![Table of Contents
❖ Introduction [3]
❖ BitCoin [4]
❖ Satoshi Nakamoto [7]
❖ A Case for Crytocurrency [9]
❖ Who Supports BitCoin [12]
❖ Case Study [15]
❖ BitCoin Forks [20]
2
❖ BitCoin Price [21]
❖ Ethereum [22]
❖ Ripple [26]
❖ BitCoin Cash [29]
❖ LiteCoin [31]
❖ Conclusion [34]](https://image.slidesharecdn.com/bitcoinblockchainandcryptocurrencies-171229223433/85/BitCoin-Blockchain-and-Cryptocurrencies-2-320.jpg)
BitCoin, Blockchain, and Cryptocurrencies
- 1. BitCoin, Blockchain, and Cryptocurrencies Dale Westervelt 1 dswestervelt@gmail.com
- 2. Table of Contents ❖ Introduction [3] ❖ BitCoin [4] ❖ Satoshi Nakamoto [7] ❖ A Case for Crytocurrency [9] ❖ Who Supports BitCoin [12] ❖ Case Study [15] ❖ BitCoin Forks [20] 2 ❖ BitCoin Price [21] ❖ Ethereum [22] ❖ Ripple [26] ❖ BitCoin Cash [29] ❖ LiteCoin [31] ❖ Conclusion [34]
- 3. Introduction This ebook is an intentionally brief and cryptic document. What I’ve tried to do here is lay out some of the most elemental aspects of BitCoin and a small handful of other cryptocurrencies. This work began as a series of personal notes that I was taking as I began to learn and teach myself about this seemingly out-of-nowhere, freakishly profitable investment—and increasingly appealing monetary alternative to the US dollar and other fiat currencies around the world. My highest hope is that this would serve as a primer for those who may be just starting out, and trying to get their head around the first entirely internet-based monetary system. If you find it helpful—and if this brief document spurs you to go and learn more, my goal will have been achieved. So, if you are ready for a swim in the deep end, let’s dive in. Dale Westervelt dswestervelt@gmail.com 3
- 4. BitCoin… ❖ Is a trust-less (no verification of anything about the sender or the receiver of monetary value), de- centralized (no central bank or government issuing entity) internet-based money system ❖ Uses cryptography (public and private key encryption) and a public ledger called the ‘blockchain’ to complete person- to-person transactions without a third party… a “cryptocurrency” 4
- 5. BitCoin (Cont’d)… ❖ In the midst of the financial crisis in 2008, was proposed by Satoshi Nakamoto in a white paper published in October of that year; BitCoin: A Peer-to- Peer Electronic Cash System. ❖ Was created when the first BitCoin was mined on 3 January 2009. ❖ Market Cap = nearly $300B December 2017. 5
- 6. BitCoin (Cont’d)… ❖ Is divisible to the one-hundred millionth of one BitCoin. ❖ Solves the problem of ‘double spending’ (ex. account has $100 and two $100 trans-actions occur almost simultaneously). ❖Is a direct and efficient transfer of BitCoin, with a debit and credit on the public ledger in real time. 6
- 7. Satoshi Nakamoto “It is one of the great mysteries of the digital age. The hunt for Satoshi Nakamoto, the elusive creator of BitCoin, has captivated even those who think the virtual currency is some sort of an online Ponzi scheme. A legend has emerged from a jumble of facts: Someone using the name Satoshi Nakamoto released the software for BitCoin in early 2009 and communicated with the nascent currency’s users via email - but never by phone or in person. Then, in 2001, just as the technology began to attract wider attention, the emails stopped. Suddenly, Satoshi was gone, but the stories grew larger… 7
- 8. Satoshi Nakamoto (Cont’d) It may be impossible to prove Satoshi’s identity until the person or people behind BitCoin’s curtain decide to come forward and prove ownership of Satoshi’s old electronic accounts. At this point, the creator’s identity is no longer important to BitCoin’s future. Since Satoshi stopped contributing to the project in 2011, most of the open-source code has been requited by a group of programmers whose identities are known… Many concepts central to BitCoin were developed in an online community known as the Cypherpunks, a loosely organized group of digital privacy activists. As part of their mission, they set out to create digital money that would be as anonymous as physical cash. “ New York Times, 17 May 2015 - Decoding the Enigma of Satoshi Nakamoto and the Birth of BitCoin, by Nathaniel Popper8
- 9. A Case For Cryptocurrency… ❖ The Federal Reserve (for good or ill) exists explicitly to regulate the US money system. ❖ The Fed can increase or decrease the value of our national fiat currency however and whenever the wish. ❖ Of the nearly $3.8T in the US dollar supply, nearly 90% is purely digital currency; only approximately 10% exists as hard cash. 9
- 10. Case For Cryptocurrency (Cont’d) ❖ Foreign central banks & governments will purchase $3.6T of US stocks in 2017. ❖ These foreign banks can move the US stock market any day they would choose to do so. ❖ Swiss National Bank owns more shares of Facebook than CEO Mark Zuckerberg. 10
