pmi - leb chap - cyrpto-currencies presentation

1. What is a crypto-currency

2. Main crypto-currencies

3. Bitcoin and “Alt Coins”

4. Love stories between crypto-currencies and world countries

5. Blockchain : Technology behind the crypto-currencies

6. ICOs

7. The possible future of crypto-currencies

8. Conclusion

AGENDA

SURVEY : WITH OR AGAINST

Crypto-Currencies :

1. A Revolution or a Hoax ?

2. Do you believe in the future of crypto-currencies ?

3. Are you an investor ?

Blockchain :

1. Technology of the future ?

ICO :

1. Successful model for raising funds ?

WHAT THE FAMOUS THINK

WHAT THE FAMOUS THINK

“Cryptocurrencies are used for buying Fentanyl and other drugs so it is a rare technology that has caused deaths in a fairly direct way. I think the speculative wave around ICOs and cryptocurrencies is super risky for those who go long,” “Yes, anonymous cash is used for these kinds of things but you have to be physically present to transfer it which makes things like kidnapping payments more difficult.”

Tesla CEO Elon Musk recently made a statement that his piggy bank has a very modest stock of cryptocurrency – only 0.25 BTC. But asking what can be done with Ethereum.

Messi joins the world of cryptocurrencies

WHAT IS A CRYPTO-CURRENCY

Anti-system, anti-financial institution

currency

Is not issued by a central authority

Has no physical, tangible existence

Its value is not based on any known economic indicator

Is not submitted to any market authority regulation

Purpose : Perform financial transaction outside the existing

financial system Lower cost of transactions

Concern : Transaction security

Trust : Previously was provided by financial institutions Now provided by the users themselves

Designed to be free from government manipulation and control

WHAT IS A CRYPTO-CURRENCY

No CEO

No frontier

Open source

Systematically under attack

No company

Rare – Not rare

Trusted or Untrusted

No brand

Bad publicity

Peer to Peer

No single point of failure

Near anonymity

DEFINITION OF VIRTUAL CURRENCY

In 2014, the European Bank Authority defined virtual currency as :

“A digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically.”

CRYPTO-CURRENCY : ANONYMITY V/S PRIVACY

1. A transaction is “anonymous” if no one knows who you are.

2. A transaction is “private” if what you purchased & for what amount, are unknown

MAIN CRYPTO-CURRENCIES

Crypto-Currency

Symbol Logo Date of Release

Programming Language

Bitcoin BTC XBT, ₿ 2008 C++

Ethereum ETH 2015 C++, Go

Ripple XRP 2013 C++

Litecoin LTC 2011 C++

Monero XMR 2014 C++

Dash NEO 2014 C++

Zcash ZEC 2016 C++

Petro XPD 2018 C++

Namecoin NMC 2011 C++

Swiftcoin STC 2011

Bytecoin BCN 2012

Peercoin PPC 2012 C++

Stellar XLM 2014 C, C++

https://coinmarketcap.com/all/views/all/

CRYPTOCURRENCIES IN FIGURES

Feb. 2017 May 2017 Sept. 2017 Jan. 2018 Nov. 2018

590 796 1,128 1,345 2,018

140B$ 850B$ 185B$

~30 Trillion $NYSE~251B$

CryptomarketCapital Market Value :

# of Cryptos

Capital Market

Mar. 2019

2,111

141B$

May 2019

2,209

251B$

BITCOIN - HISTORY

Sept. 2008 Sept. 2012Oct. 2008 Jan. 2010 May 2010 Feb. 2011

Bitcoin.org domain

Genesis block 50

BTC

Parity with US Dollar

Paper on Bitcoin by

Satoshi Nakamoto

2 pizza bought with 10,000BTC

Bitcoin Foundation

2008 :o Satoshi Nakamoto published the Bitcoin white paper.o Blockchain technology as we know it today gained then significance.

2014 :o Article published in the Newsweek “The Face Behind Bitcoin”.o Claiming that Dorian Nakamoto, a computer engineer, as the inventor of

blockchain technology and bitcoin.o 37 years old Japanese man living in California whose real name is Satoshi

Nakamoto.

BITCOIN : WHO IS BEHIND IT

2013 :o Nick Szabo was Satoshi Nakamoto.o A decentralized currency enthusiast.

YYYY :o Hal Finney was a cryptographic pioneer prior to bitcoin.o Other than Nakamoto, he was the first person to use bitcoin blockchain, make

improvements and file bug reports.o He was Dorian Nakamoto’s neighbor.

