This presentation is part of a lecture given to business students at the Grenoble Ecole de Management, France. It is aimed at explaining the technical aspects of Cryptocurrencies and presents an overview of currency, monetary systems and digital currencies. The latter half of the presentation showcases the new industries and companies that have created innovative business models using the bitcoin and the Blockchain technology.

1. Bitcoin and the Blockchain – Financial Quagmire or Evolutionary Stampede?
Image: Jon Smith-Flickr

2. Workshop Presenter:
Kariappa BHEEMAIAH
Researcher - STYLE Project, Grenoble Ecole de Management.
Dept.: People, Organizations and Societies.
Media:
Images are Hyperlinked.

3. Biased Opinions

4. Money
echanics
Currency’s availability
Price to acquire it
Scarcity of its supply
“…when they (banks) make loans …they accept promissory notes in
exchange for credits to the borrowers' transaction accounts.
Loans (assets) and deposits (liabilities) both rise…”
Page 7- Modern Money Mechanics, Federal Reserve bank of Chicago.

5. Deposit Factor = 10 Total
Required
Reserves
Capital to
be loaned
Accumulation
of Loans
Deposits held
by bank
Reserves Provided 10,000 1,000 9,000 - 10,000
Expansion Stage 1 10,000 1,900 8,100 9,000 19,000
Expansion Stage 2 10,000 2,710 7,290 17,100 27,100
Expansion Stage 3 10,000 3,439 6,561 24,390 34,390
: : : : : :
Expansion Stage
20 10,000 8,906 1,094 79,058 89,058
: : : : : :
: : : : : :
Final Stage 10,000 10,000 0 90,000 100,000
Source: Modern Money Mechanics,
Federal Reserve bank of Chicago.
Images: https://www.flickr.com/photos/jtlsyy/.

6. Internet
nside
Communication Protocols
TCP/IP
Internet
HTTP SMTP VOIP
Hyper Text Transfer Protocol Simple Mail Transfer Protocol Voice over IP

7. Decentralized
Distributed
Innovative environment
Proof of Work
HashCash
CAPTCHA

8. E-Commerce Transaction Fees (2.9%) = $18 Billion
Retail Credit Card Transaction fees (2.5%) = $260 Billion
Global Bank Transaction Fees = $524 Billion
Global Remittances --- 8.9% to 30% (Inter- Africa)
$49 Billion of the $524 Billion in 2013.
Global Transaction Fees Estimated to reach $681 billion in
2016.
Source: World Bank, Milken Institute

9. Introduction to Bitcoin

10. WHAT THE…?

11. Salient Components of Bitcoin
The Bitcoin Protocol (“B”) – The decentralized Peer-to-Peer Network.
The bitcoin currency (“b”) – A transaction token used as a form of payment which is ‘mined’.
The Blockchain – A publicly verifiable transaction ledger of all the transactions on the
network.
Transactions form the backbone of the Blockchain.
It is the Blockchain technology that makes cryptocurrencies work.
Image: flickr.com-fernandocortes

12.  A Protocol for Peer-to-Peer Transfer of Value.
 A Distributed Database of Transactions.
 Users contribute by Mining.
 Market Capitalisation of 5 to 10 Billion USD
(depending on the price of Bitcoin).
 A Protocol for Peer-to-Peer File Sharing.
 A Distributed Database of Files.
 Users contribute by Seeding.
 Accounts for over 40% of Internet Traffic.
Reference: Understanding Bitcoin Cryptography , Engineeringand Economics, by Pedro Franco
Byzantine General’s Problem: Copy-Paste

13. https://blockchain.info/

14. 19Gubir2n7e9
JpW1Av7wrM
d5M5AtTdzVw
R
18E14A7B6A307
F426A94F811470
1E7C8E774E7F9A
47E2C2035DB29
A206321725
P1
P2
P3
x
y

15. Hash Function SHA-256²
Mining
Transaction Fee
(0.005 BTC ~ €1)
8 X 500 X
HASH OF PREVIOUS BLOCK
HEADER
TIME-STAMP
DIFFICULTY
NONCE
MERKLE ROOT
THE TRANSACTIONS

17. Transaction Fees ~ $525 Billion
Remittances ~ $ 50 Billion
$475 Billion
Global Retail Sales ~ $ 10 Trillion
Retail Transaction Fees ~ $ 260 Billion
BTC Transaction Fees (1%) ~ $ 105 Billion
$ 150 Billion
< $2.00
$0.01

