KEMBAR78
Introduction into blockchains and cryptocurrencies | PDF
Sergey Ivliev, profile picture
Uploaded bySergey Ivliev
PDF, PPTX422 views

Introduction into blockchains and cryptocurrencies

The document provides a comprehensive overview of blockchains and cryptocurrencies, detailing the digital assets ecosystem, key concepts such as Bitcoin, smart contracts, and DeFi, and the mechanisms of transaction processes. It discusses challenges like double spending and the evolution of blockchain technology, including the introduction of various consensus mechanisms and scaling solutions like the Lightning Network. Additionally, the document analyzes the use cases, market metrics, and the significance of decentralized financial systems in bypassing traditional intermediaries.

Download as PDF, PPTX
1 / 111
2 / 111
3 / 111
4 / 111
5 / 111
6 / 111
7 / 111
8 / 111
9 / 111
10 / 111
11 / 111
12 / 111
13 / 111
14 / 111
15 / 111
16 / 111
17 / 111
18 / 111
19 / 111
20 / 111
21 / 111
22 / 111
23 / 111
24 / 111
25 / 111
26 / 111
27 / 111
28 / 111
29 / 111
30 / 111
31 / 111
32 / 111
33 / 111
34 / 111
35 / 111
36 / 111
37 / 111
38 / 111
39 / 111
40 / 111
41 / 111
42 / 111
43 / 111
44 / 111
45 / 111
46 / 111
47 / 111
48 / 111
49 / 111
50 / 111
51 / 111
52 / 111
53 / 111
54 / 111
55 / 111
56 / 111
57 / 111
58 / 111
59 / 111
60 / 111
61 / 111
62 / 111
63 / 111
64 / 111
65 / 111
66 / 111
67 / 111
68 / 111
69 / 111
70 / 111
71 / 111
72 / 111
73 / 111
74 / 111
75 / 111
76 / 111
77 / 111
78 / 111
79 / 111
80 / 111
81 / 111
82 / 111
83 / 111
84 / 111
85 / 111
86 / 111
87 / 111
88 / 111
89 / 111
90 / 111
91 / 111
92 / 111
93 / 111
94 / 111
95 / 111
96 / 111
97 / 111
98 / 111
99 / 111
100 / 111
101 / 111
102 / 111
103 / 111
104 / 111
105 / 111
106 / 111
107 / 111
108 / 111
109 / 111
110 / 111
111 / 111
Introduction to blockchains and cryptocurrencies Sergey Ivliev
• Digital assets ecosystem • Bitcoin • Other blockchains • Smart contracts • DeFi • Other DApps Agenda
Digital Assets Ecosystem
7 ~$265B MCap ~$8B 24h volume~2500 assets ~260 exchanges ~3M NFT-tokens Digital assets ecosystem Bitfinex hack SegWit2x/UASF Crypto winter Libra https://coinmarketcap.com/charts/
World money $ bln
Ecosystem overview • Custodial • Private • Hardware • Centralized • DEXes • Fiat on-ramps • ICO/STO • Stablecoins • DeFi • Collectibles • Bitcoin • Ripple • Monero • Ethereum • EOS • TRON • Bitmain • Nvidia • Infura • BloXroute
Bitcoin
"I think that the Internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing, but that will soon be developed, is a reliable e-cash, a method whereby on the Internet you can transfer funds from A to B, without A knowing B or B knowing A" Milton Friedman, a Nobel Prize Laureate in Economics (1999)
• You are not able to physically give a coin or a bill to two people at the same time • Electronic payment system should be able to prevent double spending, because it is easy to copy electronic records • The centralized payment system is based on a trusted middleman (bank, central bank, PSP, etc.) The double spending problem
The challenge: • Develop a secure and reliable method for updating a public ledger of which there are myriad copies distributed throughout the world • Create the necessary incentives for users to contribute resources to verifying transactions The double spending problem
Centralized payment system Decentralized payment system Centralized vs. Decentralized
• Symmetric encryption (Diffie, Hellman, Merkle, 1975) • Asymmetric encryption (Rivest, Shamir, Adelman, 1977) • Blind Signature Technology (Chaum, 1989) • Digital Signatures (Schnorr, 1989), ECDSA (NIST, 2000) • HashCash, Proof-of-Work (Back, 1997) • Bit gold (Szabo, 1998) • Smart contracts (Szabo, 2003) History
The story behind https://bitcoin.org/bitcoin.pdf Bitcoin whitepaper 31 Oct 2008 Genesis block 3 January 2009 Bitcoin code released 9 January 2009 Pizza Day 22 May 2010
Step 1 — Agreement on transaction Alice is a private person who has bitcoins Bob is an entrepreneur who sells digital content online and accepts bitcoins Alice agreed with Bob to purchase a digital art object for 0.05 BTC How it works…
http://cointemporary.com
Step 2 — Creating a transaction message Alice creates a message that contains: • A link to previous transactions in which she received bitcoins • Recipient address (Bob's address) and • The amount to be paid ...and may contain other conditions (e.g. time delay) How it works…
Alice's private key L5Ptvbbh6hpXMChRoqLUQAzQn6YoV5Hpi97aGBbjTYfh837fCXp3 Alice's public key 025cdade7165c4683e968d6b66459d3c42aa26232e1a7f88d34d0bc283418dd741 Alice's wallet address 1DgM5xyFxUyAVrAhxR1KY2r5uyiGXrKmGc How it works…
Bob's wallet address 1KsGhiAotJxzRPH52EV25d2XFWkcv3bLCC How it works…
Step 2 — Creating a transaction message Inputs: • 0.1 BTC from Alice. Outputs: • 0.05 BTC to Bob • 0.0001 BTC is a fee for transaction validation • 0.0499 BTC is a change back to Alice's address How it works…
Inputs Outputs https://coinb.in How it works…
Outcome: transaction How it works…
Step 3 — Signing a transaction As soon as the message is created, Alice signs it to prove that she manages the sender's address. Alice encrypts the message with her private key. This message can be decrypted with a public key, which is also sent with the transaction. How it works…
https://coinb.in Outcome: signed transaction How it works…
Step 4 — Broadcasting Alice distributes her message over the network to validate. How it works… https://blockchain.info/address/1DgM5xyFxUyAVrAhxR1KY2r5uyiGXrKmGc
Validating nodes (miners) are organized into a peer-to-peer network. The message propagates along the fastest path from the node to its closest neighbors… How it works…
On average, 8-10 thousand full nodes are active daily How it works…
The first 1,000 nodes receive a transaction in 2 seconds on the average… How it works…
https://bitcoinchain.com/mempool/ The transaction is put on the waiting list (mempool) How it works…
The number of transactions in the mempool can be up to 20,000 or more How it works… https://www.blockchain.com/charts/mempool-count
Step 5 — Transaction verification (mining) Miners receive Alice's transaction and add it along with other transactions to the candidate block. Miners compete with each other who will verify the new block faster. Verification of the block means: • Validation of transactions in the block • Reaching consensus How it works…
Reaching consensus is a time-consuming process and requires from each miner to demonstrate computing resources, the so- called work (Proof of Work, PoW). How it works… Hashrate ~80 . 1018 H/s 500x top supercomputer
How it works… Mining allows you to reach consensus on what transactions took place and in what order. When branching (forking), the chain will be selected, which has the largest amount of work for the verification, i.e. the longest one
Step 6 — Success Clara is a miner, who successfully verified the block with Alice's transaction, receives a reward for the extracted block (12.5 BTC), as well as a commission for the block's transactions. Clara spreads her output among other miners and they add this block to the chain. Bob receives confirmation that the payment has been sent by Alice and initiates the delivery. How it works…
How it works… The first 1,000 nodes receive a block in 1.1 seconds on the average…
Outcome Step 6 — Success How it works…
Viewing the transaction in the blockchain explorer by the hash number How it works…
The hashrate exceeds 80 million TH/s. Power consumption ~13.5 GWh Energy cost 13.5 GW * $0.05/KWh = $675k /hour ($5.9b /yr) Equipment replacement cost 6.4 mln S9 * $2000 = $12,8 b Mining Mining award for 6 blocks * 12.5 BTC = 75 BTC / hour Transaction fee for 6 blocks * 1400 tx * 0.00013 BTC = 1.1 BTC / hour Revenue of miners of 76.1 BTC * $10k ~ $761k / hour ($6.6b /yr)
