The Rise Of The Blockchain Cooperative

Trust in Numbers: the Rise of the Blockchain Cooperative August 17th, 2017 Alessandro Voto West Coast Regional Director, Consensys

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Singularity University

Trust in Numbers: the Rise of the Blockchain Cooperative | Alessandro Voto What is Blockchain? ●

Blockchain cooperative is a network that stores records in a decentralized fashion, and facilitates anonymous, secure transactions.

The Need for Decentralization ●

We have given up the right to control our personal records to centralised institutions, mitigating our ability to manage assets or legal agreements with others

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If we rely on a central piece of technology for record-storage, we end up building a fragile infrastructure, where we rely on a single node for verification (dependence), and there’s also a risk of unexpected downtime or data-loss

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The day is coming very soon where it will be unusual if you don't know your whole DNA sequence because the sequencing technology is so cheap.

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Singularity University

Trust in Numbers: the Rise of the Blockchain Cooperative | Alessandro Voto Here’s how Bitcoin works: ●

Bitcoin is an open-source software, running on a big distributed network of computers.

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Every node in the network has an unique identifier, also known as the wallet address (public key). When a transaction is initiated, a new record is created in the blockchain network that encapsulates the value being exchanged, with the associated wallet addresses.

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The network authenticates transactions based on a private key, which is unique and should be kept secure, as it’s used for identification/validation purposes.

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Instead of holding the coin balance per address, the blockchain maintains a ledger of transactions, and processes them periodically as transaction blocks

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The network comprises of highly specialised computer holders, called the miners, that verify the transaction blocks every ten minutes by solving a highly complex cryptographic problem. The process of verifying transactions is called proof of work.

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When a block of transaction is successfully verified by miners, they’re rewarded for their work, and the newly added block is synchronised across the distributed network with the the entire history of transactions, in order to prevent double spending.

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Singularity University

Trust in Numbers: the Rise of the Blockchain Cooperative | Alessandro Voto How to purchase bitcoins ●

Miners/Enthusiasts: Direct wallet-to-wallet transfer, with payment done through fiat currency. No ID proof, required.

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Bitcoin Exchange: Centralised or decentralized exchanges that mediate transfers, like a foreign currency exchange. ID proof is mandatory

Other cryptocurrencies: ●

As the Bitcoin’s code was open-source, a lot of enthusiasts modified the code-base to create a whole new set of tokens. For example, Dogecoin, Popcoin, Litecoin, etc.

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The total market cap of these cryptocurrencies has crossed $144 billion [17th August, 2017].

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Singularity University

Trust in Numbers: the Rise of the Blockchain Cooperative | Alessandro Voto Ethereum: Bitcoin 2.0 ●

Ethereum is an implementation of blockchain that allows anyone in the network to decide their own computational rules, and create a smart contract.

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Since the smart contracts run on a decentralized network or blockchain, no single node controls the computational rules. When multiple entities interact with a smart contract, they’re governed by the rules of the smart contract, and don’t have to comply to a common transaction ledger (unlike, Bitcoin!).

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Use-case: Crowd-sourcing, decentralized apps, etc.

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Enterprise Ethereum Alliance has a whole host of companies that are using blockchain to automate their processes, and implementing it for applications, where there’s no individual enterprise controlling the records, like, cross-border financing, supply chain management or tracking provenance of packages.

Blockchain Cooperative: Real World Applications ●

Self-sovereign identity: uPort is an attempt at decentralizing identity for everyone, based on their cryptographic address.

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Permanent Web: FileCoin and InterPlanetary File System (IPFS) are an attempt at creating a new kind of internet, called the permanent web. While FileCoin incentivised people to share a bit of their storage space on hard-drive or computer with others, IPFS is a routing system that lets you access resources and content from anywhere, based on who’s willing to actually support and serve the requests.

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Machine-to-Machine communication: Grid+ is building a peer-to-peer energy payment system, where anyone can provide assets as part of a cooperative in the form of electrons, and the shared assets are tracked by agent, with the system automatically incentivising the ones who share more energy with others.

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Singularity University

Trust in Numbers: the Rise of the Blockchain Cooperative | Alessandro Voto Blockchain Cooperative: Future Risks and Challenges ●

Given that most miners are concentrated in China, it puts the decentralized network at a much higher risk of being impacted by Chinese government policies.

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In the future, proof-of-work might be replaced by proof-of-stake, where instead of solving hard computational problems, entities would be asked to put up economic value, and they’ll be selected randomly to process the transaction block.

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Bitcoin hasn’t been hacked so far, and it’s highly unlikely that the system will be compromised, even in the future.

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Governments might devise a system, where every single payment on decentralized networks is tracked and linked back to their citizenship information.

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The biggest risk with Bitcoin is that since there’s no one single entity controlling the network, there’s a big cooperative structure with lots of influence, and it’s really hard to co-operate with people from different backgrounds, who have varied interests