2014 :o Craig Steven Wrught, an Australian has claimed to be Nakamoto.o Dsmissed as a hoaxer for not producing sufficient evidence to link him to bitcoin

blockchain.

All those who have been suspected to be Nakamoto have denied it,

2019 :o Craig Steven Wright : filed a copyright registration for the original bitcoin white

paper. 110% rise in 1 hour of the BitcoinSV.o The U.S. Copyright Office does not recognize it.

BITCOIN : WHO IS BEHIND IT

BITCOIN - HISTORY

1. A distributed digital currency

2. White paper released by Satoshi Nakamoto in 2008

3. Transactions started in 2009

4. Limited and finite supply of 21 million Bitcoins

5. What after the 21 million Bitcoins ? The protocol / algorithm may be changed. No more supplies of Bitcoins. That may increase the price. No fear as the last Bitcoin will be mined around year 2140, because

of the constantly reduced block reward. Only the future will tell.

BITCOIN – FINANCIAL INFO

Purchased 1,000 Bitcoins at 10$ each for a total of 10,000$ ?

You would have been a multi-millionaire if you sold them at 19,000$ each.

Info Value

Rate at launch = 0.0000 US$

Highest rate ~19,300US$, end of 2017

Current rate ~8,734US$ - (30 May 2019)

Number of bitcoins already mined 17.731 million

Current market capitalization 154.9 billion US$

Maximum market capitalization reached 321.3 billion US$

Average time between blocks 10 minutes

Bitcoin generated per day ~1,800

BITCOIN – HOW TO GET THEM

3 Ways

Mine them Buy them Hack them

Mining :Powerful computers to solve complex algorithms. Miners get rewarded by a number of Bitcoins. Over time, the reward halves, and then halves again.Very hungry in power consumption.

Buying :Open e-wallet (bitcoin wallet).Use regular money to buy Bitcoin (credit card, bank transfer, debit card,…).Bitcoin balances are kept using public and private “keys”.Public key = IBANPrivate key = ATM PIN.

Hacking:Mt.Gox, 2011, 2,609 BTCMt.Gox, 2014, 750,000BTCBitFloor, 2012, 24,000BTCPoloniex, 2014, 97 BTCBitstamp, 2015, 19,000BTCBitfinex, 2016, 120,000BTCParity Wallet,19.06.2017, 30M$ stolenParity Wallet 19.06.2017, 182M$ frozenDAO, 17.06.2018 50M$

BITCOIN – MINING REWARDS

Year Value

2009 50

2012 25

2016 12.50

2020 – reward drop 6.25

Inside a Chinese Bitcoin Miners

A look Inside America's Largest Bitcoin Mining Operation

BITCOIN – EARLY USERS

Computer Geeks

Anarchists

Criminals

Libertarians

BITCOIN BELONGS TO

How many bitcoins Satoshi Nakamoto own ?

980,000 – 1,000,000 bitcoin

Presumed to be lost forever !!!!!

What could be the impact ? A world leader able to govern ?

Manipulating everything ?Regulating the market ?

BITCOINS LOST

Nearly 4 Million Bitcoins Lost Forever, New Study Says

BITCOIN NODES

BITCOIN FORK HISTORY

BITCOIN V/S BANK

Bitcoin Bank

Loss of Credentials Loss of Money Physical Access to Money

Money Loss Due to Fraud No Legal Redress Regulators Guarantee

Mistakes with Software / Security Breach

No Legal Redress Legal Redress

Miners Decide to Pack-up No TransactionsLegal Obligation for the

Bank to Operate

Legal Enforcement Impossible Possible

Not Eligible for Bank Account Send / Receive Money No Money

International Transfer Very Cheap Expensive

Time to Transfer Money Intl’ Minutes Days

Risk of Converting Currencies High / Moderate Moderate / Low

Trust

Miners Banks

Unregulated Miners Regulated banks

Anybody Could be a Miner

Banks need to be approved

CROSS BORDERS TRANSFERS

Institution Transactions per Second

Bitcoin 3 to 10

Ethereum 20

Paypal 193

VISA 1,667

BITCOIN & THE WORLD

ALT COINS

Crypto-Currency

CurrentRate

Highest Market Cap

Supply Max Supply

Ripple ~0.387$ ~2.5$ 16.3B$ ~42B 100B

Ethereum ~252$ ~1,377$ 26.8B$ 106M

Litecoin ~101$ ~366$ 6.3B$ 61.9M 84M

Crypto-Currency

CurrentRate

Highest Market Cap

Supply Max Supply

Monero ~86.8$ 494$ 1.47B$ 17M

Zcash ~72.85$ 876$ 481M$ 6.60M

Dash ~157$ 1,600 1.38B$ 8.8M 18.9M

ETHEREUM

It is a public blockchain platform.