Mining https://blockchain.info/pools Consolidation of miners into pools
12.5 BTC is a block award, 6 blocks per hour => 1,800 BTC are issued daily ($18m) Halving every ~4 years, maximum of 21 million BTC 17.89 million BTC issued => Mcap = $10k * 17.89 million = $178b Mining
Average transaction volume: ~$1 bln/day $73m (2015) $62m (2014) $40m (2013) $1.6m (2012) Metrics $158m (2016)$1.1m (2011) https://blockchain.info/charts/estimated-transaction-volume-usd?timespan=all $1b (2017) Max=$5.6bWU $0.2 bln/day (2016) Paypal $1.25 bln/day (Q3 2017) VISA $24 bln/day (2016) SWIFT $5 trln/day (2016) $1b (8m2019) $1b (2018)
Transaction rate: ~3.8 tps (max 7 tps) 125k (2015) 69k (2014) 53k (2013)23k (2012) Metrics 226k (2016) 5k (2011) https://blockchain.info/charts/n-transactions?timespan=all 285k 3.3 tps (2017) Max=425k 4.9 tps WU 9 tps (2016) SWIFT 130 tps (2016) Paypal 200 tps (2016) Visa 4470 tps (2017) 222k 2.57 tps (2018) 335k 3.9 tps (8m2018)
Metrics Average transaction fee: ~$1.5 WU >$10 (5-10%) Paypal $2.9+0.3% VISA ~0.2% SWIFT $20-40 https://bitcoinfees.info/
Use cases Alternative payment system: ~600k daily active addresses https://bitinfocharts.com/comparison/bitcoin-activeaddresses.html
Use cases Store of value Bitcoin Gold Cash Bank deposit Durable Portable Fungible Verifiable Divisible Scarce Established history Censorship resistant
Use cases Non-correlated asset https://coinmetrics.io/correlations/#assets=btc-gld,btc-s&p_period=90
Use cases Non-correlated asset https://www.cmegroup.com/trading/ equity-index/us-index/bitcoin.html CME futures market ~$100-500m / day
Use cases Escape from the devaluation of the national currency https://coin.dance/volume/localbitcoins
Use cases https://coin.dance/statshttps://trends.google.com/trends/explore?q=bitcoin New generation money (57% under 34)
Use cases Purchase of illegal goods (~10% of payments) https://papers.ssrn.com/abstract=3102645 Foley, Sean et al. Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed Through Cryptocurrencies? (January 15, 2018).
Use cases Gateway to crypto + unit of measure for crypto-assets https://coinlib.io/exchange/bittrex
Use cases https://www.ezonomics.com/ing_international_surveys/mobile-banking-2018- cryptocurrency/
Use cases
• Killer app – money • Open protocol, everyone can participate • Operates without trusted parties, censorship is not possible • Strong cryptography and PoW energy secure network • Transactions are (pseudo-)anonymous • Fungible, divisible, portable, scarce (!) • High price volatility: >3% / day • Poorly scalable: <10 tps Summary
Other blockchains
GHOST Y. Sompolinsky, A.Zohar “Secure High-Rate Transaction Processing in Bitcoin”, 2013
SPECTRE/PHANTOM Y. Sompolinsky, A.Zohar “PHANTOM: A Scalable BlockDAG protocol”, 2017
Proof-of-Stake • NXT (2012) • Ouroboros (Cardano) • Casper (Ethereum) • Algorand • Based on staking • Lower energy consumption • Wider attack surface
Proof-of-Identity • Idena (2019) • Time-synced Turing test • 1 human = 1 vote • Use cases: governance, serverless messenger, direct marketing Filter for Live Intelligent People (flip)
Horizontal scaling • Big blockers: Bitcoin Cash, DASH, Waves (NG) 100 tps • DAG: Byteball 17 tps, IOTA 100 tps, Nano 300 tps • Committee: Algorand 1k tps • Sharding: Zilliqa 2.5k tps • DPoS: Bitshares, EOS 8k tps • aBFT: Hedera Hashgraph 200k tps
Permissioned blockchains Permissionless Permissioned Bitcoin, Ethereum, ZCash,… Fabric, Quorum, Corda, Libra Open access (PoW, PoS, …) Membership (consortium) Many validators Few validators Wide range of users Small range of users (B2B) Relatively low performance Relatively high performance Managed by ecosystem Managed by stakeholders “Internet” “Intranet” The subject of this course is open (public) protocols and crypto markets
Vertical scaling Lightning Network • Micro-payment channel network (Level 2) • Many hubs with many open channels • A channel is a multisig address with a frozen collateral • Micro-payments are made as the exchange of commitment transactions (off-chain), payments can be locked between hubs • Any party can close the channel by publishing the last transaction and receiving the balance to his or her address Joseph Poon, Thaddeus Dryja. The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments, 14 Jan 2016 https://lightning.network/lightning-network-paper.pdf
Vertical scaling Advantages: • The transactions are carried out in milliseconds • Safety is guaranteed by blockchain • Does not require trust between the participants • Scalability is up to 1 million per second or more • Low transaction costs • The possibility to carry out micro-transactions (<$1) • Crosschain atomic swaps, non-custodial DvP trading
https://explorer.acinq.co Vertical scaling Lightning Network
Vertical scaling https://bitcoinvisuals.com/lightning Lightning network: <$10 mln capacity
Vertical scaling Disadvantages: • Opening and re-opening channels requires transaction costs • The hub needs to keep the frozen capital in the channels https://www.trustnodes.com/2019/08/20/guy-makes-20-a-month-for-locking-5- million-worth-of-bitcoin-on-the-lightning-network • The average amount of collateral in the channels is small ($20), payments over $5 can be a problem • "Sending payments using the Lightning Network is cheaper than the regular Bitcoin network, but suffers from routing errors and wallet bugs that make it impractical even for highly technical users” https://news.bitcoin.com/a-look- at-what-it-was-like-to-operate-the-lightning-networks-largest-node/
• Bank of England – The emergence of digital currencies (2014) http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/ qb14q3digitalcurrenciesbitcoin1.pdf • WEF – The future of financial infrastructure (Aug 2016) http://www3.weforum.org/docs/WEF_The_future_of_financial_infrastructure.pdf • D.Fantazzini, E.Nigmatullin, V.Sukhanovskaya, S.Ivliev. "Everything you always wanted to know about bitcoin modelling but were afraid to ask". Applied Econometrics (2017) https://mpra.ub.uni-muenchen.de/71946/ • European Parliament. “Virtual currencies and central banks monetary policy: challenges ahead” (2018) http://www.europarl.europa.eu/cmsdata/149900/CASE_FINAL%20publication.pdf • J.Song. “Why blockchain is hard” (2018) https://medium.com/@jimmysong/why- blockchain-is-hard-60416ea4c5c • http://www.mas.gov.sg/News-and-Publications/Speeches-and-Monetary-Policy- Statements/Speeches/2018/Crypto-Tokens-The-Good-The-Bad-and-The-Ugly.aspx Useful links
Smart Contracts
Smart contracts Unlike Bitcoin, which stores only the transaction log (UTXO = Unspent Transactions Output), Ethereum stores both transactions and ledger states. In addition to ledger state (balances), Ethereum can store the state of smart contract variables. Technical details https://hackernoon.com/getting-deep- into-ethereum-how-data-is-stored-in- ethereum-e3f669d96033
Smart contracts Smart contracts are created in a high- level language (Solidity), they are then compiled into low-level machine code (bytecode). Bytecode is loaded into Ethereum by sending a transaction of a special type using "Contract creation". The loaded smart contracts can be performed on the Ethereum Virtual Machine (EVM). https://etherscan.io/addres s/0xbdf6a89f7c50b15d6b9 b6f35dba58fc240c1bb89# code
Smart contracts The Ethereum Virtual Machine (EVM) is a decentralized computer that can process smart contracts, confirming the changed state of variables on the blockchain. All EVM nodes perform smart contract and validate a definite output.
