3. Warren Buffet, Berkshire Hathaway
"Of our $49 billion, we haven't
moved any to bitcoin.“
Charlie Munger, Berkshire Hathaway
"I think it's rat poison."
A PROFUSION OF NEGATIVE QUOTES
Jamie Dimon, JP Morgan Chase
“Virtual currency […] that’s
going to be stopped. No
government will ever support a
virtual currency that goes
around borders and doesn’t
have the same controls. It’s not
going to happen.”
4. DEC 15, 2010 “Why Bitcoin can’t be a currency” – The Underground Economist | $0.23
JUN 20, 2011 “So, That’s the End of Bitcoin Then” – Forbes | $15.15
DEC 24, 2012 “Wired, Tired, Expired for 2012: EXPIRED – Bitcoin” – Wired | $13.30
AUG 8, 2013 “The SEC Shows Why Bitcoin Is Doomed” – Bloomberg View | $93.57
SEP 19, 2014 “Cult Markets: When the Bubble Bursts” – Financial Times | $397.78
JUN 8, 2015 “Bitcoin Isn’t the Future of Money — it’s a Ponzi Scheme” – Washington Post | $236.73
JUN 7, 2016 “Bitcoin’s Rallying Again—But Isn’t Getting Much Attention Anymore” – WSJ | $577.14
BITCOIN HAS DIED…110 TIMES
5. WHY SUCH A NEGATIVE REPUTATION ?
D
I
S
R
U
P
T
I
O
N
6. 31 October 2008.
“Bitcoin: A Peer-to-Peer Electronic Cash System”.
Satoshi Nakamoto.
BORN ON THE ASHES OF THE 2007/8 CRISIS
7. WHAT IS BITCOIN ?
A peer-to-peer network maintaining a distributed
ledger of digital tokens known as bitcoins
The integrity of this ledger is backed and secured by
a subnetwork of computers – miners – who
assemble, verify and archive its transactions for a
reward
The total bitcoins in existence will be 21 million and
each bitcoin can be divided up to 8 decimals
Bitcoin ownership is changed when owner uses his
cryptographic private key to transfer control to a
new owner, and the transaction is “mined”
8. IS BITCOIN MONEY ?
Is it a Reserve of Value ? A Means of Exchange ? A Unit of Account ?
Does it have the characteristics of Money ?
9. IS BITCOIN A STORE OF VALUE ?
Bitcoin has value as it has a market price
Bitcoin price has historically been on an upward
trend, with event-driven behavior including Cyprus
default in 2013, Chinese authorities mixed signals in
2014, halving of reward, etc.
Bitcoin has had a significantly higher volatility
compared to mainstream currencies or commodities
Nonetheless, BTC’s 30-day stdev of daily returns has
been steadily retreating since its creation, reaching
current levels of 2.5%
-200
0
200
400
600
800
1000
1200
1400
Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
BTC Price in USD
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
BTC Volatility
10. IS BITCOIN A MEANS OF EXCHANGE ?
Anecdotal number of 100,000 retailers
accepting bitcoin
About 500 ATMs all over the world
allowing to buy & sell bitcoin
An estimated 100 Million companies
exist globally
More than 3 Million ATMs worldwide
V
S
11. IS BITCOIN A UNIT OF ACCOUNT ?
A long way to go before BTC becomes a unit of
account
This would require widespread use, tamed volatility,
and also regulatory acceptance and/or financial
markets requirement
Fun fact: Germany officially considers bitcoin, in
certain situations, as a unit of account. But that
seems to be related to the ability to tax transactions
and companies holding bitcoins.
