Blockchain quiz 2

Social benefits and incentive program Distribution

Blockchain can simplify eligibility and grant process. With a blockchain system, data can be fed into a ledger that the government runs and there would be no delay, which can determine if your eligible for government programs (Medicare, Medicaid, Foodstamps, etc.)

Blockchain in the supply chain

Blockchain can: Traceability- (problem) capability to monitor events and metadata associated with a product (blockchain) can provide a full audit trail of data for a product Compliance- standards to provide evidence that regulatory conditions are met (blockchain) immutability- transactions are recorded and unchangeable providing data integrity. Flexibility- adapting rapidly without increasing operation cost ( blockchain) smart contracts continuous real-time tracking of data

Use case: Digital identity

Could replace a physical ID and health records. (not that important) proof of ID can be linked to -home health family, social leisure, professional, financial, travel, legal

EOS

Created by Block.one and competes with Ethereum, a smart contract platform and a decentralized operating system.

Quorum

J.P Morgan developed quorum, a permissioned blockchain platform based off of Ethereum.

Litecoin

"Bitcoin is gold and Lite coin is silver" Gold is too valuable for everyday transactions so we can use silver. Much like bitcoin except they have achieved faster transactions. and instead of using SHA-256, they use scrypt which is another hash function.

Challenges to Blockchain

1) Startups sometimes focus to much on the technical side and not enough about how to get people involved (ex: Namecoin) 2) Speed and performance- the distributed database is inherently slower than a centralized one, 3) Standards and complexity of operations- There are many special-purpose permissioned blockchains to be created for a wide variety of applications. There is no standardization in blockchains, so one can not operate with another. 4) Regulatory Uncertainty- we don't know how each industry or government will regulate it. 5) Still needs a "killer \" applications that are impactful- bitcoin and ethereum are the most successful but have scalability issues 6) The limits of open governance - open and decentralized governance does not automatically lead to fair and equitable decisions 7) Decentralized market structure is untested- we don't know how it will affect current markets ( banks, government, taxes) 8) Risk of Recentralization- pre-mining of tokens, Governance control can still be concentrated in a few players

Polkadot

A blockchain that connects blockchains which always blockchain to share data with each other and could solve the standard issue by incorporating the blockchains together.

Hybrid/consortium blockchain

A mix between a public and private blockchains. Consortiums can enforce a industry standard. Ex: Ethereum enterprise alliance uses a hybrid blockchain that multiple notable companies have joined that all follow the same type of blockchain

XRED ( not that important)

A real-estate development project aims to develop a technological and organizational model( kind of like a real estate fund)

BetBox

AI- Driven Hedge Fund. Turned sport betting to a alternative investing class.

DeFi ( decentralized Financing )

Any decentralized financing ( lending, security tokens, derivatives, exchanges, payment.) Challenges existing financial order and have been growing since 2020

Central Banks and Digital Currency. (CBDC)

Benefits Reduce costs in issuing and managing cash. The unbanked can bank with their phone. Fast payment and settlement around the clock Reductions in the cost of settlements and collateral requirements. Better monitoring of illegal activities Costs Retail Deposits may switch from banks to central banks Possible bank runs China is testing digital currencies which have pushed other major countries to study digital currencies

Blockchain platforms.

Blockchain platforms typically allows smart contracts, example- issuance of other currencies of tokens. and build Dapps( decentralized apps) such as crowd-funding, games, etc.

benefits of blockchain in - lodging

Booking - id is authenticated, secured and stored ( they are who they say they are) which increases trust in the booking process. Payments can be automated- payment credentials would be secure on the blockchain. funds would be released via smart contract terms Reviews about the customer's experience are permanent and cannot be altered or deleted

Stable coins

Coin values pegged to a fiat currency( usually U.S Dollar) or physical commodities/goods Ex: Tether, USDC, Libra, JPM Coin

Challenges to Blockchain( what could go wrong)

Commercial conflicts- you must have consensus of other companies adopting blockchain, but because companies are competing with each other, it may be hard to get everyone on board. Privacy- anyone on the blockchain can access the blockchain. If you have a bad reputation recorded on the blockchain then it is immutable and your reputation is permanently damaged.