Smart contracts The code is executed up to 100 times slower than locally The cost of using memory and storage is at the level of 50-ies of the 20th century The outputs can be changed in the first 60 seconds
Smart contracts It is the world's first single computer for the entire planet It cannot be stopped and it is independent of states and corporations Available wherever there is Internet It can perform any calculation that is possible to perform (Turing completeness), including infinite loops
Smart contracts Gas is a metric to evaluate and limit the use of resources for the EVM. Each operation (command, variable, etc.) requires a certain amount of gas. The more there are calculations and storage use, the more gas is required. When calling any smart contract function, the sender should specify GasLimit and GasPrice. If the transaction goes out of GasLimit, it will fail, but a fee will be charged to the sender: Fee = Amount of Gas * GasPrice
Useful links Minimum viable token Crowdfunding DAO (Decentralized Autonomous Organizations) Dapps (distributed applications) https://ethereum.org/token https://ethereum.org/crowdsale https://ethereum.org/dao https://www.stateofthedapps.com/
DeFi
#DeFi Decentralized Finance (#DeFi) is the movement that leverages open source software and decentralized networks to transform traditional financial products into trustless and transparent protocols that operate without unnecessary intermediaries. Among its core principles are transparency, accessibility and financial inclusion. Decentralized Finance participants are able to reduce counterparty risk via cryptographic verification on public blockchains.
#DeFi • Payments (cryptocurrencies, stablecoins) • Funding (ICO, IEO, STO) • Borrowing • Lending • Decentralized exchanges (DEX) • Prediction markets • Asset management / Investments • Insurance #DeFi
Tokens ERC20 Tokens ERC = Ethereum Request for Comment Standard interface to call such functions as checking balance, transfer and withdrawal of tokens https://github.com/ethereum/ei ps/issues/20 The vast majority of Ethereum tokens is compatible with this standard Matrix of balances: {0x1, 100; 0x2, 250; 0x3, 0,….} Token transfer function: transferFrom (0x2, 0x3, 100) will change the state of the balances variable as follows: It was {0x1, 100; 0x2, 250; 0x3, 0,….} It is now {0x1, 100; 0x2, 150; 0x3, 100,….} Balance inquiry function: balanceOf(0x2) will give 250 back
Stablecoins Stablecoins combined: ~$5 bln supply https://coinmetrics.io/charts/#assets=dai,gusd,pax,usdc,tusd,usdteth,usdt_log=f alse_left=SplyCur_zoom=1508378538572.8643,1571795370814.0703
Stablecoins Ex-USDT stablecoins: ~$1 bln https://coinmetrics.io/charts/#assets=dai,gusd,pax,usdc,tusd,usdteth,usdt_log=f alse_left=SplyCur_zoom=1508378538572.8643,1571795370814.0703
Funding 5250 ICO (583 in 2019) 1722 successful (33% success) $26.4b raised ($3.3b in 2019) https://www.inwara.com/report/ blockchain-crypto-report-h1- 2019 https://icobench.com/reports/IC Obench_ICO_Market_Analysis _June_2019.pdf ICO: party is not over!
Funding $37m (2018) $1.5b (6m2019) https://icobench.com/reports/ICObench_ICO_Market _Analysis_June_2019.pdf Exchanges in the ICO game: >$1.5b raised in 2019
Funding 2 STO $22m (2017) 28 STO $442m (2018) https://cryptovalley.swiss/wp-content/uploads/ch- 20190308-strategyand-ico-sto-report-q1-2019.pdf https://www.inwara.com/report/blockchain-crypto- report-h1-2019 57 STO $420m (5m2019) STO ramps up: >$400m in 2019
Funding https://www.sec.gov/news/press- release/2019-150 Happy founders
Funding https://twitter.com/lawmaster/status/1159130591209689088 Angry investors Median ROI -87% <11% ICOs ROI>0% Top-5 ICOs: - BNB (5,902%) - IOTA (1,744%) - Ethereum (1,339%) - Lambda (962%) - ChainLink (668%)
#DeFi on Bitcoin https://defipulse.com/lightning-network
#DeFi on Ethereum https://defipulse.com/ ~$450m locked in Ethereum DeFi
Dai: Stablecoin + Borrowing MakerDAO $78 mln Dai issued 1.3 mln ETH locked in collateral (1.29% of ETH) Collateral ratio 320% 13.9k CDPs 105k Dai Holders ~20% lending rate https://mkr.tools/system
xDai: Stablecoin Payments xDai Sidechain with 4 validators 2-way bridge to Ethereum (POA) 5s block time Capacity up to 1500 tps 13k xDai addresses <$0.001 fee per tx paid in Dai ZK for privacy (AZTEC) https://poa.network/xdai
Borrowing & Lending Compound, InstaDapp, Dharma, dYdX, Nuo $129m value locked 396k ETH locked in compound as collateral (0.37% of ETH)
Borrowing & Lending Compound Deposits are tokenized as cTokens (e.g.cDai) Rate of cToken to underlying asset varies with the interest rate Interest rate varies dynamically with supply & demand Interest accrued ~15s
Borrowing & Lending https://loanscan.io/reference-rates?interval=3m
Decentralized exchanges Uniswap, Bancor, Kyber Onchain orderbook Zero-KYC Delivery vs. payment The spot-swaps of ERC20 tokens via the underlying asset (ETH, BNC) Automated price reserves for liquidity provision ~$3m/day traded volume
Decentralized exchanges
Asset management Set protocol Tokenized strategies Non-custodial baskets of assets (Dai, WBTC) Rebalancing with modified dutch auction Integration with DEX
Aggregators Zerion Access to various protocols DeFi Portfolio management Others: InstaDapp, Settle
Asset management
Summary • Bitcoin wholesale payment and SoV (aka digital gold) is a strong use case • Ethereum DeFi is vibrant, but still a proof of concept • Advantages: - Inclusive (zero KYC, no censorship) - Non-custodial (no counterparty credit risk) - Transparent and price efficient - Global, low cost, fast finality • Disadvantages: - Overcollateralized (doesn’t help unbanked to get loans) - Technical barrier (e.g. Metamask, keys, …) - Bridge problem - Still in beta
Useful links A curated list of awesome decentralized finance projects, software, and resources. https://github.com/ong/awesome-decentralized-finance DeFi metrics https://defipulse.com/ Binance Research report on DeFi https://info.binance.com/en/research/marketresearch/defi-1.html
Other DApps
Collectibles Cryptokitties Digital collection Slowed down the Ethereum network: 14k DAU, $12 million (11.12.17) The collection includes over 900 thousand tokens The ERC-721 standard (Non- fungible token, NFT) for digital assets created VC (2018): $12 million (a16z) Dragon 600 ETH (~$170,000)
Markets > 1.2 million token cryptocollectibles (game characters, digital art, etc.) VC (2018): $2 million (YC)
Prediction markets Augur, Stox Betting on the outcome of sports, political and economic events Bets and payouts in tokens and ETH Competitors: Augur, Gnosis ICO (2018): 147k ETH (~$33m, 34 hours)
Social media Peepeth Distributed Twitter No advertising No censorship No ability to change or delete anything Funding cancelled
Fog Computing SONM p2p-marketplace of computing capacity Machine learning Video rendering Web hosting service Scientific computing and so on Payment in SONM tokens ICO (2017): $42 million (4 days, 8,774 participants)
Decentralized storage STORJ p2p-marketplace of disk space Backups, archives Media content Transfer of large files Logs 19k farmers, 20k API users Payment in STORJ tokens ICO (2017): $30 million (7 days)
Governance Aragon DAO/Digital democracy Unstoppable organizations Voting Multisignature wallet Dividend distribution
Digital identity uPort Self-sovereign identity (SSID) Claims are stored on the blockchain Recovery in case of key loss Integration with the state ID (Zug) Similar projects: Civic, Self-Key
Decentralized applications Summary: • 2,000 dapps and several millions of smart contracts on Ethereum alone • Most popular dapps are DeFi, collectibles, games and gambling • The total audience of dapps is not very significant yet (~10-50k /day) • Biggest issues poor user experience, poor token economy, poor scalability
Thank you! ivliev@gmail.com

