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
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
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
23.
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/
27.
28. From “trusted”, centralized human authorities
to trustless, decentralized networks
IBM Institute for Business Value (PDF)
29.
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
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