P E R M I S S I O N L E S S I N N O VAT I O N

B I T C O I N C H A L L E N G E S - T H E D AW N O F T R U S T L E S S C O M P U T I N G

Michele Mostarda <michele.mostarda@inbitcoin.it> Marco Amadori <marco.amadori@inbitcoin.it> https://inbitcoin.it/

v1.6_en

cover image source: http://www.goodfon.su

D I S C L A I M E RF O R T H E A U D I E N C E

This presentation is for: • informational purposes • people interested in adopting Bitcoin • people looking for inspiration about the

Blockchain technology

O U T L I N ETA B L E O F C O N T E N T S

• Money and limitations • What is Bitcoin • How to use it • How does it work • Permissionless innovation • Bitcoin vision • Bitcoin for everybody

B L O O M B E R G P O L L

According to a recent Bloomberg poll, only 42% of Americans correctly identified

Bitcoin as a virtual currency. 6% thought it was an iPhone app. (2014)

M O N E Y A N D L I M I TAT I O N S

I S M O N E Y D Y I N G ?T H E O B S O L E S C E N C E T H E S I S ( 1 )

“Money has been a technology to facilitate trade. To reach this purpose it was designed to facilitate value exchange.”

I S M O N E Y D Y I N G ?T H E O B S O L E S C E N C E T H E S I S ( 2 )

“Today money is no longer facilitating task it was designated for. Time is come to create a better money.”

— Winklevoss Brothers - Money 2020, Oct 2014

T H E C U R R E N C YW H AT I S M O N E Y ( 1 )

Aristotle definition of Money

• Durability: money must stand the test of time and the

elements. It must not fade, corrode, or change through

time.

• Portability: money must be able to hold a high

amount of worth, relative to its size and weight.

• Divisibility: easy to separate and recombine without

affecting its fundamental characteristics.

• Value: any good money would have intrinsic value,

without ties to any other object to support its worth.

T H E C U R R E N C YW H AT I S M O N E Y ( 2 )

• Scarce • Divisible • Storable • Durable • Fungible

• Verifiable • Portable • Difficult to counterfeit • Widely accepted

Modern definition of Money

W H AT I S B I T C O I N

T O W A R D B I T C O I NT H E G R E Y M E TA L M E TA P H O R ( 1 )

As a thought experiment, imagine there was a base metal as

scarce as gold but with the following properties:

T H E F I R S T D I G I TA L G O O D T H AT C A N N O T B E R E P L I C AT E D .

T O W A R D B I T C O I NT H E G R E Y M E TA L M E TA P H O R ( 2 )

• boring grey in color;

• not a good conductor of electricity;

• not particularly strong, but not ductile or easily malleable either;

• not useful for any practical or ornamental purpose;

and one special, magical property:

• can be transported over a communications channel.

— Satoshi Nakamoto - Aug 27 2010

A D VA N TA G E S O F G O I N G D I G I TA L

T H E D I G I TA L M E TA L ( 1 )

• Fast: transactions are instantaneous.

• Extensible: money behaviour can be programmed.

• Internet ready: already on the Web.

• Cheap: nearly for free.

A D VA N TA G E S O F G O I N G D I G I TA L

T H E D I G I TA L M E TA L ( 2 )

• Easily accountable: anybody can start with Bitcoin in

minutes.

• Transparent: anybody can see everything is going on.

• Stable: no government can manipulate its value.

• Confidential: can be used anonymously.

T H E R E V O L U T I O NW H AT I S B I T C O I N ( 1 )

‘60s definition of computer: a system that takes digital data in input, elaborate it via an algorithmic model and produces digital data as output.

To fully understand Bitcoin try to think how computer revolution has been seen at beginning.

T H E R E V O L U T I O NW H AT I S B I T C O I N ( 2 )

Now try to perceive the potential just reading today’s Bitcoin definition: a peer-to-peer network that maintains a public distributed ledger of digital math-based assets known as bitcoins.

With this definition how hard would have been to foreseen applications like video games and smartphones?

T R U S T E D T H I R D PA R T YT O WA R D D E C E N T R A L I Z E D A U T H O R I T Y

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.

