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Blockchain (Applications (Cryptocurrencies (Examples (ICO (A way to fund…
Blockchain
Applications
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Cryptocurrencies
Characteristics:
- Speculative or Real Demand?
- Real demand is from people who would actually use cryptocurrency to purchase or sell goods.
- This will cause the market to crash and destabilize or destroy the value of the currency overnight. And while it’s dog eat dog for free markets, the burst of such a speculative bubble will hurt many individuals.
- Speculative demand is from people who would acquire the currency and hope to resell it for ROI
- Susceptible to scams?
This ignoratio elenchi fails to disprove or even address the concern that scams may proliferate in an unregulated currency market like cryptocurrencies. ICO scams, pyramid scams, and pump and dump can occur.
- should protect the market and investors such as trading halt rules, governance to pursue market manipulators, and so forth
- need to consider ways of minimizing market manipulation while maintaining decentralization.
- Even under a token sale ban, what stops an investor from appointing a trusted foreign proxy to participate in the ICO on their behalf?
- With all major exchanges taken down, what stops investors from purchasing tokens from another peer through an escrow or a decentralized exchange?
- A decentralized infrastructure will have no single point of ownership, which means that no government can censor or take over the platform.
Blockchain technology will either unite and financially empower hundreds of millions of people from developing nations or it could spawn countless frauds and schemes as the largest financial bubble ever known to man looms toward a devastating collapse.
Purpose:
Created with the intention of building a better currency for various use cases and represent either a store of value, medium of exchange or a unit of account
Examples
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ICO
A way to fund new projects by coins/token to investors who are interested in the project. Similar to crowdfunding, but on blockchain
- marketed as the new way to raise capital
- ICO projs usually tech based and related to cryptocurrencies or decentralisation
- few investor documents are needed (usually a webpage, whitepaper and some internet forum posts)
- early investors encouraged via discount/tier pricing
How does it work:
- Use non-trad channels to raise capital, so there is no need for trad underwriters and exchanges. After launch, token can be typically traded in exchanges soon after tissuing
- ICO issuers uses own web or 3rd party platform to announce issuance and attract investors.
- Investors make money through
- appreciation of underlying token
- potential payment from token
Why ICO rather than IPO
for startups
- Faster fund-raising, attract talent, no equity, fewer barriers (cost and requirements)
Investors
- Global (ICO projs can be raised anywhere) and New (completely different investment tool with no existing metrics to measure accurately, currently very profitable)
Regulation
- No agency (no need IB or legal counsel)
- less regulated, more flexibility for investors and issuers but higher potential risks
Distributed ledger
Supply Chain Financing
- Hugely underserved needs of supply chain finance in China.
- Complexity and scale of supply chain finance have posed major challenges in ensuring adequate funding and efficient operations
-Chained Finance creates a unique ecosystem that will provide supply chains with easier access to funding at competitive rates
- In return, supply chain operators will gain greater visibility of their suppliers and the many layers of finance embedded in the process
- every payment, every supply chain transaction, can be more transparent, manageable and easily authenticated
- It will also help ensure the timely delivery of products to end customers and improve efficiencies across the entire supply chain.”
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National Identity System
- A distributed ledger, while available to everyone, may be unreadable if contents are encrypted
- Most distributed ledgers outside cryptocurrencies are encrypted in whole or in part (can have a copy but can't actually read it)
- Equifax and others have shown the weakness of central databases in the hands of a single firm
Applications
- Keep certified copies of identity documents, biometric test results, health data, or academic and training certificates online, available at all times, yet safe unless you give away your key.
- At a whole system level, the database is very secure
- Each single ledger entry among billions would need to be found and then individually “cracked” at great expense in time and computing, making the database as a whole very safe.
- Can forward documents to people who needs it, while keeping control of whether another party can forward the information
- Possibly bring back the power of data management from big established firms to users (users can decide who/when/whether to sell your own data on purchase, online browsing history, or mobile data)
- However, onus is shifted to oneself, if lost keys, need to rebuild identity
Cybersecurity:
- Using the blockchain to create a network of trust enables us to spread sensitive and vital information across the globe while remaining fully encrypted“
- Can be used to avoid cyberattacks such as the distributed denial of service （overload a database till it crashes）
- At its core, blockchain is a decentralized network architecture that uses a series of nodes to update information to all points simultaneously
data is not held in an individual location like a traditional database.
- As a result, every user on the chain has all the information about the chain at the same time.
-even if one or several nodes are taken offline, others can still carry on operating without downtime
Monetisation
- A blockchain’s nodes are made up of individuals who are transacting on the particular chain. In some cases, these users can earn some reward—as is the case for blockchain miners who crack hashes to continue building the chain. But in most cases, users are simply giving up spare bandwidth and processing space.
Gladius proposes to use this spare bandwidth and processing power. It lets users monetize their time on the blockchain by forming pools of nodes that accelerate web traffic and mitigate the risk of DDoS attacks. In addition, the company enables websites to find those pools that offer better traffic speeds and higher protection in a virtual marketplace, eliminating middlemen like hosting companies and accelerators. Users will then simply transact in the company’s tokens (GLA).
Fintech
Examples
COMIT (Cryptographically-secure Off-chain Multi-asset Instant Transaction network)
- A way to process transactions rapidly, and across blockchain assets.
- Eg, customer want to pay you in Litecoin but you want to take payment in Bitcoin
- Works via the cryptographic hash function
- basic building blocks of cryptography and cryptocurrencies
- could try to guess the key but my chances of guessing correctly are so vastly remote that we can pretty much completely rule that out.
- lot of hash functions, each having subtly different properties.
- With all of these contracts in order, all of the parties involved have open proof that each party is responsible for fulfilling their part of the bargain.
At this point you can provide your secret key and each contract takes that secret key and passes it through the same hash function. If the result is equal to the number you provided to the customer in the first place, the transactions are validated.
For more info
Purpose: to provide tools for exchanging one unit of currency for another, facilitating lending, accepting investment, etc.
Developer tools
Characteristics:
- aren’t in a “winner take all” area
- example, building a decentralized data marketplace could require a a number of Developer Tools subcategories such as Ethereum for smart contracts, Truebit for faster computation, NuCypherfor proxy re-encryption, ZeppelinOS for security, and Mattereum for legal contract execution to ensure protection in the case of a dispute.
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Ideal money
- Theory meant to stabilize international currencies as a solution to the Triffin Dilemma
- paradox between short-term domestic and long-term international objectives for nations whose currencies served as global reserve currencies.
- The nations that owned the global reserve currencies would have to supply the world with an extra supply of currency to meet global demand, thus creating friction between national and global monetary policies.
- Hence the concept of ideal money that was "intrinsically free of 'inflationary decadence', a true 'gold standard'
- value stabilization in relation to a domestic price index and an international exchange rate that fixed each currency to a standardised basket of commodities (the industrial consumption price index
Pros:
- Able to prevent banking fraud, fiat inflation, and nasty political machinations
- can never be tampered with, a solution to the weak institutions we are faced with in many parts of the world.
Cons: its open, borderless nature—became ideal for drug peddling, hiring hitmen, and all sorts of monstrosities in the veiled markets of the dark web.
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