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Money on the blockchain


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Presentasjon på seminaret "Kven skal laga framtidas pengar?", Høgskulen på Vestlandet, 04.11.2019.
Torbjørn Bull Jenssen, Arcane Crypto

Published in: Economy & Finance
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Money on the blockchain

  1. 1. Money on the blockchain The future of finance?
  2. 2. What is money? Money is memory Narayana R. Kocherlakota, 1996 The unique quality of money is “The ability to buy” salability, liquidity, moneyness… For something to be money it must be as […] as possible. Scarce Durable Portable Divisible Identifiable Uniform Focusing on the three functions (unit of account, medium of exchange, store of value) is a distraction 1. It’s a result rather than a cause 2. The functions are separable Technology changes how different “objects” satisfice these criteria
  3. 3. Who can create money? “No one” Private companies Governments Commodity money Credit money Fiat money
  4. 4. Who ends up creating money is determined by power structures and technology Commodity money is inherently decentralized and independent of centralized power Central banks derive their power from the need for final settlement in a credit money based payment system and depend on centralized power
  5. 5. The dollar and power – a short history 1914 1933 1971 ?
  6. 6. Blockchain?
  7. 7. What is blockchain? A blockchain is an append only log (strictly speaking) There are 4 types of blockchain-based networks
  8. 8. Money + Blockchain = Memory + Logging =
  9. 9. What are the benefits of different blochchains?
  10. 10. What is the point of a permissioned blockchain network? Shared infrastructure and interoperability And no need for the clearing house But nothing new
  11. 11. Consortium based (creationistic) mega-projects tend to fail A complex system that works is invariably found to have evolved from a simple system that worked. A complex system designed from scratch never works and cannot be patched up to make it work. #3
  12. 12. Permissioned blockchains Open blockchainsVS
  13. 13. It’s open, not blockchain, that is new Permissionless innovation Exchange of value without middlemen
  14. 14. Competition between centralized systems leads to monopoly Competition atop of open systems leads to diversity #2
  15. 15. How does money get on the blockchain?
  16. 16. Bitcoin How? What? • Commodity money • Decentralized • Use a Public and Permissionless blockchain Can replace the correspondent banking system Bitcoin is born on the blockchain as a “minable” digital commodity money
  17. 17. Efficient cross boarder payments
  18. 18. Bitcoin can be leveraged as a shared and open infrastructure, making payment services interoperable
  19. 19. Streaming of money removes the need for a middleman
  20. 20. 1: Deposit money to a smart contract DAI (Maker DAO) How? What? • Credit money (controlled by a DAO!) • Decentralized • Use a Public and Permissionless blockchain Fast growth and relatively stable peg 2: Take out a dollar denominated loan 3: Repay the loan 0 20 000 000 40 000 000 60 000 000 80 000 000 100 000 000 120 000 000 des.17 mar.18 jun.18 sep.18 des.18 mar.19 jun.19 sep.19 Circulating supply 0,9 0,95 1 1,05 1,1 des.17 mar.18 jun.18 sep.18 des.18 mar.19 jun.19 sep.19 USD/DAI
  21. 21. DAI is increasingly being used for real transactions not just decentralized leverage
  22. 22. Abra How? What? • Synthetic fiat/credit money (CFD settled in BTC) • Centralized • Use a Public and Permissionless blockchain 1. The User lock in the asset value (e.g. 200 USD) 2. Abra varies the amount of BTC to match the asset value
  23. 23. With Abra, anyone in the world can hold «any asset» as long as they are not US citizens
  24. 24. USDt, USDc, Paxos… How What? • Tokenized credit money • Centralized • Use a Public and Permissionless Blockchain
  25. 25. How is USDt being used?
  26. 26. JP Morgan coin How? What? • Credit money • Centralized • Use a Private and Permissionled blockchain (Quorum) Currently in development
  27. 27. Libra How What? • Fiat money (collateralized) • Centralized • Use a Private and Permissionled (Libra Blockchain) Libra coin Libra Reserve Backing assets Asset Yield Libra Investment Token Government securities Bank deposits Other low-risk assets Libra Association Libra/Facebook as the government
  28. 28. The potential of Libra: The official story The real story
  29. 29. «China-coin» How? What? • Fiat money • Centralized • Private Permissionled China has had a version of CBDC for a while ?
  30. 30. “It may not be wise to dismiss virtual currencies” “citizens may one day prefer virtual currencies, since they potentially offer the same cost and convenience as cash— no settlement risks, no clearing delays, no central registration, no intermediary to check accounts and identities.” “virtual currencies might just give existing currencies and monetary policy a run for their money”