— Satoshi Nakamoto, "Bitcoin: A Peer-to-Peer Electronic Cash System” -- October 31, 2008

Trustless does not mean that we do not need to trust anything, but that we do not need to trust anyone.

T H E C U R R E N C Y, T H E N E T W O R K A N D T H E L E D G E R

W H AT I S B I T C O I N

M AT H B A S E D D I G I TA L A S S E T

D I S T R I B U T E D L E D G E R

P E E R T O P E E R N E T W O R K

The TCP/IP for money

The Bitcoin A bitcoin

The Blockchain

N E T W O R K O V E R V I E WT H E B I T C O I N N E T W O R K

T H E F L O W - S I M P L E V I E WT H E B I T C O I N F L O W ( 1 )

source: atlas-ats-powerpoint-indiegogo

T H E F L O W - C O M P L E X V I E WT H E B I T C O I N F L O W ( 2 )

source: BitData

C O N F I D E N T I A L I T Y O F T H E B L O C K C H A I N ( 1 )

Every transaction is publicly logged. Anyone can see the flow of Bitcoins from address to address.

Alone, this information can't identify anyone because the addresses are just random numbers.

P S E U D O A N O N Y M I T Y

C O N F I D E N T I A L I T Y O F T H E B L O C K C H A I N ( 2 )

However, if any of the addresses in a transaction's past or future can be tied to an actual identity, it might be possible to work from that point and guess who may owns all of the other addresses.

https://en.bitcoin.it/wiki/Anonymity

P S E U D O A N O N Y M I T Y

T H E C U R R E N C YS O M E N U M B E R S ( 1 )

• Availability of bitcoins is fixed at 21M, (already discovered

~16M).

• Each bitcoin can be divided in 10^8 units (1/100 000 000 is

called satoshi). • The network tends to produce a block (12.5 new bitcoins) every

~10 minutes.

T H E C U R R E N C YS O M E N U M B E R S ( 2 )

• The block reward is halved every ~4years (or 210 000 blocks).

• Currently in 3rd reward era out of 34 (rewards end at 2140).

• 1BTC ~ €540 on online exchanges.

(At time of writing, October 2016)

T H E C U R R E N C YP R E D I C TA B L E M O N E Y S U P P LY

Inflation distribution on monetary base

H O W T O G E T B I T C O I N ?F O U R WAY S T O T H E D I G I TA L E C O N O M Y ( 1 )

• Digital currency exchanges: you can change your fiat currency (USD, EURO, etc) to Bitcoin for a small conversion fee.

• Bitcoin ATM: a growing number of ATM to buy Bitcoins is going available worldwide.

H O W T O G E T B I T C O I N ?F O U R WAY S T O T H E D I G I TA L E C O N O M Y ( 2 )

• Transactions: you can receive Bitcoins from other people in exchange for goods and services.

• Mining: supporting the Blockchain operations, (the backbone of the Bitcoin ecosystem), validating transactions between users (proof-of-work) using custom hardware, you are rewarded with Bitcoins.

H I S T O R I C A L H A S H R AT ET H E R I S E O F B I T C O I N ( 1 )

Mining hashrate trend from October 2014 to October 2016

H I S T O R I C A L P R I C ET H E R I S E O F B I T C O I N ( 2 )

Bitcoin USD value from October 2014 to October 2016

W H O I N V E N T E D T H E B I T C O I N ?A B I T O F H I S T O R Y ( 1 )

Satoshi Nakamoto, in 2008 publishes a white paper, Bitcoin: a Peer-to-Peer Electronic Cash System via The Cryptography Mailing List.

In 2009-2011 he wrote a lot of posts (80000 words, the size of a novel) in flawless english with British colloquialisms (aside only the first post where he used American spellings).

W H O I N V E N T E D T H E B I T C O I N ?A B I T O F H I S T O R Y ( 2 )

Satoshi is probably a pseudonym for a developer or a group, vanished from the web in April 2011 because he moved to other things. If he is not a group, he is a world class programmer, with deep knowledge of C++, economics, cryptography and peer-to-peer networking.

