Bitcoin: Not just a currency but an IoT facilitator
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Bitcoin facilitates IoT by enabling trustless transactions and smart contracts on distributed networks. It allows devices and assets to transact directly through payments encoded in the blockchain. This could support decentralized sharing networks and new forms of digital organizations and governance. While still early, blockchain technology may help realize a more collaborative economy by distributing control through open and peer-to-peer systems.
Bitcoin: Not just a currency but an IoT facilitator
- 1. May 2015 www.hhs.se Bitcoin: Not just a currency but an IoT facilitator
- 3. Banking is essential, but banks are not. Bill Gates
- 4. Top Fintech Investment Regions in Europe 2014 2014 Global investment: USD 12.2 bln Total: USD 1.5 bln
- 5. In just the past few years in Stockholm… Company Founded Business Klarna 2005 E-commerce payment services MyLoan 2006 Loan broker Trustly 2008 Online payments TrustBuddy 2009 P2P lending iZettle 2010 Mobile payments FundedByMe 2011 Crowdfunding, crowd equity Kivra 2011 Digital mailbox Tink 2012 Personal finance Safello 2013 Cryptocurrency exchange KnCMiner 2013 Cryptocurrency mining equipment Toborrow 2013 P2P lending for companies
- 7. Money = Fiat Currency? Fiat Currency Derives value from government Serves as country’s main currency
- 8. A vocabulary list of currencies Fiat currency − National currency Alternative/complementary currency − Bonus points/vouchers, e.g., frequent flyer miles − Digital currency In-game currency, e.g., Stardollars, Farmville cash Real cash economy/virtual world currency, e.g., Linden dollars, PEDs Mobile currency, e.g., M-pesa Cryptocurrency, e.g., Bitcoin
- 9. Real cash economy in Entropia Universe http://blogs.forbes.com/oliverchiang/2010/11/13/meet-the-man-who- just-made-a-cool-half-million-from-the-sale-of-virtual-property/ •GDP >USD 440 mln •PEDs <--> USD, EUR •Record virtual good: USD 625,000
- 10. Today > 6000 complementary currencies Many community-based currencies In cooperation with fiat currencies Benefits − Counterbalance banks − Create means of exchange − Promote resilience of local community http://www.lietaer.com/writings/books/rethinking-money-by-bernard-lietaer-and-jacqui-dunne/
- 11. WIR in Switzerland - Complementary Founded 1934 by cooperative of businessmen IOU system based on personal trust Secondary mortgages enable additional credit >60,000 member firms >CHF 4 bln assets (SEK 29 bln) Countercyclical impact Top down fiat currency Bottom up mutual credit http://p2pfoundation.net/WIR_Economic_Circle_Cooperative
- 12. Within 6 years: Challenging the fiat money system? Bitcoin – An emergent phenomenon • Open source project on SourceForge in Jan 2009 • Original source code by “Satoshi Nakamoto” – pseudonym? • Developed by self-organizing community of thousands of strangers across globe • Approx USD 3.4 bln market cap and 105,000 daily transactions (1 BTC = USD 241, May 12) Teigland, Yetis, Larsson 2013 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263707
- 14. Bitcoin Foundations across the globe
- 15. What is a cryptocurrency? Digital Decentralized, peer-to-peer (P2P), i.e., no central, third party Uses cryptography to validate/secure transactions Also uses cryptography to generate currency itself Non-technical explanation of Bitcoin − https://www.youtube.com/watch?v=t5JGQXCTe3c
- 16. Bitcoin – one of 100s of cryptocurrencies
- 17. How does Bitcoin work? Screenclip from: How Bitcoin Works under the hood, by “Curious Inventor” Block chain • Shared public ledger • All transactions ever made logged • Chronology and integrity enforced by cryptography
- 18. Screenclips from: How Bitcoin Works under the hood, by “Curious Inventor” Preventing double spending fraud
- 19. Screenclip from: How Bitcoin Works under the hood, by “Curious Inventor” Transactions between Bitcoin wallets verified and secured through digital signatures
- 20. “Mining” confirms waiting transactions through distributed consensus system Incentivizes miners by generating new bitcoins (at decreasing rate) Does coding and de- coding that verifies and stores transactions (increasingly complex)