Perform transactions in currency Ether.

Run smart contracts.

Run general software applications.

Use Solidity as programming language that enables write and run Ethereumapplications.

BITCOIN V/S ETHEREUM

Bitcoin Ethereum

Cryptocurrencies transactions onlyCryptocurrencies transactions and running

code

Slow transactions validation (~10 min.) Fast transactions validation (~14 sec.)

Single price for transactionsDifferent prices for transactions and running

of programs

Bitcoins Ether / creation of new tokens

All coins are minted by miners Crowd funded / coins are minted

BITCOIN V/S MONERO

Bitcoin Monero

Sender ID is public/known Sender ID is private/unknown

Recipient can see how much money the sender has

Recipient cannot know how much money the sender has

You can buy it directly through a credit card or bank account

You can only buy it by converting Bitcoin

Mining

SHA-256 Algorithm Cryptonight Algorithm

Needs special hardware (ASIC) Can happen on user PC

Maximum block size – limit – slows down transactions during peak time.

Adaptive block size limit – changes based on transaction volume. A new block every

2min.

FACEBOOK AND CRYPTOCURRENCIES

Facebook’s cryptocurrency secretive plan : GlobalCoin FB Coin, or Libra

Help Facebook develop an entirely new revenue stream aside from advertising. Zuckerberg met with Central Bank of England Governor, MasterCard, Visa,

Western Union,... As much as $19 billion in additional revenue in its “upside case” for Facebook

by 2020 if its secretive cryptocurrency plans work out. Launched in around 12 countries. Conservatively, an incremental $3 billion in revenue from a successful

cryptocurrency implementation. Developing a cryptocurrency to use for peer-to-peer payments, tied to the value

of traditional currencies and available to use through WhatsApp Stablecoin : would likely be less attractive to and targeted by speculators, such

as hedge funds, because of its fixed price tied to a currency like the U.S. dollar. Facebook will want to be in control to gather data and simplify administration.

CRYPTOCURRENCIES – ALTERNATIVES TO GET THEM

Why not by playing / gambling :

https://www.bustabit.com/play

Every 250 bits = ~1$

CRYPTOCURRENCIES – HOW TO TRADE

Through the sections :

1. Fiat to Crypto Trading.

2. Storing Cryptocurrencies.

3. Crypto to Crypto Trading.

HOW TO TRADE

Fiat to Crypto :1. You have money to invest.2. Chose an exchange :

Make sure that the exchange / trader is available / allowed in Lebanon. Check reputation Check exchange rates Check required documents / safety

3. Create an account.4. Wallet :

You must have one. Cryptocurrencies deposited in & protected by a wallet. It saves your private and public keys which helps you store, send, and

receive cryptocurrencies.5. Private key :

Gives you the right to access and send money. Confidential and private.

6. Public key : The address where everyone will send you money. Public, to be given to others.

HOW TO TRADE

Storing your Crypto :1. Hot storage.2. Cold storage.

Hot storage :1. Like the wallet you carry around in your pocket. 2. It gives you easy access to your cash.3. But, it is pretty vulnerable.

Cold storage :1. Like your savings account. 2. Highly impractical for day-to-day use.3. But, extremely safe.

HOW TO TRADE – CRYPTO TO CRYPTO

1. Open accounts in exchanges that enables crypto-to-crypto trading.

2. Check what cryptocurrencies are accepted, some allow you to buy using Bitcoin only.

3. Preferably better different than the one used to buy crypto from fiat.

4. Like traditional fiat currencies trading, with its charts, indicators,…

POSSIBLE FUTURE OF CRYPTO-CURRENCIES - BITCOIN

Bitcoin 1.0

Bitcoin 2.0

Bitcoin chart :


What to expect ?

By following the pattern : Rise in November 2021 By 1,300% Value ~40k$ Market capitalization : ~800B$. Nothing compared to the dot.com bubble in 2001 of 9.6T$.


Near anonymity : Take it away and no one will want to use it; Keep it and advanced-economy governments will not tolerate it.