His timestamps speculation are about either east-coast US with a fairly normal sleep schedule or western Europe with a coder sleep schedule (probably not Japan).

T H E C Y P H E R P U N K R E V O L U T I O NW H AT I S C H A N G I N G

R A N D O M Q U O T E STA K I N G A B R E AT H

Bitcoin is a remarkable cryptographic achievement and the ability to create something that is not duplicable in the digital world has enormous value.

— Eric Schmidt (Google's former CEO)

Not having an internet strategy in 1995 is the equivalent of not having a Bitcoin strategy now.

— Moe Levin (Bitpay CEO)

By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.

— Paul Robin Krugman (Nobel Memorial Prize in Economic Sciences, 1998)

Bitcoin will do to banks what email did to the postal industry — Rick Falkvinge (Swedish Politician)

H O W T O U S E B I T C O I N

W H AT C A N I D O W I T H B I T C O I N S

Direct purchase: buy goods and services

from merchants. See coinmap.org

P2P Payments: buy goods and services

from everyone

Investments: buy, sell fiat and cryptocurrencies on main exchanges

See en.bitcoin.it/wiki/Trading_bitcoins

H O W T O U S E B I T C O I N

B I T C O I N F O R M E R C H A N T S

Enables merchants to transparently accept bitcoins receiving instantly fiat currency on a specified bank account.

R E C E I V E PAY M E N T S

B U Y / S E L L B I T C O I N A N D O T H E R C R Y P T O C U R R E N C I E S

Specialized web applications to exchange fiat (EUR, USD) and crypto currencies, also supporting advanced trading setup and APIs.

B I T C O I N E X C H A N G E S

•Coinbase •Bitstamp •Kraken •Bitfinex

W A L L E T T Y P E SH O W M A N Y WA L L E T T Y P E S E X I S T ? ( 1 )

Hot Wallets (online)

• Online Wallet without control of private keys • Online Wallet with control of private keys • Desktop PC wallet (Full node, SPV Wallets) • Smartphone Wallet

W A L L E T T Y P E SH O W M A N Y WA L L E T T Y P E S E X I S T ? ( 2 )

Cold Wallets (offline)

• Hardware Wallet (personal keys) • Brain Wallet • HD Wallets (Master mnemonic key generating

multiple private keys) • Multi-signatures (p2hs)

H W W A L L E T SH O W M A N Y WA L L E T T Y P E S E X I S T ? ( 3 )

sources: hardwarewallets.com, kickstarter.com

BitcoinCard

BitSafe HardwareWallet

PaperWallet

H O W D O E S I T W O R K

C O N S E N S U S I N A D E C E N T R A L I Z E D S Y S T E M

T H E B I Z A N T I N E ’ S G E N E R A L P R O B L E M ( 1 )

A group of generals of the Byzantine army camped w i t h t h e i r t ro o p s a ro u n d a n e n e m y c i t y. Communicating only by messenger, the generals must agree upon a common battle plan.

C O N S E N S U S I N A D E C E N T R A L I Z E D S Y S T E M

T H E B I Z A N T I N E ’ S G E N E R A L P R O B L E M ( 2 )

However, one or more of them may be traitors who will try to confuse the others. The problem is to find an algorithm to ensure that the loyal generals will reach agreement.

— Marshall Pease, Robert Shosthak and Leslie Lamport, The Byzantine Generals Problem

T H E D O U B L E S P E N D I N G P R O B L E M ( 1 )

Double-spending is the fraudulent activity of spending same digital money more than once. Bitcoin protects against double spending by verifying each transaction to ensure that the inputs for the transaction had not already been spent.