14. IS BITCOIN A PONZI SCHEME ?
A Ponzi or Pyramid Scheme would require people’s
gullibility up until the time when the scheme falls
The central common denominator of schemes like
these is ultimately the absence of a basis for value
apart from people’s credulity
Seigneurage right is the same, but dubbed with
official validity by a third-party authority
Bitcoin’s link between belief in the system and basis
of value is mathematical and perfectly correlated
ASSETS LIABILITIES
Real Palpable Stuff 16 Equity 17
Foreign Currencies &
Tradable Listed Stuff
75
Foreign Currencies Owed to
System Players
71
Currency in Circulation 87 People Trust 87
Money held by System
Players
810 People Trust Overuse 813
988 988
ASSETS LIABILITIES
De-facto, Unappointed,
Core Developers
15
Distributed IT + Electricity
Cumulative Use
Cryptography Algorithms
Intractability
Currency to be Issued 6 People Trust
21
Currency in Circulation
as of March 2016
15. TECHNICAL: SOME INDICATIVE STATISTICS
605
BTC Price in USD
15,887,588
BTC in circulation
1
Bitcoin Network
Power Consumption, in GW
9,600,000,000
Market Value of BTC in circulation, in USD
88
Blockchain size, in GB
0.8%
Cost per Transaction
7
Value of bitcoin Hardware, in G USD
5,200
Reachable Nodes
16. TECHNICAL: BITCOIN MIXES KNOWN TECHS
Peer-to-Peer Network (Distribution/Decentralization)
Hashing (Ledger Content Merkle Tree & Proof of
Work)
Public / Private Key Cryptography (Privacy)
Proof of Work / of Stake / of Importance / etc.
(Byzantine Generals – Consensus Mechanism)
Merkle Tree of full historical ledger of transactions in
each block (Ledger Efficient Registration / Double
Spend Solution)
17. TECHNICAL: BITCOIN = EMERGENT PROPERTIES
Ledger of Transactions of a Token between different
addressees
Digital scarcity thanks to non-duplication of
information
Transactions are immutably registered and saved by all
participating nodes
Competition among nodes to write history and obtain
consensus around this history
“Proof of Work” is a cost paid by nodes to prove their good
faith. It is “skin in the game”. It is the sponsor equity or
downpayment requested by banks…
Transactions are registered in blocks which are intertwined
thanks to a Merkle Tree.
18. BITCOIN WEAKNESSES
Bad Reputation (killer in case of currencies !)
Very Complex to Use
Consensus Among Participants for any Modification
Transaction Costs
Limited Capacity
Shifting from Quasi-Distributed to De-
Centralized
20. BLOCKCHAIN HAS BECOME MAINSTREAM
Bank of England: CBDC may increase GDP by 3% and
stabilize it.
U.S. Federal Judge Alison Nathan in Manhattan: On
Sep 19, 2016 declared Bitcoin is money. The judgment
follows the recent Florida ruling in which the Judge
decided the opposite.
R3 is a joint effort by more than 50 global banks to
create their Blockchain and the intelligent contracts
that may run atop.
21. Nassim Nicholas Taleb, Philosopher
"Bitcoin is the beginning of something great:
a currency without a government,
something necessary and imperative.(…) For
bitcoin to make it, it needs to be banned by
a few governments and critiqued by policy
makers. Otherwise it will fade."
A PROFUSION OF POSITIVE VIEWS
Andreas Antonopoulos, Internet & Bitcoin Expert
“Banks warn of dangers of bitcoin because people already
know of the dangers of banks and are looking for choices.
Bitcoin is not “unregulated”. It is regulated by algorithm
instead of being regulated by government bureaucracies.”
Chamath Palihapitiya, VC
"Bitcoin is a Red Pill”.
22. BLOCKCHAIN MAY BE A PARADIGM SHIFT
“The notion of shared public ledgers may not sound revolutionary or sexy.
Neither did double-entry book-keeping or joint-stock companies.”
The Economist, Oct 31st, 2015
“Blockchain technology continues to redefine not only how the exchange sector
operates, but the global financial economy as a whole”
Bob Greifeld, CEO of NASDAQ
24. HOW CAN BDL EMULATE PEERS’ PRACTICES ?
Conduct Research, Studies, Seminars on
Bitcoin/Blockchain/Cryptocurrencies from technical,
financial and regulatory angles - ESA, A Antonopoulos…
Synthetize the Research and spearhead a debate with
MPs, Banks and Interested Public to Study Legislation
Issue or sponsor new regulation regarding
Bitcoin/Blockchain/cryptocurrencies.
Experiment with Lebanon/BDL-sponsored/Arab/open
Blockchain/cryptocurrency
