Cryptocurrencies like Bitcoin and Ethereum have exploded in popularity due to various socioeconomic factors and their advantages over traditional currencies. Their underlying blockchain technologies use cryptographic techniques like hashing and Merkle trees to manage trust in a decentralized manner without the need for centralized authorities. Miners are incentivized to secure the networks by verifying transactions for a reward of new coins, though over time the rewards are reduced according to set algorithms to control inflation. Anyone can now create new cryptocurrencies by forking existing blockchains or launching new ones.

1. Cryptocurrencies 101
Brett Colbert
@brett_colbert

3. History of currencies (1000BC to 500BC)
Standardized metal objects stamped with a standard value -- were
the Chinese bronze spade money, c. 475-221 BC
Chinese shell money, 1000 BC..The shell most widely
used worldwide as currency was the shell of Cypraea
moneta, the money cowry.
Coins as currency were manufactured in China, India and Turkey
between 700 and 500 BC.

4. History of currencies (800AD to 1862)
Foreign currency exchange 1700 - England and
Holland
Paper currency 800 AD
1816 Gold as a benchmark of value in
England
1862 United States issues first paper
currency

5. History of currencies (1950 to current)
1955 US introduces first paper checks as currency
1950 the first US credit card
1958 AmEx introduces their first credit card
https://www.currencyfair.com/cf-
content/uploads/2014/07/History-of-Currency-Exchange_1.jpg
2008 Satoshi Nakamoto introduces
cryptocurrency based on blockchain

6. https://howmuch.net/articles/worlds
-money-in-perspective
Update - bitcoin has increased from
$41B to $217 B market cap currently

7. Why the recent explosion in cryptocurrencies?
2 fairly recent events increased attention
• Satoshi Nakamoto’s White Paper -
https://bitcoin.org/bitcoin.pdf - published
October 31, 2008
• No one knows who Satoshi is
• Satoshi Nakamoto is a pseudonym,
possibly a name made up from
SAmsung, TOSHIba, NAKAmichi,
MOTOrola
• Bitcoin blockchain was born 2008
• Vitalik Buterin launches
Ethereum blockchain July 2015
• Improved the programmability of
the blockchain - Turing complete
• Many startups are being built on
top of Ethereum
• Dapps = distributed apps
Ethereum’s blockchain primarily stores contractual
transactions
https://www.youtube.com/watch?v=WSN5BaCzsbo
Biitcoin’s blockchain primarily stores financial
transactions

8. Both bitcoin blockchain and ethereum blockchain
DEPEND on a reward mechanism to function
Bitcoin is integral to the bitcoin blockchain - it’s a critical piece that incents miners to mine.
Ether/Ethereum is integral to the ethereum blockchain - it’s a critical piece that incents miners to mine.

9. “The currency is in the service of the protocol”
-- Vitalik Buterin

10. … and there are TONS of other cryptocurrencies
https://www.worldcoinindex.com/
967 cryptocurrencies currently tracked
on worldcoinindex.com

11. Where did many of these cryptocurrencies
come from?

12. Some forked off the original bitcoin blockchain
https://steemit.com/bitcoin/
@hugobro/what-is-this-
bitcoin-hard-fork-all-about

13. Another example of soft vs hard forks used to ‘create’ new
cryptocurrencies

14. Some cryptocurrencies are built on Ethereum blockchain
→ ICOs created on top of Ethereum blockchain
Startups
have raised
$1.3 Billion
through
digital coin
sales

15. As people realized the tremendous potential of blockchain, the
respective tokens gained value (eg bitcoin and ethereum).
This has caused investment and speculation.
Anyone can download the open source blockchain code and
create their own coin.
What happened here???? Why the explosion in cryptocurrencies?