More Related Content

PDF
Bitcoin - Beyond the basics
byChris DeRose
 
PPTX
BitCoin explained
byHarelc
 
PPTX
Bitcoin Internal
byTuan Cuong Luu
 
PPTX
Bitcoin: A Peer-to-Peer Electronic Cash System
byParas Jain
 
PPTX
Introduction to Blockchain
byAkshay Kumar
 
PDF
Bitcoin : A fierce Decentralized internet currency
byShivek Khurana
 
PDF
Intro to Blockchain Slides
byShannon Wells
 
PDF
Introduction to Lightning Network
byAlan Carbery
 
Bitcoin - Beyond the basics
byChris DeRose
 
BitCoin explained
byHarelc
 
Bitcoin Internal
byTuan Cuong Luu
 
Bitcoin: A Peer-to-Peer Electronic Cash System
byParas Jain
 
Introduction to Blockchain
byAkshay Kumar
 
Bitcoin : A fierce Decentralized internet currency
byShivek Khurana
 
Intro to Blockchain Slides
byShannon Wells
 
Introduction to Lightning Network
byAlan Carbery
 

What's hot

PPTX
Demysitifying Bitcoin and Blockchain
byGanesh Kondal
 
PDF
Bitcoin and the Rise of the Block Chains
byDallas Kennedy
 
PDF
Lightning Network
byFelix Crisan
 
PDF
Blockchain - a basic overview
bySyed Rakib Al Hasan
 
PPTX
BitCoin Protocol
byConsulthinkspa
 
ODP
Intro to Blockchain - And, by the way, what the heck is proof-of-work?
byJim Flynn
 
PDF
Bitcoin and Ransomware Analysis
byinder_barara
 
PDF
Boolberry reduces blockchain bloat
byboolberry
 
PPTX
Bitcoins, blockchains and beyond
byjhaand
 
PDF
Blockchain Technology: A Technical Introduction to Non-Technical People
byMecklerMedia
 
PDF
Bitcoins Math
byAkram El-Korashy
 
PDF
Ethereum VM and DSLs for Smart Contracts (updated on May 12th 2015)
byZvi Avraham
 
PPTX
Bitcoin & Ethereum Address
byPo Wei Chen
 
PPTX
Bitcoin: the future money, or a scam?
byIgnaz Wanders
 
PDF
Bitcoin Blockchain - Under the Hood
byGalin Dinkov
 
PPTX
Bitcoins
byRishabh Dev Singh
 
PDF
Blockchain - Presentacion Betabeers Galicia 10/12/2014
byWeKCo Coworking
 
PDF
gething started - ethereum & using the geth golang client
bySathish VJ
 
PPTX
Build your own block chain
byBohdan Szymanik
 
PPTX
Introduction to Blockchain
bysubbul
 
Demysitifying Bitcoin and Blockchain
byGanesh Kondal
 
Bitcoin and the Rise of the Block Chains
byDallas Kennedy
 
Lightning Network
byFelix Crisan
 
Blockchain - a basic overview
bySyed Rakib Al Hasan
 
BitCoin Protocol
byConsulthinkspa
 
Intro to Blockchain - And, by the way, what the heck is proof-of-work?
byJim Flynn
 
Bitcoin and Ransomware Analysis
byinder_barara
 
Boolberry reduces blockchain bloat
byboolberry
 
Bitcoins, blockchains and beyond
byjhaand
 
Blockchain Technology: A Technical Introduction to Non-Technical People
byMecklerMedia
 
Bitcoins Math
byAkram El-Korashy
 
Ethereum VM and DSLs for Smart Contracts (updated on May 12th 2015)
byZvi Avraham
 
Bitcoin & Ethereum Address
byPo Wei Chen
 
Bitcoin: the future money, or a scam?
byIgnaz Wanders
 
Bitcoin Blockchain - Under the Hood
byGalin Dinkov
 
Bitcoins
byRishabh Dev Singh
 
Blockchain - Presentacion Betabeers Galicia 10/12/2014
byWeKCo Coworking
 
gething started - ethereum & using the geth golang client
bySathish VJ
 
Build your own block chain
byBohdan Szymanik
 
Introduction to Blockchain
bysubbul
 

Similar to Introduction into blockchains and cryptocurrencies

PPTX
Blockchain.pptx
bymanishchaitanya
 
PPTX
Idea To IPO Blockchain Slides
byRoger Royse
 
PPTX
Bitcoin - Understanding and Assessing potential Opportunities
byQuasarVentures
 