C O N S E N S U S I N B L O C K C H A I N

T H E D O U B L E S P E N D I N G P R O B L E M ( 2 )

Conventional financial systems prevent double-spending using centralized authoritative servers. The most relevant innovation of Bitcoin is the use of a decentralized peer-to-peer system, where consensus among nodes about the status of transactions is reached using majority.

https://en.bitcoin.it/wiki/Double-spending

C O N S E N S U S I N B L O C K C H A I N

W A L L E T A N D K E Y SV I S I N N U M E R I S

https://blockchain.info/address/1fbk5AYjA7wLdwbru2CunWEuToBu1USsX

kPrivate Key

KPublic Key

ABitcoin Address

Elliptic Curve Multiplication (One-Way)

Hashing Function(One-Way)

Elliptic Curve Digital Signature Algorithm -- secp256k1 Hash = RIPEMD160(SHA256(pubkey))

T R A N S A C T I O N ST R A C K VA L U E E X C H A N G E ( 1 )

Spending is signing a transaction which transfers value from a previous transaction over to a new owner identified by a bitcoin address.

— Andreas M. Antonopoulos - Mastering Bitcoin - O'Reilly 2014

T R A N S A C T I O N ST R A C K VA L U E E X C H A N G E ( 2 )

Cryptographic transaction principle

source: Bitcoin: A Peer-to-Peer Electronic Cash System

C H A I N O F B L O C K ST H E D I S T R I B U T E D L E D G E R

Secure Hash Algorithm — SHA256 The proof of work used in Bitcoin takes advantage of the apparently random nature of cryptographic hashes. A good cryptographic hash algorithm converts arbitrary data into a seemingly-random number.

C O N S E N S U S V I A P R O O F O F W O R KL O N G E S T C H A I N W I N S

Mining is a validation operation (Proof of Work) of bitcoin transactions.

Mining activity, essential for the proper operation of the Blockchain is rewarded with assignment of new bitcoins.

Find a solution for SHA256(SHA256(block header) + nonce) < target Blockchain rewards me with a block (12.5 BTC)

Difficulty (inverse of target) will adapt to global hashrate every ~2 weeks (2016 blocks)

Peer’s chain 0

Peer’s chain 1

Full Node

Peer’s chain 2

For more informations about mining: http://www.slideshare.net/michele.mostarda/hydro-mining

S E C U R I T Y AT TA C K ST H R E AT S A N D AT TA C K S I N T H E E N V I R O N M E N T

• 51% attack (50% +1) • Block Withholding Attack • The Race Attack • Key Guessing / Collision Attacks • Non-Bitcoin: non infrastructural attacks • Non-Technical Attacks: scam activities (fraud)

Well known Blockchain vulnerabilities

Full list of Bitcoin weaknesses: https://en.bitcoin.it/wiki/Weaknesses

P E R M I S S I O N L E S S I N N O VAT I O N

W H AT ’ S H A P P E N I N G2 0 1 4 Q 4 S TAT U S A N D I N V E S T M E N T S ( 1 )

W H AT ’ S H A P P E N I N G2 0 1 4 Q 4 S TAT U S A N D I N V E S T M E N T S ( 2 )

See also: http://coinmap.org/

H T T P : / / W W W. C O I N D E S K . C O M / S TAT E - O F - B L O C K C H A I N - Q 1 - 2 0 1 6 /

W H AT ’ S H A P P E N I N G2 0 1 5 B I T C O I N L A N D F L O W S

source: ofnumbers.com

S P E E D U P C H A N G EB I T C O I N A N D O P P O R T U N I T I E S ( 1 )

Before Internet it was available only peer-to-peer computer communication. It required Telco agreements to innovate, in general we had a low advancement level: fax, low-level video conference.

S P E E D U P C H A N G EB I T C O I N A N D O P P O R T U N I T I E S ( 2 )

Bitcoin introduces for financial innovation the same type of technological facilitation introduced by Internet in telecommunication networks. Programmable Money has born.

B L O C K C H A I N A S D BP E R M A N E N T S T O R A G E ( 1 )

• Anybody can write small data (and sign any data) in the Blockchain (for free or for a small fee).

• What is written in the Blockchain is forever. • No one can remove or alter Blockchain

information.

B L O C K C H A I N A S D BP E R M A N E N T S T O R A G E ( 2 )

• Example Applications: Proof of Existence, decentralization of Notary Services.

• Blockchain permits Decentralized Computing. • Blockchain supports the Internet of Things: IBM

Adept is a first authoritative example.

