Bitcoin How are bitcoins sent ? • Because bitcoins don’t exist as such, bitcoin wallets don’t store bitcoins but store the keys that let you transfer or ‘spend’ them. • Copying a wallet doesn’t double the number of bitcoins you own, you simply have a copy of the same keys. If someone manages to copy and read your wallet, they can empty • the accounts, just as two people with duplicate keys to a bank’s safe deposit locker can race to unlock the locker, but the contents of the locker do not double.
Bitcoin What happens when you make a bitcoin payment ? • A payment is an instruction to unlink some bitcoins from an address you control, and move them to the control of another address (your recipient). • Your payment instruction includes everything you’d expect, including: which bitcoins you’re sending which address you’re sending them from which address you’re sending them to Digital cryptographic signatures. The instruction is then digitally • signed with the private key of the address which currently holds the bitcoins. This digital signing demonstrates that you are owner of the address in question (because only you know the private key). Payment instructions are sent from the wallet software to any of the • computers on the network (called “nodes” or “payment validators”)
Bitcoin Validators • When the first computer receives the instruction, it checks some technical details, and some business logic details (eg, does my payment attempt to create bitcoins out of nothing? Have the coins being sent already been sent elsewhere? etc). If these tests pass, then the computer relays it to others on the • network, who each run the same validation tests. On this network, computers can’t trust each other so they have to run • the same tests. Eventually all computers on the network know about this payment, and it appears on screens everywhere in the world as an “unconfirmed transaction”. It is unconfirmed because although the payment has been verified • and passed around, it isn’t entered into the ledger yet.
Bitcoin How do transactions get entered into everyone’s blockchains ? • Specialised nodes (computers who form part of the network) work to add these transactions, in blocks, to the blockchain. This is known as “mining” bitcoin. • Whoever guesses the right number first wins the right to add a new block of transactions to everyone’s blockchains, and does this by publishing this to the other computers on the network. Each computer performs a quick validation of the block, and they • agree that the block and transactions conform to the rules, then they add the block to their own blockchain. Why does the miner do this? Because as part of the block, they get • to award themselves with some amount of new bitcoins.
Bitcoin How do transactions get entered into everyone’s blockchains ? • Bitcoin’s protocol and code ensures that it takes around 10 minutes for the network as a whole to guess correctly. This is the speed that transactions take to be confirmed onto the blockchain. • Slow for security. By making it slow (10 minutes is slow compared to how fast it could be down if the guessing game was removed), and by making it computationally and therefore financially expensive to participate in this process, it also makes it financially expensive for miscreants to buy enough processing power to write their own abnormal blocks of transactions into the blockchain. • Even if miscreants were to do this, all the other computers would need to agree with all of the transactions, so they still cannot insert transactions that break the business logic rules, eg conjuring bitcoins out of thin air.
Bitcoin In bitcoin, participants are the distributed validators of the • transactions and creators of blocks. If enough of them decide to play by different rules, then the others will need to follow suit. The validators have “voting power” proportional to how much • computation power they have. • Anyone can be validator, and get more votes, if they are prepared to pay for computing power, the costs of which are hardware, electricity, and support. So instead of one single authority who can change the rules, the rules • can only be changed by consensus of those validators. The validation logic (what does a valid transaction look like?) is baked into the code which is run by the validators.
Bitcoin Changing the rules • The rules can be changed, as long as you achieve majority consensus (another myth is that the limit of 21 million bitcoins cannot be changed. • It can be changed, in one line of code, assuming you can get the majority of network participants to agree to run it). Getting the miners to agree to run code is the real challenge, as they • have invested huge amounts of capital and will not readily agree to change anything which may harm their mining rewards – “The turkeys won’t vote for Christmas” .
Bitcoin Bitcoin price evolution 2010-2017
BLOCKCHAIN Technology and Logics
Blockchain technology & logics What is blockchain ? • Blockchain is a peer-to-peer public ledger maintained by a distributed network of computers that requires no central authority or third party intermediaries. • It consists of three key components: a transaction, a transaction record and a system that verifies and stores the transaction. • The blocks are generated through open-source software and record the information about when and in what sequence the transaction took place. • This “block” chronologically stores information of all the transactions that have taken place in the chain, thus the name blockchain. • In other words, blockchain is a database of immutable time-stamped information of every transaction that is replicated on servers across the globe. • This technology is the foundation of bitcoin, a crypto currency.
