, Iconomi, Kin, KuCoin, Kyber, Loopring, Lunyr, Maker,
MediShares, Melonport, Metal, Monaco, Matchpool, Numeraire,
OmiseGo, Pillar, Po.et, Polymath, Populous, Power Ledger, Qash,
Quantstamp, Raiden, RChain, Request, Revain, Ripio, Rivetz, SALT,
Santiment, SingularDTV, Status, Storj, Storm, Substratum, TAAS, TenX,
Time New Bank, Tron, VeChain, Veritaseum, Viberate, Walton, Wax,
WeTrust, Wings and iExec RLC.
Source: https://support.exodus.io/article/108-what-is-an-erc20-token-and-does-exodus-support-it

Assets in our life
Assets
Equities
Bonds
Money
market
funds
Real
Estate
Precious
Metals
Currencies
An asset class is a set of assets that bear
some fundamental economic similarities to
each other, and that have characteristics that
make them distinct from other assets that
are not part of that class.
What is Asset and what is asset class?

Traditional Assets
Capital assets
Valued on the basis of
the net present value of
its expected returns
Examples: Stock, Bond, Rea
Estate
Consumable/transformable
assets
You can consume it. You
can transform it into
another asset
Examples: Money market
funds and Precious Metals
Store of value assets
Cannot be consumed;
nor can it generate
income. Nevertheless, it
has value
Examples: Currencies
and Precious Metals

Traditional Economy Value Chain
Currencies Commodities
Finished
goods and
services
Oil, wheat, copper, etc.$, EURO, YEN, SAR, etc. Computers, Books, Cars, etc.

Crypto Economy Value Chain
Crypt
currencies
Crypto
commodities*
Finished
goods and
services
Computing: Ether, EOS,
NEO, etc.
Storage: Storj, Filecoin,
Siancoin, etc.
Network: Sia
Bitcoin, Litecoin,
Ripple, Monero,
Dash, and Zcash
etc.
Status, Augur, BAT,
Steemit, AGI, etc.
*based on Chris and Jack

New decentralized good and services

Cryptoassets Ecosystem

New decentralized good and services

Digital Assets/Crypto Assets Performance
Year to date (YTD) refers to the period beginning the first day of the current calendar year or fiscal year up to the current date.

Total Cryptocurrency Market Cap Increased
Over 50% ($600 bn in Q4 2017)

BTC Dominance fall

Number of Tx on major blockchains

Wallets
Cold
wallet
Hot
Wallet

HD Wallets (High Deterministic Wallets)
Monday, April 22, 2019 45Source: https://coinsutra.com/hd-wallets-deterministic-wallet/
Remember:
Not your
keys …not
your money

HD Wallets (High Deterministic Wallets)
Generate
• https://iancoleman.io/bip39/
• https://coinomi.com/recovery-phrase-tool.html
Monday, April 22, 2019 46Source: https://coinsutra.com/hd-wallets-deterministic-wallet/

Choosing a Wallet
• Multicurrency wallets
https://www.exodus.io/
https://parity.io/

Mobile Wallet

Desktop wallet (EXODUS)

MetaMask

Hardware Wallet (Leger Nano S)

MyEtherWallet (MEW)

Etherscan.io

Safety & Security
• Mnemonic phrase/ Seed words
• Jason file
• Private Key
• Public Key / Address
• Google Authenticator
• Phishing websites : io , co , com , https

Agenda
Part 1
•Introduction
Part 2
•Crypto Economy
•Wallets
•Exercise
Part 3
•ICOs
•When to buy
•iCryptonia

Cash In/out
Exchanges
• Centralized:
Lykke ,
Coinbase,
Bitstamp, etc.
• Decentralized:
Ether delata, 0x
exchanges, etc.
Cash
• Community
• Friends
P2P exchange
• Bitcoinlocal.com
• bisq.network

Where to buy from

Exchanges

Binance.com

Coinmarketcap.com (CMC)

ICO vs. Kickstarter vs. VC vs. IPO
Source: https://www.slideshare.net/vfjcxxxx/ico-the-next-big-thing-in-digital-gold