- 11. Case For Cryptocurrency (Cont’d) ❖ So, our nation’s fiat currency and primary stock exchange are manipulated by traditional power structures of central banks and governments ❖ Little wonder that the total market capitalization for all cryptocurrencies is over $350B in December 2017. ❖ This is a massive capital flight from traditional banks and fiat currencies to de-centralized money. 11
- 12. Who Supports BitCoin? ❖ Bill Gates: Big fan of disruptive technology; also relishes the implications for the ‘un-banked’ poor via the work of he and his wife’s Foundation. ❖ Ben Bernanke: Former Fed Chair; ironic support for the de-centralized money system; publicly critical 2-years ago, now very publicly supportive - keynote at blockchain conference Fall 2017. ❖ Warren Buffet, Richard Branson, Julian Assange, Ashton Kutcher, Mike Tyson, and Jim Cramer. 12
- 13. Supports BitCoin (Cont’d) ❖ Accepting Payments: Target, Tesla, Overstock, MicroSoft, Wikipedia, MIT’s Bookstore, RE/Max London, Dish Network, PayPal, Intuit, Subway, Whole Foods, Bloomberg, Gap, 1-800-Flowers, Apple App Store, Dell, Home Depot, K-Mart, Virgin Galactic, Victorias Secret, Zappos. ❖ US State Department hosting BlockChain conference in October 2017. 13
- 14. Supports BitCoin (Cont’d) ❖ European Union declared BitCoin and other cryptocurrencies can be exchanged w/o taxation in 2015; treated the same as fiat currency. ❖ Countries: Vietnam, Japan, Switzerland, Papua New Guinea, Estonia, United States, Denmark, Netherlands, Finland, United Kingdom, Australia, Canada, Nigeria, S. Korea (massive use and adoption, though recent state moves toward banning exchanges. ❖ Companies Investing Resources: Walmart, IBM Global Services, Nestle, Bank of America, Accenture. 14
- 15. Case Study: Response to JP Morgan JP Morgan Chase’s CEO Jamie Dimon recently made statements deriding BitCoin, referring to it as a fraud, and suggesting that if any of his firm’s traders bought the cryptocurrency, he would fire them. He also said his daughter bought BitCoin, and then added sarcastically, “and she thinks she’s a genius.” The following is a challenge to his un-grounded comments. ——————————————————————————— BitCoin & The US Dollar: A Rational Response To Jamie Dimon, by Dale Westervelt, published on LinkedIn, 19 September 2017 (http://tinyurl.com/ydgh6d2c) A handful of weeks ago, Jamie Dimon, the head of JP Morgan Chase, took provocative shots at BitCoin, calling it--among other things--a "fraud." It's reasonable to take an apples-to-apples comparison of BitCoin and the US dollar to test the validity of his claim--despite that he himself offered no substance behind it. 15
- 16. Case Study: Response to JP Morgan Let's start with Dimon's apples, the US dollar and the banking system. Of the nearly $3.8T in the US dollar money supply, only about 10 % exists in hard cash. Roughly 90% is digital. This is to say that, when the Federal Reserve prints trillions more dollars for their "quantitative easing" projects, they are merely typing several more zeros into their digital ledger. This has the effect of increasing the supply and diluting the value of our currency. Anyone saving their US dollars loses money--and spenders pay more for everything--when the value of his or her money is decreased. Consider our national debt, which doubled during both the previous two administrations and is now over $20T. It's unlikely that this number will ever be paid down to a small fraction of the total. So, it's not hyperbole to call it a somewhat phony number. In other words, if the debt cannot and will not ever be paid down, what's the difference between $20 trillion and $20 quadrillion? And remember, 90% of our money supply is 16
- 17. digital--and theoretically infinite. So… higher debt and zero interest rates? Add more zeros to the ledger. Is this a fraud? (Note: Dimon's comments were just prior to the close of Q3, when his company looked to show at least a 20% decline in revenues. Ironically, BitCoin was up--even after a brief 40% pullback--more than 200% during the same period.) Now consider BitCoin. It's no more or less "digital" than all but 10% of the world's reserve currency, the US dollar. Between 2011 and 2014, the number of "unbanked" people around the globe was reduced by 20%, from 2.5B to 2B, according to the World Health Organization's latest publicly available online data. Case Study: Response to JP Morgan 17
- 18. Case Study: Response to JP Morgan Here's what this means: a poor Nigerian with a text-enabled Nokia phone, with proximity to a solar panel and internet connectivity, can hold in their hand their own bank--the only one they've ever known--and participate in economic society for the first time in their lives. Is this a fraud? (Perhaps Chase could have offered them an account.) Lastly, and straight to the point, when a BitCoin transaction is approved on the BitCoin networks BlockChain, here's what happens instantaneously: the sender's finite BitCoin supply is reduced and the recipient's finite BitCoin supply is increased by the exact same amount--to the one hundred millionth of a BitCoin. The public ledger is reconciled by both the debit and the credit. Maybe this is the fraud? (Not so much!) 18