Blockchain technology and logics How blockchain works 1. Distributed Database Each party on a blockchain has access to the entire database and its complete history. No single party controls the data or the information. Every party can verify the records of its transaction partners directly, without an intermediary. 2. Peer-to-Peer Transmission Communication occurs directly between peers instead of through a central node. Each node stores and forwards information to all other nodes. 3. Transparency with Pseudonymity Every transaction and its associated value are visible to anyone with access to the system. Each node, or user, on a blockchain has a unique 30-plus-character alphanumeric address that identifies it. Users can choose to remain anonymous or provide proof of their identity to others. Transactions occur between blockchain addresses.
Blockchain concepts How blockchain works 4. Irreversibility of Records Once a transaction is entered in the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”). Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network. 5. Computational Logic The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. So users can set up algorithms and rules that automatically trigger transactions between nodes.
Blockchain technology and logics What elements are common to all blockchains ?
Blockchain technology and logics
Blockchain concepts
Blockchain technology and logics
Blockchain technology and logics
Blockchain technology and logics Blockchains are persistant: Once added into the database (the blockchain) a record cannot be modified and it is very difficult to falsify entries. When an entry in the database (the blockchain) needs to be updated, a new record must be appended to the existing information. Blockchains are auditable: Finally, each of records can be viewed by any member of the public, allowing for any person to individually verify the authenticity of each transaction recorded for any single entry in the database (the blockchain).
Blockchain technology and logics Consensus • A distributed database cannot be hacked, manipulated, or otherwise disrupted the way a database build on one single operator can be • A traditional centralized database requires a user-controlled access system. That is to say, it requires a system directly operated by known and trustworthy individuals (whether that is a known person, organization, computer, or any other familiar operating unit) • A blockchain, on the other hand, is operated by unknown and untrusted parties (that is to say, you cannot know if it is an individual person, and organization, a computer operating automatically, or whatever else — let alone know them well enough to trust their decisions and actions implicitly).
Blockchain technology and logics Consensus • Consequently, lack of trust is inherent in the blockchain system (particpants don’t need to trust each other) • Because any entity, individual, or party can submit information to the blockchain (that is to say, try to add information to the database), it is necessary for the distributed operators of the blockchain to evaluate and agree on all addenda before they are permanently incorporated into the blockchain (the database). • Because we cannot be sure of the author’s trustworthiness, it is vital that all new information must be reviewed and confirmed before being accepted. • That’s why consensus mechanism have to be built into the code
Blockchain technology and logics Consensus There are four main methods of finding consensus in a blockchain (and all distributed • systems, for that matter): the practical byzantine fault tolerance algorithm (PBFT), • the proof-of-work algorithm(PoW) , • • the proof-of-stake algorithm (PoS), and the delegated proof-of-stake algorithm (DPoS). •
Blockchain technology and logics Private vs. public vs. consortium blockchains There is a big difference in what technologies you need, depending on whether you allow anyone to write to your blockchain, or only allow it to known, vetted participants. Bitcoin allows anyone to write to its ledger.
Blockchain technology and logics Public blockchains Ledgers can be ‘public’ in two senses: • Anyone, without permission granted by another authority, can write data • Anyone, without permission granted by another authority, can read data • • Usually, when people talk about public blockchains, they mean anyone-can-write. Because bitcoin is designed as a ‘anyone-can-write’ blockchain, where participants • aren’t vetted and can add to the ledger without needing approval, it needs ways of arbitrating discrepancies (there is no ‘boss’ to decide), and defence mechanisms against attacks (anyone can misbehave with relative impunity, if there is a financial incentive to do so). These create cost and complexity to running this blockchain.
Blockchain technology and logics Public blockchains Ledgers can be ‘public’ in two senses: • Anyone, without permission granted by another authority, can write data • Anyone, without permission granted by another authority, can read data • • Usually, when people talk about public blockchains, they mean anyone-can-write. Because bitcoin is designed as a ‘anyone-can-write’ blockchain, where participants • aren’t vetted and can add to the ledger without needing approval, it needs ways of arbitrating discrepancies (there is no ‘boss’ to decide), and defence mechanisms against attacks (anyone can misbehave with relative impunity, if there is a financial incentive to do so). These create cost and complexity to running this blockchain.