G E N E R I C A S S E T L E D G E RC O L O R E D C O I N S ( 1 )

• Colored Coins enable the exchange of physical and virtual goods (assets).

• They assign a meaning to the possession of a marked (colored) bitcoin and track property transitions.

• Everybody can release and exchange a Colored Coin.

G E N E R I C A S S E T L E D G E RC O L O R E D C O I N S ( 2 )

Bitcoin Transaction

Transaction outputowned by Richard

1 bitcoinEquals to 100 Twitter Shares

Transaction outputowned by Alice

3.33 bitcoin

Transaction outputowned by Bob

10 bitcoin

Transaction outputowned by Alice

0.25 bitcoinEquals to 25 Twitter Shares

Transaction outputowned by Bob

0.75 bitcoinEquals to 75 Twitter shares

Transaction outputowned by Richard

13.33 bitcoin

M U LT I S I G N AT U R EE N A B L I N G S M A R T C O N T R A C T S ( 1 )

• Wallets needing more than one signature to send a transaction.

• k/n multi-signatures are available in Bitcoin since 2012.

• Smart Contracts are trustless unbreakable agreements.

M U LT I S I G N AT U R EE N A B L I N G S M A R T C O N T R A C T S ( 2 )

• Example: micro and nano payments trustless channels.

• Example: decentralized escrow (OpenBazaar is a decentralized eBay).

• Example: Smart Properties.

A LT C O I N S6 4 0 + C O I N S S H O U L D B E E N O U G H F O R E V E R Y B O D Y ( 1 )

A LT C O I N S6 4 0 + C O I N S S H O U L D B E E N O U G H F O R E V E R Y B O D Y ( 2 )

• The most start as a fork of the Bitcoin codebase. • They differ from Bitcoin for deflation parameters

or hashing algorithms. • Being tied to Bitcoin, they become real money

too (crypto exchanges).

A LT C O I N S6 4 0 + C O I N S S H O U L D B E E N O U G H F O R E V E R Y B O D Y ( 3 )

• Less network effect, no real threat to Bitcoin. • Ethereum is another story: complete rewrite of

the blockchain codebase, gained lot of attention (and capitalization) in less than one year.

B I T C O I N F O R G O O DM O N E TA R Y S Y S T E M F O R D E V E L O P I N G C O U N T R I E S ( 1 )

• 50 % of the world is unbanked • Kenya: 50 % of GDP is transacted via

Mpesa, SMS money • Remittances: $400 B$ market, 8%

average fee

B I T C O I N F O R G O O DM O N E TA R Y S Y S T E M F O R D E V E L O P I N G C O U N T R I E S ( 2 )

• Microcredit • P2P lending • Crowdfunding

A C T I V I T I E S A F F E C T E D B Y T H E A D O P T I O N O F B I T C O I N

Category Disrupted Business Disrupted

Purchasing Visa, Mastercard, American Express

Digital Payment Paypal, Google Play, Apple, Amazon

Remittance Western Union

Donation Campaign Finance

Notary Notary Service

Legal Legal Service

B I T C O I N D I S R U P T I V I T Y

B I T C O I N V I S I O N

N E A R F U T U R E A P P L I C AT I O N SL O N G T E R M O P P O R T U N I T I E S ( 1 )

• Smart Contracts • Decentralized Applications (AppCoins) • Decentralized Autonomous Communities/

Organizations (DAOs) • Machine to machine enabled trading

N E A R F U T U R E A P P L I C AT I O N SL O N G T E R M O P P O R T U N I T I E S ( 2 )

• Smart Internet (StorageCoin, eMailCoin, DDosCoin, IndexCoin)

• Smart Internet Communities (OpenCoin) • Autonomous Agents and a new Trade Network • Ethereum https://www.ethereum.org/

S M A R T C O N T R A C T SL O N G T E R M O P P O R T U N I T I E S ( 3 )

Self - enforcing and self-executing contracts that facilitate, verify, or enforce the negotiation or performance of a contract without a thrusted party.