PDF
Bitcoin and Ransomware Analysis
byInderjeet Singh
 
PPTX
Crypto101.pptx
bySameer Mahajan
 
PDF
Blockchain External.pdf
bymanishchaitanya
 
PPTX
Blockchain explained (Technology running Bitcoin)
byQais Ammari
 
PPTX
What is bitcoin?
bySuraj Bora
 
PDF
CRYPTO CURRENCY-2022OD205.pdf
byJESUNPK
 
PDF
Upfront Ventures blockchain and crypto deck
byMark Suster
 
PPTX
A Quick Start To Blockchain by Seval Capraz
bySeval Çapraz
 
PDF
Blockchain, bitcoin
bySathish VJ
 
PPTX
Block chain introduction to the world and how we can utilise it
byMichealDsouza1
 
PDF
14 Jan17- Nullmeets -Blockchain concept decoded by Ninad Sarang
byNinad Sarang
 
PPTX
Block chain introduction to the world and how we can utilise it
byMichealDsouza1
 
PPTX
Understanding Blockchain
byTony Willenberg
 
PDF
Introduction to Blockchains
byRameshNair6
 
PPTX
Introduction to Blockchain
bySanjeev Mishra
 
PDF
Bitcoin presentation
byFrancis Pouliot
 
PDF
Blockchain overview, use cases, implementations and challenges
bySébastien Tandel
 
Blockchain.pptx
bymanishchaitanya
 
Idea To IPO Blockchain Slides
byRoger Royse
 
Bitcoin - Understanding and Assessing potential Opportunities
byQuasarVentures
 
Bitcoin and Ransomware Analysis
byInderjeet Singh
 
Crypto101.pptx
bySameer Mahajan
 
Blockchain External.pdf
bymanishchaitanya
 
Blockchain explained (Technology running Bitcoin)
byQais Ammari
 
What is bitcoin?
bySuraj Bora
 
CRYPTO CURRENCY-2022OD205.pdf
byJESUNPK
 
Upfront Ventures blockchain and crypto deck
byMark Suster
 
A Quick Start To Blockchain by Seval Capraz
bySeval Çapraz
 
Blockchain, bitcoin
bySathish VJ
 
Block chain introduction to the world and how we can utilise it
byMichealDsouza1
 
14 Jan17- Nullmeets -Blockchain concept decoded by Ninad Sarang
byNinad Sarang
 
Block chain introduction to the world and how we can utilise it
byMichealDsouza1
 
Understanding Blockchain
byTony Willenberg
 
Introduction to Blockchains
byRameshNair6
 
Introduction to Blockchain
bySanjeev Mishra
 
Bitcoin presentation
byFrancis Pouliot
 
Blockchain overview, use cases, implementations and challenges
bySébastien Tandel
 

Recently uploaded

PDF
Beyond Generative AI: Creating Demand for Compute in the 2030s
byReidar Wasenius
 
PDF
The Journey Is The Reward - Apple Maps Travel Companion
byJohn Andrews
 
PDF
Unlocking Full-Stack Observability for AIOps: A Precisely Ironstream for Big ...
byPrecisely
 
PDF
How to Measure Microsoft 365 Copilot Success and Manage AI Risk: Advanced Str...
byNikki Chapple
 
PDF
UnityNet Digital Sovereignty Checklist 2025-10-13
byLHelferty
 
PPTX
"Towards React Server Components in Clojure", Roman Liutikov
byFwdays
 
PDF
Data Structure - 12 Graph
byAndiNurkholis1
 
PDF
From Data Chaos to Copilot Confidence: A Step-by-Step Microsoft 365 Copilot R...
byNikki Chapple
 
PDF
What's New? ThousandEyes Features and Highlights: October 2025
byThousandEyes
 
PPTX
Top Trends in Kubernetes Security: TalosCon 2025
byCheryl Hung
 
PPTX
Agentic AI Solutions and Services | Aeologic
byankitaeologic
 
PDF
A fool with a tool is still a fool - Plone Conference 2025
byAndreas Jung
 
PDF
Expert Python App Development Company for Modern Enterprises
bySynapseIndia
 
PDF
From Bots to Brains: Getting Started with Agentic Automation in UiPath
byUiPathCommunity
 
PDF
Planetek Italia Corporate Profile brochure
byPlanetek Italia Srl
 
PDF
Getting the Best of TrueDEM – October News & Updates
bypanagenda
 
PDF
Fairness and Bias in AI Ethics and Explainability
byShiwani Gupta
 
PDF
A 4-Terminal Approach to Validating Charge Conservation in MOSFET Compact Models
byEalwan Lee
 
PDF
Dragino商品カタログ 2025.7 LoRaWAN・NB-IoT・LTE-M(LTE Cat.M1)対応センサーリスト
byCRI Japan, Inc.
 
PDF
NDP Act GAID Simplified: From Confusion to Compliance
byMuiz Adeleke
 
Beyond Generative AI: Creating Demand for Compute in the 2030s
byReidar Wasenius
 
The Journey Is The Reward - Apple Maps Travel Companion
byJohn Andrews
 
Unlocking Full-Stack Observability for AIOps: A Precisely Ironstream for Big ...
byPrecisely
 
How to Measure Microsoft 365 Copilot Success and Manage AI Risk: Advanced Str...
byNikki Chapple
 
UnityNet Digital Sovereignty Checklist 2025-10-13
byLHelferty
 
"Towards React Server Components in Clojure", Roman Liutikov
byFwdays
 
Data Structure - 12 Graph
byAndiNurkholis1
 
From Data Chaos to Copilot Confidence: A Step-by-Step Microsoft 365 Copilot R...
byNikki Chapple
 
What's New? ThousandEyes Features and Highlights: October 2025
byThousandEyes
 
Top Trends in Kubernetes Security: TalosCon 2025
byCheryl Hung
 
Agentic AI Solutions and Services | Aeologic
byankitaeologic
 
A fool with a tool is still a fool - Plone Conference 2025
byAndreas Jung
 
Expert Python App Development Company for Modern Enterprises
bySynapseIndia
 
From Bots to Brains: Getting Started with Agentic Automation in UiPath
byUiPathCommunity
 
Planetek Italia Corporate Profile brochure
byPlanetek Italia Srl
 
Getting the Best of TrueDEM – October News & Updates
bypanagenda
 
Fairness and Bias in AI Ethics and Explainability
byShiwani Gupta
 
A 4-Terminal Approach to Validating Charge Conservation in MOSFET Compact Models
byEalwan Lee
 
Dragino商品カタログ 2025.7 LoRaWAN・NB-IoT・LTE-M(LTE Cat.M1)対応センサーリスト
byCRI Japan, Inc.
 
