Bitcoin and Blockchain: Relevance to Anti-Poverty Research
- 1. Nick Doiron - @mapmeld - SVB Presented to U. Chicago Poverty Lab itcoin & Blockchain Relevance to Anti-Poverty Research
- 2. About Me One Laptop per Child Code for America The Asia Foundation UNICEF open source e.g. OpenStreetMap
- 3. - Origins of Bitcoin and Blockchain - Where do I get Bitcoin? - Payment Applications - Blockchain Applications - Hazards Agenda
- 4. Origins of Bitcoin Cyber punks, B-Gold circulate in mailing lists since 1998 Satoshi Nakamoto white paper - Nov 2008 Code - Jan 2009 http://satoshi.nakamotoinstitute.org/ - all verified communication
- 6. No controller or sponsor (Nakamoto disappeared 2011) Key technical advances: - making consensus through Proof of Work - Byzantine Generals Problem https://en.wikipedia.org/wiki/Byzantine_fault_tolerance#Byzantine_Generals.27_Problem - blockchain as a transparent, distributed ledger Most “cryptocurrencies” now based on these Why did Bitcoin stand out?
- 7. Not only “online payments” Blockchain is built by consensus - no one has control With a credit card: - Retailer - Visa - Bank - You - Trust, legal agreements, fees prevent and reverse fraud Cryptocurrencies have no central authority, use cryptography to build trust
- 8. Where do Bitcoins come from? No free lunch in Bitcoin - scarcity
- 9. Where do Bitcoins come from? Can buy, or get rewards for mining blockchain Mining = resolving hashes Currently 6 quintillion hashes / second (6 million trillion) https://blockchain.info/charts/hash-rate No profit without special hardware, pools, low-cost electricity
- 10. Sichuan Province mining center https://qz.com/1026605/photos-chinas-bitcoin-mines-and-miners/
- 11. How about buying Bitcoin? $1 ~= 0.00025 BTC (1:4100) (+25% since Aug 1) Find an exchange for your country / currency: http://planetbtc.com/complete-list-of-bitcoin-exchanges/ I use Coinbase as an exchange and bank
- 13. Payment Applications: Digital Payments US State Dept backing digital payments Full transparency and accounting? People in developing world already mobile - Multiple exchanges for M-Pesa (4 African countries) https://news.bitcoin.com/bitwala-connects-bitcoin-mpesa-sub-saharan-africa/ Bitcoin wallets = vendor-neutral
- 14. Payment Applications: Remittances Western Union: - $115 to Maldives + $15 transfer fee (13%) $1000 + $48 transfer fee (4.8%) - $115 in Bitcoin + $1 fee/reward (0.8%) Higher reward = faster transactions
- 15. Other Payment Applications - Unbanked, Restricted (Afghanistan, Maldives) - High-inflation Countries - Venture Capital (Russian Zirconium) https://www.finextra.com/pressarticle/68523/zrcoin-crowdfunds-commodities-option-on-the-blockchain
- 16. https://www.coindesk.com/how-bitcoin-helps-afghan-girls-achieve-financial-freedom/ (more recent, now Code to Inspire) https://bitcoinmagazine.com/articles/code-to-inspire-bitcoin-gives-afghan-women-financial-freed om-1460652348/
- 17. Blockchain Applications There’s more to a blockchain than money Ethereum’s runs code called “smart contracts” - zirconium shares were an example Some things to keep in mind: - storage is costly - keep sensitive info out of the blockchain - smart contracts cannot see the outside world
- 18. Blockchain Apps: Proof of Existence Store a unique marker in the blockchain Proves that I had a document / photo, at that time
- 19. Blockchain Apps: ID Asia Foundation and UNICEF were interested in migrant worker IDs
- 20. Blockchain Apps: Islamic Finance Generally approved - encouraged by opening of a Dubai blockchain accelerator, govt wants to use blockchain tech internally Wall Street Journal https://www.wsj.com/articles/dubai-aims-to-be-a-city-built-on-blockchain-1493086080 Gates Fdn report on Islamic Finance + Microcredit https://docs.gatesfoundation.org/Documents/Islamic%20%28Micro%29%20Finance%20Culture,%20Context,%20Promise,%20Challenges.pdf Blockchain bank could reduce management costs, reach extreme Muslim-minority countries
- 21. Crime? - Organized crime prefers to “cook the books”, be untraceable related info: http://www.sciencemag.org/news/2016/03/why-criminals-cant-hide-behind-bitcoin - “currently there is no more than anecdotal evidence” of terror group interest https://twitter.com/valkenburgh/status/872923132880990209 - My concern would be DPRK + WannaCry Ransomware https://www.theguardian.com/technology/2017/jun/16/wannacry-ransomware-attack-linked-north-korea-lazarus-group Hazards for Bitcoin Adopters
- 22. Hacks? - Buggy Bitcoin exchanges and banks (Mt. Gox 2014) https://www.wired.com/2014/03/bitcoin-exchange/ rival exchange hacker finally arrested in 2017: https://www.cryptocoinsnews.com/suspect-of-mt-gox-hack-and-money-laundering-is-alleged-btc-e-admin-arrested-in-greece/ - Smart contracts can have security bugs - in mid-2016, 1/6th of all Ether was in the DAO (venture capital fund concept) May 22, 2016 NY Times - it got hacked June 17 NY Times Hazards for Bitcoin Adopters
- 24. Investors and Entrepreneurs - There are a lot of “get rich quick” schemes, few if any sustainable stories outside finance - Many new coins are being created - ICOs https://www.forbes.com/sites/laurashin/2017/07/12/crypto-boom-15-new-hedge-funds-want-in-on-84000-returns/#7a4af698416a - SEC warning https://www.americanbanker.com/news/sec-report-may-put-an-end-to-ico-boom - UNICEF considered program to help unbanked refugees, but startup had a ‘private blockchain’ - No benefits of public, transferable records - No ability to buy/sell coins (we would still need to use existing bank wires) Hazards for Bitcoin Adopters
- 26. Thanks! Thanks - will field your questions now Will be sending slides with references Nick Doiron - @mapmeld