Blockchain technology and logics Public blockchains Anyone in the world can download the data and read the data. • • Anyone can participate in the consensus process to write the data or block into the public Blockchain. There are numerous public blockchains. Bitcoin which is a peer to peer currency • exchange was the first public Blockchain followed by Ethereum which allows anyone to build smart contracts and decentralized apps on it. • Some other examples are Dash and Lisk.Some people think that since public blockchain is open source, it is not secured. On the contrary, it is highly secured using cryptography and consensus protocol. Examples – Bitcoin, Ethereum, Dash, Lisk, Factom and Blockstream •
Blockchain technology and logics Private blockchains Conversely, a ‘private’ blockchain network is where the participants are known and • trusted: for example, an industry group, or a group of companies owned by an umbrella company. Many of the mechanisms aren’t needed – or rather they are replaced with legal • contracts – “You’ll behave because you’ve signed this piece of paper.” This changes the technical decisions as to which bricks are used to build the solution. •
Blockchain technology and logics Private blockchains In Private Blockchain, all permissions are kept centralized to an organization. • Companies who wanted to create own currencies started using this type of • Blockchain. One major criticism of Private Blockchain is that since it is not decentralized, • it’s just a distributed database. There are some points in favor of this approach. One it allows some • organizations who have compliance and privacy requirements to implement Blockchain. Second, it adds the values like cryptographic auditing and known identities to the internal processes. But with private Blockchain, the central idea and beauty of decentralization • and open protocols gets lost. • Examples – Multichain, Blockstack
Blockchain technology and logics Consortium blockchains Consortium Blockchain as the name suggests is controlled by a • consortium of members. It has pre-defined set of nodes, the users with access to write the • data or block. For example in the case of Trade Finance use case, the consortium • may be participating banks, importer, exporter, ports of sending and receiving countries, custom officials etc. Some of these participants will have write access and some or all will have read access. It is not fully decentralized as public blockchain. • Examples – Ripple and R3 •
Blockchain technology and logics
Blockchain technology and logics Blocks Blocks in a chain = pages in a book • For analogy, a book is a chain of pages. • Each page in a book contains: the text: for example the story information about itself: • at the top of the page there is usually the title of the book and sometimes the chapter number or title; at the bottom is usually the page number which tells you where you are in the book. This ‘data about data’ is called meta-data. •
Blockchain technology and logics Blocks Similarly in a blockchain block, each block has: • the contents of the block, for example in bitcoin is it the bitcoin transactions, and • the miner incentive reward (currently 25 BTC) • a ‘header’ which contains the data about the block. In bitcoin, the header includes some technical information about the block, a • reference to the previous block, and a fingerprint (hash) of the data contained in this block, among other things. This hash is important for ordering.
Blockchain technology and logics Smart contracts In the context of blockchains and cryptocurrencies, smart contracts are: pre-written logic (computer code), • stored and replicated on a distributed storage platform (eg a blockchain), • executed/run by a network of computers (usually the same ones running • the blockchain), and can result in ledger updates (cryptocurrency payments, etc). • In other words, they are little programs that execute “if this happens then do that”, run and verified by many computers to ensure trustworthiness. If blockchains give us distributed trustworthy storage , then smart contracts give us distributed trustworthy calculations .
Blockchain technology and logics Smart contracts So, smart contracts are contracts on the blockchain that can be programmed to self-execute in various ways.
Blockchain technology and logics Smart contracts A smart contract is some code which automates the “if this happens then • do that” part of traditional contracts. Computer code behaves in expected ways and doesn’t have the linguistic • nuances of human languages. Code is better, as there are less potential points of contention. • • The code is replicated on many computers: distributed/decentralised on a blockchain (more on that later) and run by those computers, who come to an agreement on the results of the code execution.
Blockchain technology and logics Smart contracts Control In a correctly set-up blockchain ecosystem, there should be no single source of control. The distributed layout with consensus mechanisms mean that multiple parties are constantly checking and re-checking and updates to the ledgers, and anything that doesn’t conform to pre-agreed rules is rejected by other participants. Code With smart contracts running on a blockchain, the logic is run in parallel on all the participating computers, and the results are compared by all participants. Participants only change their own version of the ledger if they agree the results. No one can cheat a blockchain, in theory.
