Professional Documents
Culture Documents
5 Blockchain
5 Blockchain
Daniel Kim
Contents
• In-class exercise
• Overview
• How it works
• Diem
• Initial Coin Offering
• Challenges
In-Class Exercise
• Objective:
• Learn how to receive blockchain coin
• Learn how to send blockchain coin
• Learn how to mine
In-Class Exercise: Prep
1. Generate 1000 bitcoins
In-Class Exercise
1. Go to www.bitcoinsimulator.tk
2. Click on
3. Create a user name
1. E.g. bifintech2021-## where ## is assigned to you
4. Click on
5. Type in the blockchain name
6. Receive 100 bitcoins from the instructor
7. Send 50 bitcoins back to the instructor
8. Mine
Overview
The Internet
• The internet lacks trust!
• Rise of fake news!
• Trust is distributed across the network, not vested in any single member
Source: WeAreSocial
History
• On June 18, 2019, under name Libra
• No proof of work
Business Model
• How are they funding their operations?
• Transaction fees
• Funded through member contributions, and interest income from reserves.
• Libra is a non-profit
Libra and regulators
• Libra = Facebook – U.S. Regulators seem to think so
• How has the response been from regulators?
• Threatening the monetary sovereignty of nations
• Financial stability
• Consumer – investor protection
• Data protection
• Money-laundering
• Terror-financing
• Cybersecurity
• Tax evasion
Advantages
• The unbanked population
2 billion of the world population does not have a bank account
• Facebooks user database
Facebook can take advantage of its existing users
• Asset-backed cryptocurrency
Fully backed by deposits and short-term securities
• Energy-efficient
Byzantine Fault Tolerance approach
• Move programming language
Claimed to be safer
• The libra association controls supply
Bitcoin is deflationary
• Transfers between countries
IBAN
Disadvantages
• Regulations
Several problems for the world economy in the eyes of regulators
• Safety of cryptocurrency
The 51% attacks
Safety of smart contracts
• Facebooks reputation
Cambridge Analytica scandal
• Libra’s attractiveness to store value
Interest will go to support growth and founding members
• Transactions per seconds
Ø High TPS compared to other cryptocurrencies but far behind VISA, Mastercard etc.
Initial Coin Offering
Initial Coin Offering
• One form of crowdfunding that uses cryptocurrencies
• Comparison
• Crowdfunding – product launch & produce product
• ICO´s – Blockchain & dependent on individual company
• Create a new crypto currency
• Appreciation in token value – profit for investors
Token
Examples of rights:
• Some service in the future
• Access to a platform
• Dividends or underlying assets
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Side note: Ethereum
The blockchain that catalysed the ICO craze
83% of all tokens generated for ICOs are created through Ethereum. The platform provides a
toolkit with code for the creation of tokens, and is credited by some with enabling the ICO trend.
• Versatile system: Ethereum's blockchain allows for smart contracts that can calculate the
amount of funds raised, verify and execute transactions and distribute tokens. Bitcoin's blockchain
does not allow for the distribution of new tokens.
• Accurate tracking system: This is essential in an ICO, where the blockchain must be able
to recalculate total contributions after each new investor, close ICO at a certain point and issue
tokens when conditions are met.
• Speed: Bitcoin's blockchain is very slow, meaning transaction in an ICO would have taken ages.
Ethereum's protocol allows for a much faster creation of blocks, speeding up the process.
Smart Contract
• An agreement that self executes without any human intervention
• The idea is to let software determine the legal course of action, whether the
action is between persons, businesses or even countries
ICO process
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Source: Based on Blockcahin Fund, Initial Token/Coin Offering Advisory (ITOSG)
ICO VS traditional
ICO wayIPOof financing?
VC