S M A R T C O N T R A C T SL O N G T E R M O P P O R T U N I T I E S ( 4 )

Smart contracts aim to provide security superior to traditional contract law and to reduce other transaction costs associated with contracting, avoiding also to rely on a centralized entity.

H Y B R I D O R G A N I Z AT I O NH U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 1 )

A decentralized network of AI autonomous agents which attempt to maximise a production function and which divides its labor into machine-intractable tasks (which incentivises humans to do) and tasks which it performs itself.

H Y B R I D O R G A N I Z AT I O NH U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 2 )

It can be thought of as a corporation run without any human involvement under the control of an incorruptible set of business rules. These rules are typically implemented as publicly auditable open-source software distributed across the computers of their stakeholders.

H Y B R I D O R G A N I Z AT I O NH U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 3 )

A human becomes a stakeholder by buying stock in the company or being paid in that stock to provide services for the company. This stock may entitle its owner to a share of the profits of the DAO, participation in its growth, and/or a say in how it is run.

D A / D O / D A OH U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 4 )

• Decentralized Application (DA): simplest form of decentralization automation. Smart Contract is an example.

• Decentralized Organization (DO): a human organization is a combination of properties and a communication protocol for individuals to interact with each other, including rules for use certain parts of the properties.

D A / D O / D A OH U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 5 )

• Decentralized Autonomous Organization (DAO): differently from DA, a DAO has an internal capital, it contains some kind of internal property and it has the ability to use that property as a mechanism for rewarding certain activities.

D A / D O / D A OH U M A N - M A C H I N E C O L L A B O R AT I V E O R G A N I Z AT I O N ( 6 )

Source: http://en.wikipedia.org/wiki/Decentralized_Autonomous_Organization

A P P C O I N SS M A R T F I N A N C I A L S Y S T E M S ( 1 )

Appcoins are Decentralized Applications based on the Blockchain. Currently Bitcoin fullnodes and the Altcoin pegged sidechains support non-Turing Complete scripts (handling of transactions, signatures).

A P P C O I N SS M A R T F I N A N C I A L S Y S T E M S ( 2 )

Several initiatives are moving toward the adoption of a full scripting support, to enable the Blockchain or (other sidechains) to become the support for advanced Smart Contracts (DAs) and DAOs to setup applications like crowdfunding and automatic share and dividend management.

S M A R T F I N A N C I A L S Y S T E M S

D A O : W O R K I N P R O G R E S S

• Ethereum: Ethereum.org

• MaidSafe: maidsafe.net

• Rootstock: http://www.rsk.co

B I T C O I N F O R E V E R Y B O D Y

W H AT I S G O O D F O R ?C O M M U N I C AT I N G B I T C O I N ( 1 )

• For consumers is a payment system which doesn’t require to provide private credentials, (no cloning credit card fraud)

• For marketers is a way to save transaction costs and target products to techno-enthusiast early adopters.

• For investors and traders is a high-risk / high-reward speculative good.

W H AT I S G O O D F O R ?C O M M U N I C AT I N G B I T C O I N ( 2 )

• For emigrants is an instrument to send remittances without charges.

• For hackers is a brand new platform to create innovative solutions.

L E G A L S TAT U S O F B I T C O I N W O R L D W I D E ( 1 )

B I T C O I N R E G U L AT I O N

•European Union: The European Central Bank classifies Bitcoin as a convertible decentralized virtual currency. A German court found Bitcoin to be a unit of account. In July 2014 the European Banking Authority advised European banks not to deal in virtual currencies such as Bitcoin until a regulatory regime was in place.

L E G A L S TAT U S O F B I T C O I N W O R L D W I D E ( 2 )

B I T C O I N R E G U L AT I O N

•United States: the U.S. Treasury classifies Bitcoin as a convertible decentralized virtual currency. A June 2014 U.S. government auction of almost 30,000 bitcoins, which the U.S. Marshals Service seized from Silk Road, was said to increase legitimacy of the currency. The U.S. Government Accountability Office recommended that the (IRS) formulate tax guidance for Bitcoin businesses.