Blockchain technology and logics Smart contracts Transparency For all participants in a blockchain ecosystem to run the same code, each verifying the other, the logic of the smart contract must be visible to all. This means anyone can look into a smart contract, and if you like the logic, you can use it. If you don’t, you don’t. There will be smart contracts for general usage, and also very specific smart contracts. The transparency is both a pro and a con. It’s useful to all stakeholders of the contract to agree on what happens; on the other hand it’s not just the stakeholders that can see what happens – it’s everyone on the network. Privacy in blockchains is a contentious issue. There are solutions to the privacy-vs-validation tension being discussed, some using zero-knowledge proofs
Blockchain technology and logics Smart contracts Flexibility & automation A so-called “Turing complete” smart contract can do anything that a normal computer can do, though the blockchain version will run much more slowly and be more expensive to run than on a regular computer (depending on the set-up of the blockchain), because ultimately you need to pay for all computers on the network to run the code in parallel.
Blockchain technology and logics Smart contracts In traditional contracts, a mismatch or “break” can occur, where parties • don’t agree on the outcome of the trade, due to a number of things: A mutual misunderstanding of the initial trade terms • Confusion due to multiple copies of the original trade terms (usually • there is back-and-forth on the wording of the documents, with in- house lawyers on both sides trying to protect their interests) Or a disagreement with what actually happened in the external • dependencies With a smart contract, there is only one set of trade terms, written in • computer code, which is much less fluffy than legalese, and agreed upon up-front. The external dependencies (price of oil, share price of Apple, etc) can be fed in via a mutually agreed feed. The contract will live on a blockchain, and run when an event happens or when the bet expires.
Blockchain technology and logics Smart contracts Autonomy – You’re the one making the agreement; there’s no need to rely on a broker, lawyer or other intermediaries to confirm. Incidentally, this also knocks out the danger of manipulation by a third party, since execution is managed automatically by the network, rather than by one or more, possibly biased, individuals who may err. Trust – Your documents are encrypted on a shared ledger. There’s no way that someone can say they lost it. Backup – Imagine if your bank lost your savings account. On the blockchain, each and every one of your friends has your back. Your documents are duplicated many times over. Safety – Cryptography, the encryption of websites, keeps your documents safe. There is no hacking. In fact, it would take an abnormally smart hacker to crack the code and infiltrate. Speed – You’d ordinarily have to spend chunks of time and paperwork to manually process documents. Smart contracts use software code to automate tasks, thereby shaving hours off a range of business processes. Savings – Smart contracts save you money since they knock out the presence of an intermediary. You would, for instance, have to pay a notary to witness your transaction.
Blockchain technology and logics Smart contracts examples • Let’s say you bet your friend that it will rain tomorrow. You can write a rule that says that this money goes to whoever correctly predicts tomorrow’s weather. The next day, that money can check an online weather service and automatically send itself to the correct person’s account.” • Individuals might have an opportunity to program their ethics and values directly into autonomous savings accounts. One might design an account that automatically donates to relief efforts in the case of any or certain natural disasters, thereby removing the need (or even the option) of a case-by-case donation decision. • The same concept might work for aspects of public budgeting. Imagine that a portion of FEMA’s funds were programmed to check a Hurricane’s status, and in the case of a Category 5 storm that makes landfall—it could allocate money to the correct local offices.
Blockchain technology and logics Etherum Ethereum is a platform for creation of decentralized applications running • on blockchain, through the use of smart contracts. Since its launch on June 30, 2015, it has been steadily gaining popularity. • Starting from late January 2016, it has experienced a surge. • In March 2016, within less than a year of its existence, that growth culminated in Ethereum achieving a record-breaking market capitalization of over $1B. Since then, the passions have subsided and Ethereum has declined a bit. • However, the coin is now second only to Bitcoin on the cryptocurrency market capitalization list.
Blockchain technology and logics Etherum The problem: So far, the developers tried to produce new apps based on the blockchain • in two distinct ways, both of which have been ultimately ineffective. The first option was to build an app on top of Bitcoin. However, Bitcoin’s script is not • Turing complete, i.e. it cannot solve the problems that are easily solvable by some known programming languages, such as C++, for example. That is associated with technical complications and requires a developer to introduce • all kinds of “crutches” to make it work. Other option was to develop, launch and promote you own alternative blockchain, thus • depriving yourself of the opportunity to use the immense power of the whole Bitcoin’s network. Instead, you will have to run your own blockchain, which is associated with high costs, • that can not be justified for every app.