Other see it more likely at ~100$.Bitcoin is like lottery tickets that might pay off in future

Many crypto-evangelists insist that bitcoin is “digital gold,” in part because the long-term supply is algorithmically capped at 21 million.

Unlike gold – which has always had other purposes and today is employed widely in new technologies from iPhones to spacecraft – bitcoin has no alternative use. And even if bitcoiners manage to find a way to lower the phenomenal energy cost of verifying transactions, the very nature of decentralised ledger systems makes them vastly less efficient than systems with a trusted central party like a central bank.

Real question : if and when global regulation will stamp out privately constructed systems that are expensive for governments to trace and monitor. In the end, advanced economies will surely coordinate on cryptocurrency regulation, as they have on other measures to prevent money laundering and tax evasion.


What is it waiting for to disappear ?

Bitcoin has died 348 times

Most Recent Death : March 02, 2019

Oldest Death : December 15, 2010

Deaths by Year: 2019 (10) 2018 (93)

2017 (124) 2016 (28) 2015 (39) 2014 (29) 2013 (17) 2012 (1) 2011 (6) 2010 (1)


This 10-years old technology pretends to replace the 4,000 years old fiat currency.

POSSIBLE FUTURE OF CRYPTO-CURRENCIES – COUNTRIES

The Banque du Liban closing in on the launch of its own crypto-currency.

Launch of a new 100% ‘made in Lebanon’ crypto-currency in the near future. The currency will be a “virtual Lebanese pound” destined exclusively for local use. Its goal is to ease payment methods, to implement a technological transformation of financial institutions and to lower the costs borne by consumers.However, many risks have still to be taken into consideration. First off, there are concerns about money laundering and cyber security.

Lebanon was the first country in the Middle East to issue an official warning regarding their trade.

Tunisia has already launched its e-DINAR in 2015, followed by the e-CFA in Senegal at the end of 2016, both based on blockchain technology. Other states are in a trial phase such as Uruguay, Dubai with its emCash, Iran, which is looking to bypass American sanctions, and Singapore. The Swiss company X8 has received a “sharia-compliant” certificate awarded by the Shariyah Review Bureau for its “stablecoin”.

Revolution

CONCLUSION

Hoaxor

Some see them disappear. Some see them replacing national currencies by 2030. Only the future will tell us, most probably they are here to stay. A lot of them will disappear. New ones will be created. They will play a role in the world economy. Interesting to follow them up and understand :

Their evolution Their weaknesses and strengths The regulations.

Be cautious (if you want to invest) : Don’t bet on risky / dark crypto-currencies, even if they have a high ROI. Chose more stable ones with a clear purpose and objective.

Revolution

CONCLUSION

Hoaxor

If you buy / sell crypto-currencies, you will end up :

Real Poor Person

Or

TECHNOLOGY BEHIND : BLOCKCHAIN

1991 :o Idea behind blockchain technology traced back.o Stuart Haber and W. Scott Stornetta described the first work on a

cryptographically secured chain of blocks.

1992 :o They incorporated the capability of collecting several documents into a block.

2008 :o Satoshi Nakamoto published the Bitcoin white paper.o Blockchain technology as we know it today gained then significance.

WHO IS BEHIND IT

WHO USE IT - SECTORS

TECHNOLOGY BEHIND : BLOCKCHAIN

Internet most promising new development

One of the most important

technologies to emerge in recent

years

The applications for blockchain

technology seem endless

It will change our world in the next two decades as

much as the Internet has over the last two ones

It can also solve problems and create new

opportunities in health care, defense, supply chain management,

luxury goods, government, and other

industries

Businesses can use it to streamline operations and

create new opportunities

The technology could give rise to what

Gartner calls “the programmable

economy”, powered by entirely new

business models that eliminate all kinds of

middlemen

Machine networks in which devices engage in economic activity, and “smart assets” in which some form of property such as shares in a company can be traded

according to programmable or artificial intelligence-based rules rather than the control of a centralized entity.

The 1st obvious ones are financial : international payments, remittances,

complex financial products

It will offer trust to financial services.

It will be a business enabler.

WHAT DO THEY SAY ABOUT IT

It is a distributed ledger of all transactions across a peer-to-peer network.

No need for central certifying authority to confirm transactions.

What is it ?

A blockchain is a single version of the truth made possible by an immutable and secure time-stamped ledger, copies of which are held by multiple parties.