How to deal with challenges of blockchain

Consider the business problems before the technical problems ( its a business and you have to make money, and has to be adopted or you will fail.) EX;Namecoin Focus on talent building Continue to innovate Collaborate with the best partners( EX: Microsoft and IBM, Microsoft had a contract with IBM that let them put Microsoft on all IBM computers) Play hard to stay ahead of competitors secure smart capital develop strong communities.

currencies with more anonymity ( bitcoin still has the addresses of the sender and receiver (suedo names)

Dash(digital cash)- they use two-tier networks of miners. regular miners and master nodes(when you hold a certain amount of dash you can be a master node.) private send- mixing coin addresses so that transactions are untraceable. only available for fixed denominations Instant send- Inputs are locked and verified by master nodes almost instantly Monero- Can be completely untraceable. they can hide the sender and receiver address. Zcash-aimed at approving the anonymity for bitcoin users. the blockchain is public but there is a privacy feature to conceal sender, recipient and amount being transferred.

R3

Develop a blockchain platform for financial services. R3 also developed Corda which is a open source distributed ledger platform which is available on AWS. JP and Goldman Sachs have left the group.

Milkcoin

First biggest agricultural ICO.

Is the ICO a security?

Howey test ( has to meet all 4 requirements ) 1) It is an investment of money 2) there an expectation of profits from the investment 3) the investment of money is in a common enterprise 4) Profit from the efforts of a promoter or third party SEC determined DAO was a security

ICO Rounds

ICO financing has multiple stages like an investor and VC rounds.

Initial Coin Offering

ICO is a means of crowdfunding for startup companies. A percentage of the newly issued cryptocurrency or token is sold to investors typically in exchange for cryptocurrencies such as bitcoin and Ethereum (first ICO) Utility tokens- gives investors access to features of a particular project starting at a later date. Security tokens- rights of ownership or royalties to a project. ( document with SEC)

ICO Platform

Most issued on Ethereum because ethereum has the highest liquidity and transaction volume

Proof of Stake

Nothing-at-stake problem. a node can try to endorse multiple blockchain histories and thus help to double-spend. two chains can allow for double-spending. The solution- you will be punished by losing your stake for validating fraudulent transactions.

Omisego (not that important )

Public blockchain based on Etheruem. Allows crypto-fiat currencies and other forms of payment like ripples protocol. venture-backed payments company based in Thailand. "unbank the banked" by providing financial services to everyone

Challenges of ICO

Regulations of the SEC, and consumers are aware of its long history of ICO scams which has eroded confidence.

delegated proof of stake

Similar to proof of stake, but involves voting in validators.

Use cases: Consumers Use cases: Supply chain Use cases: Payment

Smart loyalty program, targeted recall( when a company has to recall a product it is difficult to track) connected devices, recalling a product, locate stolen products, consumer participation, sharing economy. Connected supply chain, authenticicty and provernanace(data integrity), Delivery(tracebility) , Know your customer, connected store, fraudulent transactiosn Consumer payments, B@B Pyaments, Digital advertising, conusmer protection

Ripple

The Ripple transactions ( RTXP). free global transactions and It supports exchanges among fiat currencies, cryptocurrency, or any other units of value. Ripple network uses a list of validated nodes for verifying transactions, ( permissioned blockchain) making it very fast (no mining) The native currency for ripple is XRP. not necessary for the transactions in the protocol except for transaction fees, and it is much cheaper than swift. Decentralized( but not fully) -25 validators globally

BAT

The fastest ICO

DAO

The most "tragic" ICO ( a bug allowed a hacker to steal 60million dollars) Decentralized venture fund. An was delisted from the trade exchange after being labeled as a security and not a ICO.