Blockchain technology and logics Etherum The solution: Ethereum has solved this discrepancy for the first time ever, by integrating a proper, all- • purpose programming language with its own blockchain. With it, anybody can think of any possible application, easily code it and offer the ETH network to execute • it. Quite simply put, Ethereum is a worldwide distributed decentralized computer with a theoretically • unlimited power. • A developer codes a solution and deploys it in the network. Then the network executes it by itself, verifies the outputs by itself and distributes value between the participants by itself. • The applications run in an absolutely transparent manner, without any input from central authorities, achieved with the help of smart contracts. The cherry on the cake is that the network’s power is only limited by the number and power of the • computers, which are connected to it, i.e. it isn’t: keep in mind, that there are no barriers to entry.
Blockchain concepts
Blockchain technology and logics The Hyperledger Project Hyperledger is an open source • collaborative effort created to advance cross-industry blockchain technologies. It is a global collaboration, hosted by The Linux Foundation, including leaders in finance, banking, Internet of Things, supply chains, manufacturing, and Technology. Hyperledger does not • support Bitcoin or any other cryptocurrency. But the platform is thrilled by blockchain technology.
Blockchain technology and logics The Hyperledger Project
Blockchain technology and logics Distributed Ledger Technologies Blockchain is a distributed ledger technology (DLT) • But other form of DLTs are emerging which are not blockchains • All blockchains are DLTs, but not all DLTs are blockchains • What makes blockchains so intriguing is how they are so much more than just a simple data structure. It is • possible to use a blockchain to determine rules for a transaction or even to create a smart contract. Moreover, a blockchain is a sequence of blocks, but distributed ledgers do not require such a chain. • • Furthermore, distributed ledgers do not require proof of work and offer – theoretically – better scaling options.
The potential for fundamental disruptive changes caused by BLOCKCHAIN
Blockchain’s disruptive forces Evolution of blockchain Blockchain has the potential to become the standard layer for transactions on the • Internet • It is to transactions what TCP/IP was to the Internet. The development and maintenance of blockchain is open, distributed, and shared—just like TCP/IP’s Email was the killer app in the early Internet, bitcoin is the killer app in blockchain • There are still may competing technologies in the blockchain arena, like in th early • Internet It is possible that one blockchain technology will survive and be embedded in the • Internet infrastructure • Like email, it’s likely that some form of Bitcoin will persist. But the blockchain will also support a variety of other applications, including smart contracts, asset registries, and many new types of transactions that will go beyond financial and legal uses.
Blockchain’s disruptive forces Evolution of blockchain Bitcoin was first created as a response to the 2008 financial crisis. • We might best understand Bitcoin as a microcosm of how a new, decentralized, • and automated financial system could work. It offers a compelling vision of a possible future because the code describes both • a regulatory and an economic system Transactions must satisfy certain rules before they can be accepted into the • Bitcoin blockchain. Instead of writing rules and appointing a regulator to monitor for breaches, which is how the current financial system works, Bitcoin’s code sets the rules and the network checks for compliance . Even Bitcoin’s “monetary policy” is written into its code: New money is issued • every 10 minutes, and the supply is limited so there will only ever be 21 million Bitcoins, a hard money rule similar to the gold standard (i.e., a system in which the money supply is fixed to a commodity and not determined by government).
Blockchain’s disruptive forces Evolution of blockchain The existing financial system is very complex at the moment, and that complexity • creates risk. A new decentralized financial system made possible with cryptocurrencies could be much simpler by removing layers of intermediation Cryptocurrencies could open up the financial system to people who are currently • excluded, lower barriers to entry, and enable greater competition Regulators could remake the financial system by rethinking the best way to • achieve policy goals, without diluting standards But the technology is still in its infancy and there are many problems that have • yet to be solved, but which will be the case
Blockchain’s disruptive forces Evolution of blockchain Contracts, transactions, and the records of them are among the defining • structures in our economic, legal, and political systems These critical tools and the bureaucracies formed to manage them have not kept • up with the economy’s digital transformation Blockchain promises to solve this problem • Intermediaries like lawyers, brokers, and bankers might no longer be necessary. • Individuals, organizations, machines, and algorithms would freely transact and • interact with one another with little friction. But experience studying technological innovation tells us that if there’s to be a • blockchain revolution, many barriers—technological, governance, organizational, and even societal—will have to fall.