L E G A L S TAT U S O F B I T C O I N W O R L D W I D E ( 3 )

B I T C O I N R E G U L AT I O N

•China: While private parties can hold and trade bitcoins in China, regulation prohibits financial firms like banks from doing the same.

Source: https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country

B I T C O I N A N D T H E E C O N O M I C T H E O R Y

Permalink: http://bitcoincharts.com/charts/btcdeEUR#igWeeklyztgSzbgBza1gEMAzm1g10zm2g25zv

B I T C O I N E C O N O M Y I S D E F L AT I N G

Bitcoin economy grows faster than monetary base: this causes deflation (value of Bitcoin raises without investing it).

B I T C O I N A N D R E A L E C O N O M Y ( 1 )

I N F L AT I O N V S D E F L AT I O N

• Inflation: value of money decreases over time. • Deflation: value of money increases over time. • The first seems good while the second bad, but: • Inflation erodes the values of savings →

encourages spending → sustains economic growth.

B I T C O I N A N D R E A L E C O N O M Y ( 2 )

I N F L AT I O N V S D E F L AT I O N

• Deflation discourages investments: why spending today when spending the same tomorrow will get me more?

• World central banks tend to regulate economy to have a small but significant (~2%) inflation over time.

B I T C O I N A N D R E A L E C O N O M Y ( 3 )

L I F E I N B I T C O I N I A

• A national economic system based on the current Bitcoin configuration means economic stagnation.

• Bitcoin can be used as side currency for transactions and advanced services, not as replacement for fiat currency.

B I T C O I N A N D R E A L E C O N O M Y ( 4 )

L I F E I N B I T C O I N I A

Citation: http://www.slideshare.net/larsga/bitcoin-digital-gold

• There are several Altcoin proposals designed to solve the current Bitcoin limitations in replacing fiat-currencies.

B I T C O I N A N D R E A L E C O N O M Y ( 5 )

C R Y P T O C U R R E N C I E S A N D I L L E G A L A C T I V I T I E S ( 1 )

B I T C O I N A N D C R I M E

Silkroad: black market platform for selling illegal drugs paid in bitcoins, closed by FBI in 2013. https://en.wikipedia.org/wiki/Silk_Road_(marketplace)

C R Y P T O C U R R E N C I E S A N D I L L E G A L A C T I V I T I E S ( 2 )

B I T C O I N A N D C R I M E

Mt. Gox: Bitcoin exchange based in Tokio, handing 70% of transactions at that time, closed in 2014 for currency theft. https://en.wikipedia.org/wiki/Mt._Gox

C R Y P T O C U R R E N C I E S A N D I L L E G A L A C T I V I T I E S ( 3 )

B I T C O I N A N D C R I M E

Bitcoin Savings and Trust Scam: a Ponzi scheme to allow users to investing at an interest of 7% a week https://www.techdirt.com/articles/20130723/16121723913/sec-confirms-that-bitcoin-savings-trust-was-ponzi-scheme-files-lawsuit.shtml

S U G G E S T E D R E A D I N G S ( 1 )

• Introductive video to Bitcoin: https://www.youtube.com/watch?v=Gc2en3nHxA4

• What is Bitcoin? Learn in 5 minutes: http://www.slideshare.net/ryaneshea/bitcoin-v9

• Bitcoin basics: http://www.slideshare.net/itBit_Bitcoin_Exchange

L I N K S A N D R E F E R E N C E S

S U G G E S T E D R E A D I N G S ( 2 )

• The Bitcoin vision: https://www.youtube.com/watch?v=YIVAluSL9SU

• The Dot.org coordinating development and adoption of Bitcoin: https://bitcoin.org/

L I N K S A N D R E F E R E N C E S

S U G G E S T E D R E A D I N G S ( 3 )

• Main news about crypto currency: http://www.coindesk.com/information/

• Original Bitcoin paper: https://bitcoin.org/bitcoin.pdf

L I N K S A N D R E F E R E N C E S

C O N TA C T S

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T H A N K S !

Michele Mostarda <michele.mostarda@inbitcoin.it> Marco Amadori <marco.amadori@inbitcoin.it> https://inbitcoin.it/