- 19. Case Study: Response to JP Morgan PS Google his statements from 12 September 2017 ... and then find out how much institutional money his firm poured into BitCoin over the past several months HERE. His statements moved the markets, so possibly the statements themselves were fraud? ** NOTE: A little over a year ago, one BitCoin was worth about $600. As of this posting, BitCoin hit another high today of more than $11,400. This is a 1,665% increase in a year and BitCoin now has a $350B market cap. Yeeesh! Dale Westervelt Originally published on LinkedIn, 19 September 2017 dswestervelt@gmail.com 19
- 20. BitCoin Forks ❖ Cryptocurrency Hard Fork: Software developers change a cryptocurrency’s code, causing an incompatibility between the previous coin’s code and the new code; in BitCoin’s case, this created 2 new coins. ❖ BitCoin Cash: Happened on 1 August 2017; purpose - group of miners (particularly in China) wanted a larger block size than 1 mb, so BCH has 8 mb’s capacity ❖ BitCoin Gold: Scheduled for 25 October 2017; purpose is to de-centralize mining, allowing anyone who holds BTC to be a miner; sometimes referred to as “the people’s fork” 20
- 21. BitCoin price chart 2010 through Q2 2017. Price surged to $5,000 in September, pulled back to $3,000. Price $10,635 in late November, up 1,665% from October 2016 BitCoin Price 21
- 22. Ethereum (ETH) ❖ “Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed w/o any possibility of downtime, censorship, fraud, or third party interference.” (ethereum.org) ❖ “These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent ownership of property.” (ethereum.org) 22
- 23. Ethereum (Cont’d) ❖ Launched in June 2015; 9-months later had a $1B market cap ❖ MicroSoft launched Ethereum Blockchain as a Service (EBaaS) in November 2015 - partnered w/ ConsenSys and use MS’s Azure (cloud-based) network ❖ Integrated an all-purpose programming language with its own blockchain ❖ “Ethereum is a worldwide distributed decentralized computer with theoretically unlimited power.” (CoinTelegraph.com, “What is Ethereum?” ❖ Market Cap = nearly $46B in December 2017 23
- 24. Ethereum Hard Fork ❖ Planned change to atheneum’s underlying source code to enhance the network’s functionality ❖ The planned enhancement phase is called “Metropolis” ❖ The first fork occurred on 16 October 2017 and is called “Byzantium.” Internet reports are that it is running smoothly. ❖ The second fork in the Metropolis phase is “Constantinople,” planned for sometime in 2018 24
- 25. Etheum price went from $10 in January to current price of $476, an increase of nearly 4,660% in 2017 Ethereum Price 25
- 26. Ripple (XRP) ❖ Connects banks, payment providers, digital asset exchanges, and corporations via RippleNet to provide one frictionless experience to send money globally ❖ Proposed to solve the problem of global payment systems: inefficient (low speed); non- transparent; and too costly. ❖ Exclusively selling to banks for remittance transfers 26
- 27. Ripple (Cont’d) ❖ Used by MUFG (Bank of Tokyo), UBS (Union Bank of Switzerland), and RBC (Royal Bank of Canada), YES Bank of India, BBVA (2nd largest bank in Spain) ❖ xCurrent software “enables banks to differentiate themselves by offering new cross-border payments services while lowering the cost of settlement.” (ripple.com) ❖ Created a “global graph of liquidity” called Interledger, which is the conduit for sending payments efficiently. ❖ Market cap = over $9.7B in December 2017 27
- 28. Ripple price was $.008 a year ago and is $.27 today, an increase of 3,275% Ripple Price 28
- 29. BitCoin Cash (BCH) ❖ Result of BitCoin’s hard fork on 1 August 2017 ❖ Everyone who had BitCoin received BCH on the same day ❖ Proposed to solve a perceived scalability problem with BitCoin block size (1 mb) with an 8 mb block size ❖ Compatible with a dozen wallets and traded on 20 exchanges ❖ Market Cap = $26B in December 2017 29
- 30. BitCoin Cash price opened at $278 on 1 August 2017 and is $1,596 in early December, an increase of 474% BitCoin Cash Price 30
- 31. Litecoin (LTC) ❖ “Litecoin is a peer-to-peer Internet currency that enables instant, near zero cost payments to anyone in the world.” (litecoin.org) ❖ “Litecoin features faster transaction confirmation times and improved storage efficiency than the leading math-based currency (BitCoin).” (litecoin.org) 31
- 32. Litecoin (Cont’d) ❖ Technology is mostly identical to BitCoin, but adopted Segregated Witness (SegWit - process of increasing block size by removing signature data) and the Lightening Network—allowing greater transaction volume & reducing bottlenecks ❖ Was released on 7 October 2011 on GitHub by Charlie Lee, a former employee of Google ❖ Market Cap = $5.6B in December 2017 32
- 33. LiteCoin’s price 1 year ago was $3.79 and is $103.31 in early December 2017, an increase of 2,626% LiteCoin Price 33