Blockchain’s disruptive forces Evolution of blockchain Intermediaries like lawyers, brokers, and bankers might no longer be necessary. • Individuals, organizations, machines, and algorithms would freely transact and interact with one another with little friction But True blockchain-led transformation of business and government, we believe, • is still many years away And Blockchain is a foundational technology: It has the potential to create new • foundations for our economic and social systems The process of adoption will be gradual and steady, not sudden, as waves of • technological and institutional change gain momentum Ultimately, it took more than 30 years for TCP/IP to move through all the • phases—single use, localized use, substitution, and transformation—and reshape the economy
Blockchain’s disruptive forces Evolution of blockchain “Smart contracts” may be the most transformative blockchain application at the • moment If contracts are automated, then what will happen to traditional firm structures, • processes, and intermediaries like lawyers and accountants? And what about managers? Their roles would all radically change. Consider how law firms will have to change to make smart contracts viable. • They’ll need to develop new expertise in software and blockchain programming. Companies are already using blockchain to track items through complex supply • chains, for instance. This is happening in the diamond industry, where gems are being traced from mines to consumers Financial services companies, for example, are finding that the private blockchain • networks they’ve set up with a limited number of trusted counterparties can significantly reduce transaction costs.
Blockchain’s disruptive forces Evolution of blockchain Blockchain could handle large-scale public identity systems for such functions as • passport control, and algorithm-driven decision making in the prevention of money laundering and in complex financial transactions that involve many parties. So blockchain can be considered as the second generation of the Internet. It will • change every institution, in some ways more so than the first generation did.
Blockchain’s disruptive forces Decentralized autonomous organizations (DAO) You can have a company that would be a bunch of smart contracts and • autonomous agents on a blockchain. And that this company would have no people—it wouldn’t need a CEO or management or people. Bob Dylan, “There’s somethin’ goin’ on here, and you don’t know what it is.” This • is deep, deep changes to the architecture of the corporation.
Blockchain’s disruptive forces DAOs: Companies of the future: No CEO, no boss, managed by blockchain • A DAO is a combination of computer code, a blockchain, smart contracts, and people The founders of a DAO set up the basic governance rules of how it will work • (embedded in the code) The DAO has stakeholders who own tokens that represent a share in the performance • of the DAO. Essentially, what those stakeholders want is an increase in the value of their tokens as reflected by increased demand. Instead of a board of directors or senior executives, the token holders (aka • shareholders) of a DAO have the right to vote “yes” or “no” on any and every proposal facing the organization. In a DAO, instead of being hired as an employee, you are awarded a contribution • contract on a project basis (after you submitted a proposal) After discussion among the community members, the proposal is voted upon and, • when passed, work can commence.
Blockchain’s disruptive forces DAOs: Companies of the future: No CEO, no boss, managed by blockchain If you miss your deadlines or treat people rudely, the DAO token holders who • voted on your contract simply withdraw their votes. At a certain point, your contract falls below a threshold and your kicked off the • DAO The incentive for everyone who contributes to a DAO is • Get your stuff done • Get it done with high quality • • Treat people with respect Because the DAO is organized around smart contracts and value and not people • and roles, the flexibility and agility to innovate is greatly increased. Businesses often talk about innovation and “looking to the edges for insight.” In a • hierarchical organization, that’s really tough to do. Ideas from the “edges” are tough to find, tough to manage, and tough to execute. In a flat organization, the community can rally and “fund” the best ideas from anywhere.
Blockchain’s disruptive forces DAOs: Companies of the future: No CEO, no boss, managed by blockchain In a DAO world, you don’t have a boss. But what’s better is that underperformers • and those who are a drag on the organization are removed much more quickly and efficiently. What the DAO offers is the potential not just for better output but for a better • work experience for everyone. The first DAOs are primitive. • But it’s possible that, in the future, you’ll have 10 different contribution contracts • to multiple DAOs that, collectively, pay you more than a full-time job AND give you the flexibility to do more of what you love.