ICOs
Source https://masterthecrypto.com/crypto-ico-vs-stock-ipo/

ICO growth over time
Check it out https://elementus.io/token-sales-mar-2018

Performance of some ICOs and Cryptocurrencies
Source: https://icostats.com as of 15 of Nov 2017

Initial Coin Offering ( ICO )
• Developing company / team
• White Paper
• White List
• Pre-sale
• Crowdsale
• Bonuses / Discounts
• Token / coins number
• Telegram / chat
Resources and websites
https://tokenmarket.net/ico-calendar
https://icowatchlist.com/
https://icostats.com/
https://cyber.fund/
http://www.icocountdown.com/
https://www.ico-list.com/
https://icorating.com/

Factors affecting the success of an ICO
1. The size of the ICO, reasonable hard cap vs. greedy cap (overfunded, fairly funded or
underfunded)
2. The founding team / owners / advisors
3. Terms and conditions (bonuses, discounts, eligibility, etc.)
4. When the token/coin will be listed on exchanges and which exchanges
5. Development stage (idea, PoC, MVP, working product)
6. Big gaps in the roadmap
7. Who is talking about the project?
8. Does the project solve real problem? Who is their competitors?
9. Does the project really need to be on the blockchain? Do they need an ICO? What is the
token role?
10. Founders engaged with the community
11. Closed vs. open source project
12. Platform vs. product

Basis investment principles
1. Invest in what you can afford to lose. This is a very risky investment. You may lose all what you put!!
2. Buy gradually and sell gradually. It’s extremely difficult, if not impossible, to know if you are buying or
selling at the best time
3. Don't enter in the peak value (ATH) of coin if you have no idea about the achieved target (never buy
when people rush into buying)
4. You should educate yourself technically. Learn about the coins you are buying. Know what you are
buying
5. If you want to make good gains you should be engaged
6. Patience is the key to success
7. Never panic, never sell in loss , you didn’t lose if you didn’t sell
8. Don't fall in love with one coin, have a bag of coins (liquid ones)
9. Don't worry if the market goes down due to bad news (this is actually the best time to get in)
10. Don't invest in a dead coin
11. Trade at your own risk. Trading is a full time job!
12. So far long-term investors were the best winners

Popular Crypto Terms
• Crypto / Fiat
• Coin / Token
• Alts
• Mining
• FOMO (Fear Of Missing Out)
• FUD (Fear , Uncertainty , Doubts)
• Hodler , Day trader
• Pump / Dump groups
• Arbitrage
• ATH ( All Time High )
• ROI (Return of Investment)
• Market correction
• Bull / Bear Market
• Moving Average, candles / TAMonday, April 22, 2019 69
• KYC / Verification
• Support / Resistance

Where to lean more about crypto industry
Industry news
• https://www.coindesk.com/
General information
• https://www.coindesk.com/information/ general
information about Bitcoin, Blockchain and Ethereum
Industry reports
• Industry-leading
research and in-
depth analysis
about the
pressing issues
that surround
one of the most
exciting
emerging
technologies of
our time.

• Most ICO’s have telegram
channels .
• Learn about the latest news.
• Know the important dates.
• See how the Admin deals
with the questions.
• Learn about the technology.

Where to lean more about crypto industry
General good introduction in Bitcoin. Also available in Arabic.
• https://bitcoin.org/en/faq
DFIN-511: Introduction to Digital Currencies MOOC on Digital Currencies, and the
first course of the MSc in Digital Currency degree programme.
• https://digitalcurrency.unic.ac.cy/free-introductory-mooc/
Princeton course on Coursera
• https://www.coursera.org/learn/cryptocurrency
Andreas M. Antonopoulos
• Videos about Bitcoin, Ethereum and other Open Blockchain topics by Andreas
M. Antonopoulos:
• https://www.youtube.com/user/aantonop
Books
• Mastering Bitcoin: https://www.amazon.com/Mastering-Bitcoin-Programming-
Open-Blockchain/dp/1491954388/
• Ethereum: https://www.amazon.com/Ethereum-Blockchains-Decentralized-
Autonomous-Organizations/dp/1523930470
• Cryptoassets: https://www.amazon.com/Cryptoassets-Innovative-Investors-
Bitcoin-Beyond/dp/1260026671/

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