Trust and intermediation

Traditional intermediation is done through banks, Govt's, and big tech companies, but this trust comes with a cost of charge fees(implicit and explicit), monetize on information, and exclusion of a population(those who don't have access to banking services). a blockchain network can be the new middle man, not the bank. this will help drive cost savings by eliminating labor-intensive processes and eliminating duplicate effort.

Ethereum platform

Vitalik Buterin believes bitcoin is to restrictive. DAO attack- a hacker stole 60 million using a loop hole in the codes which led to a hard fork in the blockchain. Ethereum and Ethereum classic

Use case: Registration of land

Worldwide "dead capital" when ppl don't have legal titles to their assets you can lose your assets. If the title was on a public blockchain then the Govt and everyone else could see it. The data transaction is immutable.

IOTA

attended to be the cryptocurrency for the internet of things. facilitate information among machines ( micropayments) It uses tangle, based on DAG- directed acyclic graph.( not traditional blockchain) May not be secure, relying on millions of machines to verify.

current top ranked crypto currencies (start of next lecture)

bitcoin, Ethereum, Tether, XRP, bitcoin cash

BBOD

blockchain board of derivatives. Used solely to pay for the platform's trade execution fees.

blockchain potential

blockchain has the power not only to streamline existing markets but also to redistribute markets and create new ones.

Namecoin

decentralized IP address registration. Introduced, .bit,a new decentralized domain ending. Requires special software. only 5k people have the software

Blockchain Trilemma

it is difficult to have, decentralization, scalability, and security. -Bitcoin achieves decentralization and security, but not scalability- only processes a few transactions/second. Proof of work- mining is slow solutions- Proof of stake can eliminate waste and help scalability -Sharding (parallel processing)- one group will do one group of transactions and another will do another group of transactions. -Two-layer solutions ( off-chain solutions) Lighting Network ( for bitcoin), Raiden, Plasma ( for Ethereum)

Hyperledger

open source collaborative effort created to advance cross-industry blockchain technologies hosted by Linux. there are multiple product including Hyperledger fabric- IBM Hyperledger sawtooth- intel Hyperledger quilt - interlederger protocol

who will be disrupted?

overall blockchains effects are more about streamlining than disruption.

Challenges to adopting blockchain

privacy concerns- the perception of loss of consumer privacy. being, IDs, payment information, reputation, past transactions, and reviews. A strong level of underlying security with blockchain-based solutions will mitigate these objections over time.

zero knowledge proof

proves your knowledge of a fact to a third party without revealing the fact itself. ( showing you no something without sharing the information directly)

Rega

risk-sharing is a crowdsurance platform that will allow people cover and manage the variety of risks without excessive and inefficient chain intermediaries.

benefits of blockchain in- capital markets

the U.S cash equities market trade uses multiple intermediaries ( stock exchanges, brokers/dealers, custody banks, deposit trust company) the current post-trade settlement system is: requires manual affirmation, takes 2-3 days, and ties up capital and liquidity. blockchain could eliminate trade errors( current 10% of all trades have errors) BackOffice labor can be streamlined which reduces labor cost shortening settlement times estimated saving is 2billion dollars in the U.S

Bitcoin

the first cryptocurrency, most largely adopted -issues: scale( only 7 transactions per second ) one solution would be to increase the size of the blocks- and that is when bitcoin cash was created. or to create a second layer ( lighting network) -high transaction cost( but there dropping) -with more innovation and more cryptocurrencies being added, will bitcoin stay on top?

Public Key Infrastructure (PKI)

the system for issuing pairs of public and private keys and corresponding digital signature ( this was done before bitcoin .)

challenges of adopting blockchain

universal adoption- competitors have to collaborate to achieve a network effect standardization- there needs be a standarized form

challenges of adopting blockchain

universal adoption- competitors have to collaborate with each other to achieve a network effect. Standardization- there needs to be a standard legal and regulatory approval- example is blockchain ownership recognized in courts challenges of technical transition

Uniswap

zone of the biggest decentralized exchanges.