Blockchain’s disruptive forces DAOs: Companies of the future: No CEO, no boss, managed by blockchain DAOs are an ecosystem of self-enforcing contracts. • An entire machine-powered ecosystem of commerce could develop on • the blockchain. • Ex: Network-owned drone service might power its units from network- owned charging stations. • Ex: Ownerless firms: A taxi that not only has no driver, but that belongs to a computer network, not to a human being. The network has raised funds, signed contracts, and taken delivery of vehicles, even though its headquarters is distributed all over the net.” Supply chains built on top of such a system might further reduce the • costs of delivering goods anywhere in the world.
Blockchain’s disruptive forces DAOs: Companies of the future: No CEO, no boss, managed by blockchain To participate in a DAO, you must “buy in”, literally. You need to own a • “token” or “coin”, the ownership of which is recorded in the blockchain. To do so, you’ll need to use a wallet. • In the future, obtaining these coins will be easier. Today, the most • common route is to buy Bitcoin with your dollars, euros, yen, etc. and then use the Bitcoin to buy the tokens or coins of the specific DAOs in which you wish to be a member You can earn money in 2 ways: • Increase in value of the token itself • • Tokens you earn through doing work for the DAO
Blockchain’s disruptive forces DAOs: Companies of the future: No CEO, no boss, managed by blockchain The increase in the DAO’s token value comes simply from supply and • demand. As the total token supply for each DAO is either fixed or predictably inflationary and it is known to all, the value of the tokens increase along with demand. A key benefit is that the supply of tokens is not easily subject to future • dilution by central administrators such as government officials or incompetent executives. Ah, the power of blockchains!. • Unlike a traditional organization, the priorities of a DAO aren’t “set from the top.” There’s no command and control. There’s no boss: Which is where the freedom from bad meeting tyranny comes in.
Blockchain’s disruptive forces DAOs: Companies of the future: No CEO, no boss, managed by blockchain The one thing that everyone in the DAO shares is this: Every single • person wants the value of the tokens to increase. This makes you hyper-focused on managing your time and efforts. • Your incentive is to create as much value as you can for the project, • based on your skill set and beliefs, not based on what your boss thinks. Reputation matters…a lot ! •
Blockchain’s disruptive forces
Blockchain’s disruptive forces DAOs
Blockchain’s disruptive forces DAO: The Fermat Project The Fermat Project: “We envision a world where people can freely interact electronically without unnecessary third party interferences. Both for social and commercial interactions. No spying, no censorship, no taking a cut on private transactions between individuals, no mining of private information, no unnecessary middlemen. A world where people are more important than entities like companies and states, a world where people have the choices and the means to interact directly between each other.” It’s a vision about a decentralized and connected human species. It is also a plan on how to get there. Decentralization makes humans more resilient and eventually free. It offers an alternative to the current path where all humans will be connected to a matrix-like entity that will control it all, or a similarly ugly future as the one described at George Orwell novel “1984”.
Blockchain’s disruptive forces DAO: The Fermat Project The Fermat Project: “We envision a world where people can freely interact electronically without unnecessary third party interferences. Both for social and commercial interactions. No spying, no censorship, no taking a cut on private transactions between individuals, no mining of private information, no unnecessary middlemen. A world where people are more important than entities like companies and states, a world where people have the choices and the means to interact directly between each other.” It’s a vision about a decentralized and connected human species. It is also a plan on how to get there. Decentralization makes humans more resilient and eventually free. It offers an alternative to the current path where all humans will be connected to a matrix-like entity that will control it all, or a similarly ugly future as the one described at George Orwell novel “1984”.
Blockchain’s disruptive forces DAO: The Fermat Project Three years after its founding, the Fermat project has given birth to its first crypto-community: the IoP Community. From the broader Fermat community, a new community has been born, full of enthusiastic people willing to build a piece of Fermat’s vision of The Internet of People. The IoP Consortium — an institution that already has several members, managed by Daniel Csendes — and the wider IoP Community will receive a total of 300K IoP tokens from original founder Luis Molina to finance core development, community building, research, and entrepreneurship.
Blockchain’s disruptive forces DAO: The Fermat Project • 2 objectives: Direct Device to Device Communication: • Connecting our personal devices between each other with direct connection over the internet. • P2P Apps (Person to Person Apps): Apps for our personal devices that know how to speak to each other directly over a device to device connection.
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