/ Blockchain

Starter Kit - The Blockchain Primer

1 Hour All you Need to Know

Background

Satoshi Nakamoto is the name used by the unknown person or people who developed bitcoin, authored the bitcoin white paper, and created and deployed bitcoin’s original reference implementation.

After bitcoin got adopted, and listed in exchanges — the value shot up like crazy because of multiple reasons including new launches in Ethereum and ICOs.

Ethereum was created with new revolutionary features in ERC20 Tokens and Smart contracts which caused a influx of ICOs because of how tokens can mirror ERC20 tokens and also be listed.

What happens next — nobody can tell.

Key Figures

  • Bitcoin has more then 8M accounts, and growing by more then 100% per year.
  • 0.5% of world’s population using Blockchain. 50% or 3.77B use internet.
  • IBM dedicates 200M to Blockchain projects & 1000 employees.
  • VCs invested > $1B to Blockchain companies.
  • Global market expected to hit 20B by 2024.
  • Banks could save $8–12B if they used blockchain technology

Consensus

Consensus Protocol is about how people make decisions. When people talk about decentralization — it’s about how decisions are made across multiple people who do not know about each other or are affected by each other’s decision. This is in game theory — called non-cooperative game theory.

In Bitcoin this is using Proof of Work. There are a whole load of other Protocols out there that are created to manage decision making.

Three businesswomen talking at a white table
She does not agree.

Let’s Be Clear on What we See. Is it Transparent?

When a task for proof of work is done — a block is generated which is used for the transaction. This task of proof of work is meant to “secure the network” and rewards the miner with a Bitcoin stored in a wallet (I have a slide on wallet).

These are all linked together and distributed to people within the network

Distributed is the concept where databases are replicated across the network so there is no one single point of failure.

Imagine, someone stole your candy but now you can clearly see who has it with 100% accuracy. Imagine a REAL internet of things is what people are trying to build.


I have a crystal ball.

Wallet####

When a block is created and mined by solving a proof of work, Bitcoins are created, rewarded to the miner. Bitcoins are saved in a Wallet.

Now wallets are where tokens / coins are being held.

There are many answers to what is a difference between token and coin. And the answer differs (I kind of don’t have the best answer). I would say coin is the mined reward, while token is a currency used for services and stuff. Whilst a token can also be a coin. But that’s more a philosophy answer.

Wallets are on the Blockchain, and CANNOT be hacked.

He disappeared like Sand.. Where did he Go???

But you can mind-hack the owner of the Wallet. Eg hack his gmail, or spoof and make him give you the key — reset stuff. To unlock a wallet you need a private key. If you lose the private key, you loose the wallet.

There’s a big demand to improve the security, or custodian services of a wallet.

Ethereum

Ethereum introduced ERC20 tokens. It is a standard, and is constantly being improved (eg to solve the scalability issues). What it means is that people can create their own token standard and add funky stuff to it and it is all compatible with each other in a wallet.

Ethereum also introduced smart contracts (Bitcoin does not have it but news is that it is coming up.) The coin / token for ethereum is Ether.

Some people call Ethereum the “people’s choice” because how easy it is to create tokens.

Regulations

Biggest questions are on utility vs securities. Securities will require it to be cleared by regulators. There’s a lot of rules on these.

All companies have to do their KYC (know your customer) because of many companies moving funds offshore through Bitcoin.

Many criminals are using Bitcoin because there’s no way to track. One of my friends got her server hacked, and the hacker threatened to delete all data unless she gave 50 bitcoins.


A better mask.

Most countries would want to tax cryptocurrency gains.

Many companies banned ICOs because of the bad-press and also many companies using it to move money out of the country eg.

What else to know

  1. It’s not scalable. Number of transactions any Blockchain solutions can support are very low. This is evidenced by the ‘CryptoKitties’ issue where it crashed ethereum because of the number of transactions.
  2. Many hacks are on the users access, and fraud cases instead of hacking into the Blockchain. For example, hacking into emails, or getting passwords.
  3. Public Chain, Private Chains. Imagine earth is a public chain. Each continent is a private chain. To get from one continent to another continent today you need a passport — that’s a smart contract.

The content on the Blockchain is as accurate as what you put on it!!

Starter Kit - The Blockchain Primer
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