NDP Act GAID Simplified: From Confusion to Compliance
byMuiz Adeleke
 

Introduction into blockchains and cryptocurrencies

  • 1.
    Introduction to blockchainsand cryptocurrencies Sergey Ivliev
  • 2.
    • Digital assetsecosystem • Bitcoin • Other blockchains • Smart contracts • DeFi • Other DApps Agenda
  • 3.
  • 4.
    7 ~$265B MCap ~$8B24h volume~2500 assets ~260 exchanges ~3M NFT-tokens Digital assets ecosystem Bitfinex hack SegWit2x/UASF Crypto winter Libra https://coinmarketcap.com/charts/
  • 5.
  • 6.
    Ecosystem overview • Custodial •Private • Hardware • Centralized • DEXes • Fiat on-ramps • ICO/STO • Stablecoins • DeFi • Collectibles • Bitcoin • Ripple • Monero • Ethereum • EOS • TRON • Bitmain • Nvidia • Infura • BloXroute
  • 7.
  • 8.
    "I think thatthe Internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing, but that will soon be developed, is a reliable e-cash, a method whereby on the Internet you can transfer funds from A to B, without A knowing B or B knowing A" Milton Friedman, a Nobel Prize Laureate in Economics (1999)
  • 9.
    • You arenot able to physically give a coin or a bill to two people at the same time • Electronic payment system should be able to prevent double spending, because it is easy to copy electronic records • The centralized payment system is based on a trusted middleman (bank, central bank, PSP, etc.) The double spending problem
  • 10.
    The challenge: • Developa secure and reliable method for updating a public ledger of which there are myriad copies distributed throughout the world • Create the necessary incentives for users to contribute resources to verifying transactions The double spending problem
  • 11.
    Centralized payment systemDecentralized payment system Centralized vs. Decentralized
  • 12.
    • Symmetric encryption(Diffie, Hellman, Merkle, 1975) • Asymmetric encryption (Rivest, Shamir, Adelman, 1977) • Blind Signature Technology (Chaum, 1989) • Digital Signatures (Schnorr, 1989), ECDSA (NIST, 2000) • HashCash, Proof-of-Work (Back, 1997) • Bit gold (Szabo, 1998) • Smart contracts (Szabo, 2003) History
  • 13.
    The story behind https://bitcoin.org/bitcoin.pdf Bitcoinwhitepaper 31 Oct 2008 Genesis block 3 January 2009 Bitcoin code released 9 January 2009 Pizza Day 22 May 2010
  • 14.
    Step 1 —Agreement on transaction Alice is a private person who has bitcoins Bob is an entrepreneur who sells digital content online and accepts bitcoins Alice agreed with Bob to purchase a digital art object for 0.05 BTC How it works…
  • 15.
  • 16.
    Step 2 —Creating a transaction message Alice creates a message that contains: • A link to previous transactions in which she received bitcoins • Recipient address (Bob's address) and • The amount to be paid ...and may contain other conditions (e.g. time delay) How it works…
  • 17.
    Alice's private key L5Ptvbbh6hpXMChRoqLUQAzQn6YoV5Hpi97aGBbjTYfh837fCXp3 Alice'spublic key 025cdade7165c4683e968d6b66459d3c42aa26232e1a7f88d34d0bc283418dd741 Alice's wallet address 1DgM5xyFxUyAVrAhxR1KY2r5uyiGXrKmGc How it works…
  • 18.
  • 19.
    Step 2 —Creating a transaction message Inputs: • 0.1 BTC from Alice. Outputs: • 0.05 BTC to Bob • 0.0001 BTC is a fee for transaction validation • 0.0499 BTC is a change back to Alice's address How it works…
  • 20.
  • 21.
  • 22.
    Step 3 —Signing a transaction As soon as the message is created, Alice signs it to prove that she manages the sender's address. Alice encrypts the message with her private key. This message can be decrypted with a public key, which is also sent with the transaction. How it works…
  • 23.
  • 24.
    Step 4 —Broadcasting Alice distributes her message over the network to validate. How it works… https://blockchain.info/address/1DgM5xyFxUyAVrAhxR1KY2r5uyiGXrKmGc
  • 25.
    Validating nodes (miners)are organized into a peer-to-peer network. The message propagates along the fastest path from the node to its closest neighbors… How it works…
  • 26.
    On average, 8-10thousand full nodes are active daily How it works…
  • 27.
    The first 1,000nodes receive a transaction in 2 seconds on the average… How it works…
  • 28.
    https://bitcoinchain.com/mempool/ The transaction isput on the waiting list (mempool) How it works…
  • 29.
    The number oftransactions in the mempool can be up to 20,000 or more How it works… https://www.blockchain.com/charts/mempool-count
  • 30.
    Step 5 —Transaction verification (mining) Miners receive Alice's transaction and add it along with other transactions to the candidate block. Miners compete with each other who will verify the new block faster. Verification of the block means: • Validation of transactions in the block • Reaching consensus How it works…
  • 31.
    Reaching consensus isa time-consuming process and requires from each miner to demonstrate computing resources, the so- called work (Proof of Work, PoW). How it works… Hashrate ~80 . 1018 H/s 500x top supercomputer
  • 33.
    How it works… Miningallows you to reach consensus on what transactions took place and in what order. When branching (forking), the chain will be selected, which has the largest amount of work for the verification, i.e. the longest one
  • 34.
    Step 6 —Success Clara is a miner, who successfully verified the block with Alice's transaction, receives a reward for the extracted block (12.5 BTC), as well as a commission for the block's transactions. Clara spreads her output among other miners and they add this block to the chain. Bob receives confirmation that the payment has been sent by Alice and initiates the delivery. How it works…
  • 35.
    How it works… Thefirst 1,000 nodes receive a block in 1.1 seconds on the average…
  • 36.
    Outcome Step 6 —Success How it works…
  • 37.
    Viewing the transactionin the blockchain explorer by the hash number How it works…
  • 38.
    The hashrate exceeds80 million TH/s. Power consumption ~13.5 GWh Energy cost 13.5 GW * $0.05/KWh = $675k /hour ($5.9b /yr) Equipment replacement cost 6.4 mln S9 * $2000 = $12,8 b Mining Mining award for 6 blocks * 12.5 BTC = 75 BTC / hour Transaction fee for 6 blocks * 1400 tx * 0.00013 BTC = 1.1 BTC / hour Revenue of miners of 76.1 BTC * $10k ~ $761k / hour ($6.6b /yr)
  • 39.
  • 40.
    12.5 BTC isa block award, 6 blocks per hour => 1,800 BTC are issued daily ($18m) Halving every ~4 years, maximum of 21 million BTC 17.89 million BTC issued => Mcap = $10k * 17.89 million = $178b Mining
  • 41.
    Average transaction volume:~$1 bln/day $73m (2015) $62m (2014) $40m (2013) $1.6m (2012) Metrics $158m (2016)$1.1m (2011) https://blockchain.info/charts/estimated-transaction-volume-usd?timespan=all $1b (2017) Max=$5.6bWU $0.2 bln/day (2016) Paypal $1.25 bln/day (Q3 2017) VISA $24 bln/day (2016) SWIFT $5 trln/day (2016) $1b (8m2019) $1b (2018)
  • 42.