16. Say what? Anyone can create a cryptocurrency? YES!

17. Investment and speculation in cryptocurrency is a personal choice - completely separate from
blockchain.
Public blockchains rely on their respective currencies to reward miners to mine blocks. Bitcoin and
Ethereum are critical to how they work.
Possible personas???
Blockchain Cryptocurrencies
I believe in blockchain but I would never
invest in cryptocurrencies.
I believe in blockchain and I also invest
in cryptocurrencies.
I think blockchain is a fad and I would
never invest in cryptocurrencies.
I think blockchain is a fad but I’m
investing in cryptocurrencies.

18. Socio-Economic Forces Increasing Adoption of Cryptocurrencies
Inflation, Lack of Access, Digital Wallets
http://www.paymentscardsandmobil
e.com/mobile-wallets-global-
growth-continues/

19. Venezula’s High
Inflation
The president of Venezula unvelieved a new 100,000
bolivar note in November, 2017. The note has a value
of $2.50 on the black market.
Venezuelans, on average, are only allowed to withdraw
about 10k to 20k bolivares a day. 20k bolivars are
currently worth 50 cents.
IMF sees inflation in Venezula soaring to 2200% by
2017.
Venezuelans are turning to bitcoin as an appreciating
store of wealth/currency.

20. How are people buying/selling these
cryptocurrencies?
Cryptocurrency Exchanges
www.kraken.com
www.coinbase.com
www.bittrex.com
www.poloniex.com
...

21. Sure, but these cryptocurrencies can’t be that
popular, right? 11/28/2017

22. Bitcoin’s standing in global currencies

23. Interest in Understanding Bitcoin is Growing

24. Will Bitcoin Go Mainstream?
12/4/2017

25. Brett’s Favorite Bitcoin & Cryptocurrency Tools
• https://tradeblock.com/bitcoin
• http://bitcointicker.co/#
• https://coinmarketcap.com/
• https://bitinfocharts.com/
• https://www.tradingview.com/

26. Comparing bitcoin to ethereum...
Usage Financial transactions Smart Contracts
Market Cap $184 billion $44 billion
Total coins 21 million unlimited (currently 96 M)
Blockchain based Yes Yes

27. Key Messages
● Certain crytocurrencies such as bitcoin and ethereum underpin the reward mechanism for bitcoin
blockchain and ethereum blockchain
● Some people see cryptocurrencies as an investment vehicle
● Cryptocurrencies exist because of lack of access to financial institutions for $2B people
● Cryptocurrencies exist because of socio-econonic reasons such as high currency inflation rates
● The interest in cryptocurrencies is growing at an exponential rate

28. What possible advantages do cryptocurrencies
have?
● Lower transactional cost compared to other financial solutions such as credit cards which currently have a national average
APR of about 15%
● Less expensive than other online payment solutions which have rates such as 2.9% + $.30 per transaction
● With other types of currencies, there are often additional transaction costs to send money between people in different
countries
● Converting non-digital currencies from one currency type to another often carries a transaction fee (eg – converting US dollar
to Euro or Euro to GBP)
● International payments on non-digital currencies often have a significant delay (sometimes a few days) to send money
overseas
● Some emerging countries don’t have a banking system or easy access to a bank or financial institution (eg Kenya, Uruguay,
Panama) … but people have cell phones!
● Merchants pay a fee of between 2% and 3% for some credit card transactions
● “Wiring money home” in some cases costs upwards of 10% of the amount transferred
● Banks can fail – remember the 2007/2008 global financial crisis

29. The Trust Model for both Bitcoin and Ethereum rely
on mining - miners mine because there is a reward
Blockchain uses hash (SHA-256), Merkle trees and a decentralized set of nodes to
manage Trust.
This is referred to as the Proof of Work.
In the case of bitcoin, the reward for solving the puzzle is 12.5 bitcoin (currently
~$12,000 each).

30. bitcoin = verification reward for the blockchain -
reward cuts in half approx every 4 years
This is referred to as
the “halving”
Nov 28, 2012

31. http://fortune.com/2017/11/25/lost-bitcoins/
“Just as gold bars are lost at sea or $100 bills can burn, bitcoins can disappear from the
Internet forever. When all 21 million bitcoins are mined by the year 2040, the actual amount
available to trade or spend will be significantly lower.”