It’s a secure, tamper-proof ledger with time-stamped transactions, distributed amongst a number of entities.

The blockchain is intended to provide a tamperproof record of transaction metadata, regardless of transaction type.

Bitcoin uses blockchain technology but it is not blockchain.

WHAT IS BLOCKCHAIN

Cryptography secures the data and new transactions are linked to previous ones, making it near-impossible to change older records without having to change subsequent ones.

And because multiple “nodes” (computers) run the network, one would need to gain control of more than half of them in order to make changes.

Transactions are batched together in a block.

Blocks are chained to preserve the temporal order.

Chaining is secure because each record depends on the previous ones.

How it works ?

WHAT IS BLOCKCHAIN

HOW IT WORKS

Block :

Hash

Data

Hash of Previous Block

HOW IT WORKS

Data Its content depends on the type of the blockchain Example of bitcoin blockchain :

o Fromo Too Amount

Hash : Calculated once the block / data is created It is always unique It is like a fingerprint If the content is changed, the hash is changed. Example : e2c521bc53bb5db4c04aa497dba2ba5d48c8444db3

Hash of previous block : It helps create the chain

HOW IT WORKS

Chain :

Hash : 1Z8F

Previous hash : 0000

Hash : 6BQ1

Previous hash : 1Z8F

Hash : 3H4Q

Previous hash : 6BQ1

1 2 3

Genesis block

HOW IT WORKS

Tampering :

Hash : 1Z8F

Previous hash : 0000

Hash : 6BQ1 H62Y

Previous hash : 1Z8F

Hash : 3H4Q

Previous hash : 6BQ1

1 2 3

Ooopsss

HOW IT WORKS

BLOCKCHAIN : TYPES / COMPARISON

Permissioned / Private Public

Selected partners can submit transaction Anybody can submit a transaction

Selected partners participate in the consensus mechanism

Anybody can become a miner

Identity of participants is known Public addresses

Selected participants can audit the ledger The ledger is public and auditable 24/7

Permissioned / Private Public

Access Permissioned read / write Open read / write

Speed Fast Slow

Security Preapproved participants PoW

Identity Known identities Anonymous

Asset Any asset Native assets

Validation of Transactions Predefined group Anybody miners

The principles of blockchain are important

Have the right team in place – most important factor

Picking the right technology – new & still immature technology : Faces many challenges Lack of qualified & experienced resources

Blockchain projects are complicated Follow best practice Dedicated project manager Agile : the most used methodology

Training : take time to learn and understand the technology & how it can be applied

User experience can be a killer regardless the technology underneath

Legal & compliance issues

LESSONS LEARNED & KEY SUCCESS FACTORS

Blockchain is seen as a threat to cloud computing.

Quantun computing is seen as a threat to blockchain.

Security : Cryptography will play a very important role. Access Identity Transparency & openness Integrity will be safeguarded

Blockchain is being increasingly used, but it not a magic bullet for everything.

It will definitely change economy, business and how things are being done

CONCLUSION

ICO – INITIAL COIN OFFERING

ICO = crypto-equivalent of the IPO (Initial Public Offering). Purpose is to raise capital : digital proprietary tokens are sold. Quantity of cryptocurrency is sold in the form of "tokens"

to speculators or investors, No shares, no diligence, simply sell tokens which provide no ownership

rights or control. White paper with business plan for the company. No need to go to a bank or venture company (VC). Tokens are listed via cryptocurrency exchanges. Short period for getting the funds. It is a source of capital for start-ups.

1st ICO = MasterCoin in 2012 or 2013 (depending on source). Ethereum raised money with a token sale in 2014, raising 3,700 BTC in

its first 12 hours, equal to approximately $2.3 million at the time. Feb. 2018 = Ethereum is the leading blockchain platform for ICOs (80%

marketshare)


Idea

Team

White Paper

Tokens Delivery

Tokens Trading

Deliver Project 78% of ICOs projects fail completely

Phases

Platform – Token & Pricing – Key dates –Partnerships – Technology - …

Regulation


Criticisms :

Funding based only on white paper. Can be used for fraud. Regulators warn against scammers using ICOs’ to execute pump and

dump schemes. Lot of ICOs are scams. Some ICOs launchers went to jail. Some platforms prohibit ICOs advertisements (in China, Japan,

Russia,…). UK FCA has warned that ICOs are risky and speculative with no

protection for investors. Each country has its own regulations for ICOs’ handling.

pmi - leb chap - cyrpto-currencies presentation

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