- 22. Bitcoin - The best payment system we have? “It is fast, it is secure, it works everywhere in the world. It does not tell you either you can transfer or not, it does not make you exclude it if you live in a poor country or in some kind of danger zone. Banks won‘t open a branch in a danger zone in Africa or somewhere, they say ‘we do not do business here and this is it‘ but Bitcoin does not exclude, it just works everywhere. Ingram & Morisse, 2015
- 24. Benefits and drawbacks of Bitcoin Benefits − Improved transaction security − Trust in cryptography rather than institutions − Transparency through time − Lower transaction costs − Cross-border, faster transactions − No outside intervention − No inflation (although market volatility) Drawbacks − Tax concerns − Only as safe as wallet holding coins or exchange’s servers − Consumer uncertainty − Market volatility (commodity or currency?) − Potential for illicit use − High electricity consumption to “mine”
- 25. More than USD 475m has been invested in the Bitcoin Ecosystem Selection of companies getting funding in 2014 Blockstream: 14M USD Spondoolies: 6M USD Bitnet: 14.5M USD Blockchain: 30M USD KnCM: 30M USD Chain: 9.5M USD Bitfury: 20M USD Bitpay: 30M USD Vaurum: 4M USD Circle: 26M USD Kraken: 5M USD Coinbase: 100M USD BTC China: 5M USD Ripple: 3.5M USD Ethereum: 6M USD OKcoin: 10M USD Xapo: 20M (60m) USD Blockstream 21M USD Source: KnC Miner, Jan 2015
- 26. What is Bitcoin? Is it …. A currency? An investment? But it is definitely much more than “a coin”… A ledger (the blockchain) A software development platform A P2P network for monetary and non- monetary asset transactions Returning the internet to its roots as a decentralized P2P system? http://thenextweb.com/insider/2014/02/15/bitcoin-platform-currency/
- 28. From “trusted”, centralized human authorities to trustless, decentralized networks IBM Institute for Business Value (PDF)
- 30. IoT and smart contracts Smart property − Ownership attached to asset/property and can be verified Smart contracts − Run on Bitcoin ledger, execute legal rules between two entities: people, organizations, machines − Trustless because no center, no one in middle – the network is the middleman − Example: I run a private weather station using neighbors’ sensors. Smart contracts enable payment to neighbors for data sent from their sensors to my weather station. − But time will tell… uses we cannot imagine today. https://www.youtube.com/watch?v=JsC4ptn2Aik
- 31. Emerging companies in IoT/Blockchain space Enables decentralized electronic security via keyless access protocol for smart property (Ethereum) Manages payment addresses assigned to each IoT device for M2M sale of data (Bitcoin) Enables sensors to have private key to participate in blockchain (Bitcoin)
- 32. Ethereum: Next gen Bitcoin protocol? http://www.wired.com/2014/01/ethereum/
- 33. The Blockchain App Stack http://www.coindesk.com/blockchain-application-stack/
- 34. They do not own the assets, but they have a center that can be disrupted by the blockchain technology and cryptocurrencies
- 35. Moving towards a true Sharing Economy? Blockchain Sharing Economy IoT P2P/M2M Micropayments
- 36. La’Zooz – Real-time transportsharing
- 37. Bitnation – A new form of government? http://www.bitnation.co/
- 38. People • “Net generation” • 24x7 “mobile” workforce • Knowledge via MOOCs • Sharing not consuming • Sustainability Technology • Broadband access • The Cloud • Mobile phones • Internet of Things • Big Data • 3D printing • Robotics/AI • VR/AR • Blockchain Open Source • Software • Hardware • Physibles Convergence of….. Finance • Microlending/microfinance • Crowdfunding/equity/P2P • Non-fiat cryptocurrencies • Mobile money/payments • M2M payments
- 39. What’s around the corner? 24x7 Global Internet Collaboration + Open Source + 3D Printing http://mashable.com/2013/02/13/robohand/ $60,000 $150 Available for free download on Where is the firm?
- 40. Want to learn more? Check out our funnovation workshops funnovation.se
- 41. Robin Teigland robin.teigland@hhs.se www.knowledgenetworking.org www.slideshare.net/eteigland www.funnovation.se @RobinTeigland If you love knowledge, set it free… If you like this presentation and would like to contribute to our research, we accept bitcoins: 14hs4JbnQLXE87GGzu84uXGaspmxmnLpwC. Thank you!!!!!
- 42. Recommended viewing: How Bitcoin Works under the hood, by “Curious Inventor” http://youtu.be/Lx9zgZCMqXE