18. 340,282,366,920,938,463,463,374,607,431,768,211,456 …more !!!
Growth of the Number of Things Connected to the
Internet: CISC0 (2013)
$14.4
Trillion
in Value
at Stake
http://www.cisco.com/web/about/ac79/docs/innov/IoE_Economy.pdf http://www.accenture.com/Microsites/fsinsights/capital-markets-uk/Documents/Accenture-Global-Boom-in-Fintech-Investment.pdf
Investment in Fintech ventures = 3X Growth,
from $930 million in 2008 to $2.97billion in
2013

19. Key Objectives:
 Distributed Transaction Processing & Applications without the need for
centralized control infrastructure
 Robust Security where no trusted third party is required to secure
transactions.
Solutions:
 Peer-to-peer decentralized networks
 A value-exchange protocol like the Blockchain
 Autonomous Device Coordination
Empowered Law
Bitrated.com
CryptoCorp
Colored Coins
Codius

20. 114 X (total amount of money in the global
economy )
Bitcoin technology, network & protocol.
Non-Bitcoin Blockchain ,pegged to bitcoin
currency

21. Bitcoin Blockchain ,non-bitcoin currency Non-bitcoin currency & non-Bitcoin Blockchain
 Own capital
 Hire people
 Issue shares
 Produce profits
 Pay Dividends
To shareholders who host DACs

22. New Ideas and Business Models
Crowdfunding
 Mine with Proof of Stake
 Use Revenues for Operations
 Nodes autonomously supervise
Supply Chain
SKU CHAIN
 Hashes instead of Barcodes
 Protection against Counterfeit
Transportation
 ZooZ Tokens- Proof of Movement
 Data as money
 Decentralized UBER?

23. BLOCKCHAIN 2.0
COMPONENTS OF APPLICATIONS
STORAGE COMPUTATION BANDWIDTH
DAPPS VENTURE FUND

25. Regulation (Seigniorage)
3rd Party Storage Security
Price Volatility
Scalability
Transaction Speeds
Bandwidth & Storage
Volunteer Based Infrastructure
Mining Pools
Poor Mobile Platform Support
Over-enthusiastic VC’s?
Education & Mind-set

26. IT WILL BE MINED!….and time-stamped and put on the Blockchain.

28. BOOKS
 The Anatomy of a Money-like Informational Commodity, Tim
Swanson
 Mastering Bitcoin: Unlocking Digital Cryptocurrencies,
Andreas M. Antonopoulos
 Bitcoin: The Future of Money?, Dominic Frisby
 Understanding Bitcoin: Cryptography, Engineering and
Economics, Pedro Franco
WHITEPAPERS
 Bitcoin: A Peer-to-Peer Electronic Cash System, Satoshi
Nakamoto
 The General Theory of Decentralized Applications, Dapps,
David Johnston
 The Value of App Coins, David Johnston
 Ethereum-A next generation smart contract & decentralized
application platform, Vitalik Buterin
 Enabling Blockchain Innovations with Pegged Sidechains, The
Blockstream Team
 Smart Oracles: A Simple, Powerful Approach to Smart
Contracts, Coduis/Ripple Labs
 IBM ADEPT Practictioner Perspective - Pre Publication Draft - 7
Jan 2015, The IBM ADEPT Team
 Business Processes Secured by Immutable Audit Trails on the
Blockchain, Factom
BLOGs
 Cryptocoinsnews:
 Adam Back: Sidechains can replace altcoins-bitcoin 2-0-
platforms.
 Philippines-e-peso digital currency use bitcoin
technology
 Ecuadors centralized national digital currency
 Ericsson report reveals early warning signs dramatic
disruption financial services industry
 CoinDesk:
 Bitcoin core developers bitcoin side-chains
 Sidechains white paper ecosystem reboot
 New Blockchain startup-brings contracts digital age
 Bithalo smart contracts without block chain bloat
 Ripple labs unveils proposal new smart contract system
 Payments veterans seek unlock Blockchains power align
commerce
 Bitcoinmagazine:
 Side chains-challenges and potential
 Siliconangle:
 bitcoin-sidechains
 bitcoin pegged sidechains whitepaper reveals new
horizons for cryptocurrency
 Fastcolabs
 App economy/smart contracts could be
cryptocurrency’s killer app
 Monetas- why central banks will race to adopt the Blockchain