    Transaction rate: ~3.8tps (max 7 tps) 125k (2015) 69k (2014) 53k (2013)23k (2012) Metrics 226k (2016) 5k (2011) https://blockchain.info/charts/n-transactions?timespan=all 285k 3.3 tps (2017) Max=425k 4.9 tps WU 9 tps (2016) SWIFT 130 tps (2016) Paypal 200 tps (2016) Visa 4470 tps (2017) 222k 2.57 tps (2018) 335k 3.9 tps (8m2018)
  • 43.
    Metrics Average transaction fee:~$1.5 WU >$10 (5-10%) Paypal $2.9+0.3% VISA ~0.2% SWIFT $20-40 https://bitcoinfees.info/
  • 44.
    Use cases Alternative paymentsystem: ~600k daily active addresses https://bitinfocharts.com/comparison/bitcoin-activeaddresses.html
  • 45.
    Use cases Store ofvalue Bitcoin Gold Cash Bank deposit Durable Portable Fungible Verifiable Divisible Scarce Established history Censorship resistant
  • 46.
  • 47.
  • 48.
    Use cases Escape fromthe devaluation of the national currency https://coin.dance/volume/localbitcoins
  • 49.
  • 50.
    Use cases Purchase ofillegal goods (~10% of payments) https://papers.ssrn.com/abstract=3102645 Foley, Sean et al. Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed Through Cryptocurrencies? (January 15, 2018).
  • 51.
    Use cases Gateway tocrypto + unit of measure for crypto-assets https://coinlib.io/exchange/bittrex
  • 52.
  • 53.
  • 54.
    • Killer app– money • Open protocol, everyone can participate • Operates without trusted parties, censorship is not possible • Strong cryptography and PoW energy secure network • Transactions are (pseudo-)anonymous • Fungible, divisible, portable, scarce (!) • High price volatility: >3% / day • Poorly scalable: <10 tps Summary
  • 55.
  • 56.
    GHOST Y. Sompolinsky, A.Zohar“Secure High-Rate Transaction Processing in Bitcoin”, 2013
  • 57.
    SPECTRE/PHANTOM Y. Sompolinsky, A.Zohar“PHANTOM: A Scalable BlockDAG protocol”, 2017
  • 58.
    Proof-of-Stake • NXT (2012) •Ouroboros (Cardano) • Casper (Ethereum) • Algorand • Based on staking • Lower energy consumption • Wider attack surface
  • 59.
    Proof-of-Identity • Idena (2019) •Time-synced Turing test • 1 human = 1 vote • Use cases: governance, serverless messenger, direct marketing Filter for Live Intelligent People (flip)
  • 60.
    Horizontal scaling • Bigblockers: Bitcoin Cash, DASH, Waves (NG) 100 tps • DAG: Byteball 17 tps, IOTA 100 tps, Nano 300 tps • Committee: Algorand 1k tps • Sharding: Zilliqa 2.5k tps • DPoS: Bitshares, EOS 8k tps • aBFT: Hedera Hashgraph 200k tps
  • 61.
    Permissioned blockchains Permissionless Permissioned Bitcoin,Ethereum, ZCash,… Fabric, Quorum, Corda, Libra Open access (PoW, PoS, …) Membership (consortium) Many validators Few validators Wide range of users Small range of users (B2B) Relatively low performance Relatively high performance Managed by ecosystem Managed by stakeholders “Internet” “Intranet” The subject of this course is open (public) protocols and crypto markets
  • 62.
    Vertical scaling Lightning Network •Micro-payment channel network (Level 2) • Many hubs with many open channels • A channel is a multisig address with a frozen collateral • Micro-payments are made as the exchange of commitment transactions (off-chain), payments can be locked between hubs • Any party can close the channel by publishing the last transaction and receiving the balance to his or her address Joseph Poon, Thaddeus Dryja. The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments, 14 Jan 2016 https://lightning.network/lightning-network-paper.pdf
  • 63.
    Vertical scaling Advantages: • Thetransactions are carried out in milliseconds • Safety is guaranteed by blockchain • Does not require trust between the participants • Scalability is up to 1 million per second or more • Low transaction costs • The possibility to carry out micro-transactions (<$1) • Crosschain atomic swaps, non-custodial DvP trading
  • 64.
  • 65.
  • 66.
    Vertical scaling Disadvantages: • Openingand re-opening channels requires transaction costs • The hub needs to keep the frozen capital in the channels https://www.trustnodes.com/2019/08/20/guy-makes-20-a-month-for-locking-5- million-worth-of-bitcoin-on-the-lightning-network • The average amount of collateral in the channels is small ($20), payments over $5 can be a problem • "Sending payments using the Lightning Network is cheaper than the regular Bitcoin network, but suffers from routing errors and wallet bugs that make it impractical even for highly technical users” https://news.bitcoin.com/a-look- at-what-it-was-like-to-operate-the-lightning-networks-largest-node/
  • 67.
    • Bank ofEngland – The emergence of digital currencies (2014) http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/ qb14q3digitalcurrenciesbitcoin1.pdf • WEF – The future of financial infrastructure (Aug 2016) http://www3.weforum.org/docs/WEF_The_future_of_financial_infrastructure.pdf • D.Fantazzini, E.Nigmatullin, V.Sukhanovskaya, S.Ivliev. "Everything you always wanted to know about bitcoin modelling but were afraid to ask". Applied Econometrics (2017) https://mpra.ub.uni-muenchen.de/71946/ • European Parliament. “Virtual currencies and central banks monetary policy: challenges ahead” (2018) http://www.europarl.europa.eu/cmsdata/149900/CASE_FINAL%20publication.pdf • J.Song. “Why blockchain is hard” (2018) https://medium.com/@jimmysong/why- blockchain-is-hard-60416ea4c5c • http://www.mas.gov.sg/News-and-Publications/Speeches-and-Monetary-Policy- Statements/Speeches/2018/Crypto-Tokens-The-Good-The-Bad-and-The-Ugly.aspx Useful links
  • 68.
  • 69.
    Smart contracts Unlike Bitcoin,which stores only the transaction log (UTXO = Unspent Transactions Output), Ethereum stores both transactions and ledger states. In addition to ledger state (balances), Ethereum can store the state of smart contract variables. Technical details https://hackernoon.com/getting-deep- into-ethereum-how-data-is-stored-in- ethereum-e3f669d96033
  • 70.
    Smart contracts Smart contractsare created in a high- level language (Solidity), they are then compiled into low-level machine code (bytecode). Bytecode is loaded into Ethereum by sending a transaction of a special type using "Contract creation". The loaded smart contracts can be performed on the Ethereum Virtual Machine (EVM). https://etherscan.io/addres s/0xbdf6a89f7c50b15d6b9 b6f35dba58fc240c1bb89# code
  • 71.
    Smart contracts The EthereumVirtual Machine (EVM) is a decentralized computer that can process smart contracts, confirming the changed state of variables on the blockchain. All EVM nodes perform smart contract and validate a definite output.
  • 72.
    Smart contracts The codeis executed up to 100 times slower than locally The cost of using memory and storage is at the level of 50-ies of the 20th century The outputs can be changed in the first 60 seconds
  • 73.
    Smart contracts It isthe world's first single computer for the entire planet It cannot be stopped and it is independent of states and corporations Available wherever there is Internet It can perform any calculation that is possible to perform (Turing completeness), including infinite loops
