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Crypto for the Rest of Us
1. âCryptoâ for the Rest of Us
Young Jain Professionals Conference
Hilton, Long Island
6th October, 2018
Copyright 2018, Pankaj Jain
2. What is âCryptoâ or
âCryptocurrencyâ?
⢠Digital money used for transacting
⢠Store of value, like gold
⢠Decentralized - no central bank like the RBI, usually, no
corporation
⢠Based on math and cryptography
⢠Transactions stored on a âBlockchainâ or many times
referred to as a âdigital ledgerâ (a very very slow
database with lots of redundancy)
Copyright 2018, Pankaj Jain
3. What is a âBlockchainâ
⢠A public ledger of all transactions
⢠Everyone can see every transaction that occurs
5. ⢠Transactions are transmitted to the network and then
âminersâ use sophisticated computers to solve a
mathematical equation to verify the transaction.
⢠A transaction is considered irreversible after 6 conďŹrmations
are transmitted on the network.
⢠A âPublic Keyâ is your address
⢠A âPrivate Keyâ is essentially your password to make a
transaction
⢠Typically, each transaction on a blockchain has a cost which
is usually paid by the sender
⢠Transactions are made from a wallet
Copyright 2018, Pankaj Jain
7. Why is this a Big Deal?
⢠Relatively quick transfers (as low as a few seconds to 10 minutes)
⢠Removal of barriers to transact with anyone, anywhere, any time
⢠Completely decentralized, do not need bank permission to transfer
money or sell a security to another person, or check who owns a piece
of art, or create and sell digital assets w/o worry of duplication, etc.
⢠Every transaction is immutable and public
⢠Transaction doesnât have to be âmoneyâ, it can be the record of a
marriage, divorce, purchase of a home, sale of a business, etc.
⢠There will always be a record of the transaction as long as nodes are
sharing the database
Copyright 2018, Pankaj Jain
8. Bitcoin
⢠Created by âSatoshi Nakamotoâ in 2009
⢠Finite amount of âcoinsâ can be mined - 21 million Bitcoins
⢠Value is created by âminingâ and good old fashioned economics -
supply and demand
⢠Bitcoins (BTC) can be transferred to any address, anywhere for low
transaction fees
⢠Bitcoin addresses start with a â1â or â3â
⢠It operates almost as the reserve cryptocurrency and mostly as a SoV
⢠Market cap ~ $110 Billion
Copyright 2018, Pankaj Jain
12. AltCoins
⢠There are >1,800 cryptocurrencies and tokens. There is
Bitcoin and then there are AltCoins (alternative coins)
⢠Even some in the top 10 market cap are questionable
⢠Privacy coins like ZCash, Monero and others have been
gaining more interest from people because, like cash, they
offer a higher degree of privacy than most other
cryptocurrencies
⢠Other coins like Tezos are changing âProof of Stakeâ
consensus where any stakeholder can participate in reaching
consensus
Copyright 2018, Pankaj Jain
âCaveat Emptorâ
13. Ethereum
⢠Created by Vitalik Buterin, Gavin Wood, Joe Lubin and others in 2014
⢠Similar to Bitcoin as it is based on Blockchain and cryptography.
⢠Ether is the âcurrencyâ used to transact on the Ethereum blockchain
⢠Enables creation of âtokensâ using a programming language called
âSolidityâ
⢠Tokens created on Ethereum beneďŹt from the development of the
Ethereum Blockchain
⢠Uses âProof of Workâ but hoping to transition to âProof of Stake1â
consensus mechanism
Copyright 2018, Pankaj Jain
1. https://en.wikipedia.org/wiki/Proof-of-stake
14. Ethereum
⢠Building blockchain apps on Ethereum has fueled a
new generation of decentralized apps or âdAppsâ that
use blockchain while trying to hide the complexity of
blockchain
⢠Examples of tokens on Ethereum are:
⢠Basic Attention Token (BAT) +370% since ICO in May
2017
⢠0x Protocol (ZRX) 1,235% since August 2017
Copyright 2018, Pankaj Jain
15. ICOs
⢠ICOs (Initial Coin Offerings) are crowdfunding campaigns to
raise capital via cryptocurrencies by selling tokens
⢠Many tokens are âERC20â tokens which means they comply
with a standard and operate on top of the Ethereum blockchain
⢠ICOs have raised over $18 Billion in the ďŹrst 8 months of 2018
alone1
⢠Many ICOs are utility tokens, others are securities, many others
are scams!
⢠âIf it looks too good to be true, it usually is.â
Copyright 2018, Pankaj Jain
16. ICOs
⢠The SEC is rapidly increasing enforcement of
securities laws violations from ICOs
⢠Bitcoin and Ether have been declared commodities by
the CFTC and SEC
⢠Other governments are trying to ďŹgure out how to
handle ICOs, though, most have stated existing laws
are applicable regardless of the technology. What
remains unclear is which crypto currencies are
securities and which are utility tokens or commodities.
Copyright 2018, Pankaj Jain