29. PICTURES- All pictures used were registered under a Public Domain / Creative Commons Licence
Slide 6:
 http://en.wikipedia.org/wiki/Vint_Cerf
 http://vi.wikipedia.org/wiki/Bob_Kahn
 www.flickr.com/photos/corpse_of_taloy/
 http://www.flaticon.com/
Slide 7:
 http://en.wikipedia.org/wiki/Fireworks
 https://prezi.com/haigbktvbgdb/tim-berners-lee/
Slide 8:
 http://carryon.wikia.com/wiki/S._Melly
 https://www.flickr.com/photos/lawrence_chard/6344527436
/
 http://en.wikipedia.org/wiki/Social_network
 https://www.flickr.com/photos/4_shore/4498197359
Slide 10:
 http://xmenmovies.wikia.com/wiki/File:The-wolverine-2-
hugh-jackman.jpg
 http://en.wikipedia.org/wiki/Samurai_Jack
 http://pixshark.com/female-samurai-anime.htm
 https://www.flickr.com/photos/fernando_cortes
SLIDE 1:
 https://www.flickr.com/photos/weiphotography/998981452
3/
Slide 3:
 http://en.wikiquote.org/wiki/V_for_Vendetta
 https://www.flickr.com/photos/lendingmemo/11431740684/
 http://www.babygorilla.com/
 https://www.pinterest.com/garydavies924/colossus/
 http://imgur.com/gallery/yamed
 http://en.wikipedia.org/wiki/Chess
Slide 4:
 http://tinyurl.com/kfg2vr7
 http://tinyurl.com/mtfcqom
 http://en.wikipedia.org/wiki/File:Gold-crystals.jpg
 http://tinyurl.com/k33ujfs
Slide 5:
 https://www.flickr.com/photos/jtlsyy/6115074889/
 Open Education - http://www.opednews.com/articles/-Oops-
We-Meant-7-TRILLIO-by-Ellen-Brown-081130-741.html

30. Slide 19
 https://www.flickr.com/photos/afilliate-marketing
 http://www.dreamstime.com/stock-photo-businessman-
shake-hand-online-business
Slide 21
 https://www.pinterest.com/pin/537335799260231741/
 https://github.com/BitShares
Slide 22:
https://github.com/lazooz
Slide 23:
 https://www.facebook.com/gtbitcoin/posts/5756959158964
35
 http://en.wikipedia.org/wiki/Ripple_%28payment_protocol%
29
 http://en.wikipedia.org/wiki/MaidSafe
 https://twitter.com/factomproject
 https://twitter.com/search?q=ethereum&src=typd
Slide 24:
 http://en.wikipedia.org/wiki/Hype_cycle
 https://sfodan.wordpress.com/2012/07/14/go-get-out-of-
here-go-get-some-fish-for-me-to-clean-mark-67-
13%E2%80%A0/
Slide 24:
http://mentio.ca/2015/02/20/long-will-cash-last/
Slide 27:
https://www.flickr.com/photos/fernando_cortes
Slide 13:
 https://www.flickr.com/photos/66151463@N04/604181411
5/in/photostream/
 https://en.bitcoin.it/wiki/Transaction
 http://commons.wikimedia.org/wiki/File:Armory_Bitcoin_Cli
ent.png
 http://en.wikipedia.org/wiki/Bitcoin
Slide 14:
 www.flickr.com/photos/dripper/2310164608
 http://commons.wikimedia.org/wiki/Category:Keys
 http://en.wikibooks.org/wiki/Cryptography/Elliptic_curve
Slide 15:
 https://www.flickr.com/photos/127069763@N07/16239360
227/
 https://blockchain.info/
 http://www.myce.com/news/qualcomm-claim-fingerprint-
sensor-breakthrough-75215/
 https://pp6.global.ssl.fastly.net/comment/20
Slide 16:
 http://www.cisco.com/web/about/ac79/docs/innov/IoT_IBS
G_0411FINAL.pdf
 http://www.accenture.com/Microsites/fsinsights/capital-
markets-uk/Documents/Accenture-Global-Boom-in-Fintech-
Investment.pdf
Slide 17:
 http://commons.wikimedia.org/wiki/File:Contract_-_CC-BY-
SA_-_Gunnar_Wrobel.jpg