  • 74.
    Smart contracts Gas isa metric to evaluate and limit the use of resources for the EVM. Each operation (command, variable, etc.) requires a certain amount of gas. The more there are calculations and storage use, the more gas is required. When calling any smart contract function, the sender should specify GasLimit and GasPrice. If the transaction goes out of GasLimit, it will fail, but a fee will be charged to the sender: Fee = Amount of Gas * GasPrice
  • 75.
    Useful links Minimum viabletoken Crowdfunding DAO (Decentralized Autonomous Organizations) Dapps (distributed applications) https://ethereum.org/token https://ethereum.org/crowdsale https://ethereum.org/dao https://www.stateofthedapps.com/
  • 76.
  • 77.
    #DeFi Decentralized Finance (#DeFi)is the movement that leverages open source software and decentralized networks to transform traditional financial products into trustless and transparent protocols that operate without unnecessary intermediaries. Among its core principles are transparency, accessibility and financial inclusion. Decentralized Finance participants are able to reduce counterparty risk via cryptographic verification on public blockchains.
  • 78.
    #DeFi • Payments (cryptocurrencies,stablecoins) • Funding (ICO, IEO, STO) • Borrowing • Lending • Decentralized exchanges (DEX) • Prediction markets • Asset management / Investments • Insurance #DeFi
  • 79.
    Tokens ERC20 Tokens ERC =Ethereum Request for Comment Standard interface to call such functions as checking balance, transfer and withdrawal of tokens https://github.com/ethereum/ei ps/issues/20 The vast majority of Ethereum tokens is compatible with this standard Matrix of balances: {0x1, 100; 0x2, 250; 0x3, 0,….} Token transfer function: transferFrom (0x2, 0x3, 100) will change the state of the balances variable as follows: It was {0x1, 100; 0x2, 250; 0x3, 0,….} It is now {0x1, 100; 0x2, 150; 0x3, 100,….} Balance inquiry function: balanceOf(0x2) will give 250 back
  • 80.
    Stablecoins Stablecoins combined: ~$5bln supply https://coinmetrics.io/charts/#assets=dai,gusd,pax,usdc,tusd,usdteth,usdt_log=f alse_left=SplyCur_zoom=1508378538572.8643,1571795370814.0703
  • 81.
    Stablecoins Ex-USDT stablecoins: ~$1bln https://coinmetrics.io/charts/#assets=dai,gusd,pax,usdc,tusd,usdteth,usdt_log=f alse_left=SplyCur_zoom=1508378538572.8643,1571795370814.0703
  • 82.
    Funding 5250 ICO (583in 2019) 1722 successful (33% success) $26.4b raised ($3.3b in 2019) https://www.inwara.com/report/ blockchain-crypto-report-h1- 2019 https://icobench.com/reports/IC Obench_ICO_Market_Analysis _June_2019.pdf ICO: party is not over!
  • 83.
  • 84.
  • 85.
  • 86.
    Funding https://twitter.com/lawmaster/status/1159130591209689088 Angry investors Median ROI-87% <11% ICOs ROI>0% Top-5 ICOs: - BNB (5,902%) - IOTA (1,744%) - Ethereum (1,339%) - Lambda (962%) - ChainLink (668%)
  • 87.
  • 88.
  • 89.
    Dai: Stablecoin +Borrowing MakerDAO $78 mln Dai issued 1.3 mln ETH locked in collateral (1.29% of ETH) Collateral ratio 320% 13.9k CDPs 105k Dai Holders ~20% lending rate https://mkr.tools/system
  • 90.
    xDai: Stablecoin Payments xDai Sidechainwith 4 validators 2-way bridge to Ethereum (POA) 5s block time Capacity up to 1500 tps 13k xDai addresses <$0.001 fee per tx paid in Dai ZK for privacy (AZTEC) https://poa.network/xdai
  • 91.
    Borrowing & Lending Compound,InstaDapp, Dharma, dYdX, Nuo $129m value locked 396k ETH locked in compound as collateral (0.37% of ETH)
  • 92.
    Borrowing & Lending Compound Depositsare tokenized as cTokens (e.g.cDai) Rate of cToken to underlying asset varies with the interest rate Interest rate varies dynamically with supply & demand Interest accrued ~15s
  • 93.
  • 94.
    Decentralized exchanges Uniswap, Bancor,Kyber Onchain orderbook Zero-KYC Delivery vs. payment The spot-swaps of ERC20 tokens via the underlying asset (ETH, BNC) Automated price reserves for liquidity provision ~$3m/day traded volume
  • 95.
  • 96.
    Asset management Set protocol Tokenizedstrategies Non-custodial baskets of assets (Dai, WBTC) Rebalancing with modified dutch auction Integration with DEX
  • 97.
    Aggregators Zerion Access to variousprotocols DeFi Portfolio management Others: InstaDapp, Settle
  • 98.
  • 99.
    Summary • Bitcoin wholesalepayment and SoV (aka digital gold) is a strong use case • Ethereum DeFi is vibrant, but still a proof of concept • Advantages: - Inclusive (zero KYC, no censorship) - Non-custodial (no counterparty credit risk) - Transparent and price efficient - Global, low cost, fast finality • Disadvantages: - Overcollateralized (doesn’t help unbanked to get loans) - Technical barrier (e.g. Metamask, keys, …) - Bridge problem - Still in beta
  • 100.
    Useful links A curatedlist of awesome decentralized finance projects, software, and resources. https://github.com/ong/awesome-decentralized-finance DeFi metrics https://defipulse.com/ Binance Research report on DeFi https://info.binance.com/en/research/marketresearch/defi-1.html
  • 101.
  • 102.
    Collectibles Cryptokitties Digital collection Slowed downthe Ethereum network: 14k DAU, $12 million (11.12.17) The collection includes over 900 thousand tokens The ERC-721 standard (Non- fungible token, NFT) for digital assets created VC (2018): $12 million (a16z) Dragon 600 ETH (~$170,000)
  • 103.
    Markets > 1.2 milliontoken cryptocollectibles (game characters, digital art, etc.) VC (2018): $2 million (YC)
  • 104.
    Prediction markets Augur, Stox Bettingon the outcome of sports, political and economic events Bets and payouts in tokens and ETH Competitors: Augur, Gnosis ICO (2018): 147k ETH (~$33m, 34 hours)
  • 105.
    Social media Peepeth Distributed Twitter Noadvertising No censorship No ability to change or delete anything Funding cancelled
  • 106.
    Fog Computing SONM p2p-marketplace ofcomputing capacity Machine learning Video rendering Web hosting service Scientific computing and so on Payment in SONM tokens ICO (2017): $42 million (4 days, 8,774 participants)
  • 107.
    Decentralized storage STORJ p2p-marketplace ofdisk space Backups, archives Media content Transfer of large files Logs 19k farmers, 20k API users Payment in STORJ tokens ICO (2017): $30 million (7 days)
  • 108.
  • 109.
    Digital identity uPort Self-sovereign identity(SSID) Claims are stored on the blockchain Recovery in case of key loss Integration with the state ID (Zug) Similar projects: Civic, Self-Key
  • 110.
    Decentralized applications Summary: • 2,000dapps and several millions of smart contracts on Ethereum alone • Most popular dapps are DeFi, collectibles, games and gambling • The total audience of dapps is not very significant yet (~10-50k /day) • Biggest issues poor user experience, poor token economy, poor scalability
  • 111.