OABC Seminar on cryptocurrency

Blockchain: hype or real?

Ali Al Shidhani @alialshidhani Ali.alshidhani@gmail.com

Note: • This is not a business or investment advice • Please do your own research before investing in blockchain, bitcoin or any cryptocurrency

6 D’s of disruptive innovations

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HSBC Global survey in 2017 found that 80% of those who have heard of blockchain don’t understand it!!

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What is Blockchain • Distributed ledger system composed of cryptographically linked blocks • Each block contains batches of transactions • Each transaction represents the movement of asset (currency, real estate, intellectual property, jewelry, cars, art, music, vote, etc…)

• Internet of value/assets 4

What is Blockchain • A database replicated over a peer-to-peer network • Enables multiple parties to share and modify information in a secure fashion

even if they don’t trust each other • There is a need for a consensus mechanism to ensure that each participant’s

view of the ledger matches the view of other participants • Blockchain can facilitate the transfer of assets without needing a trusted

central authority 5

Blockchain Benefits • Eliminates the need for trust between stakeholders • Builds a secure/immutable value transfer system • Increases record transparency

• Decreases transaction cost • Increases transaction speed

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Types of Blockchain • Permission-less • Open blockchain where anyone can participate in reading or writing to the blockchain

• Permissioned • Closed blockchain where selected parties can read or write to the blockchain

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Bitcoin

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Software Engineering

Bitcoin

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Blockchain features • Decentralized, lack of a central authority • Low transaction cost • Fast

• Transparent • Anonymity

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Price

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Bitcoin Limitations • Performance: slow number of transactions per second. Max 7 in Bitcoin, 10Ks in VISA. Not suitable for real-time applications, 10-min confirmation and validation (12 sec in Ethereum)

• Scalability: latency when more nodes join the network. Need for increased power and memory usage • Consensus: absence of code fined decision-making process (usage of consensus to

reach an agreement) • Regulations: Tight grip on ICOs, exchanges, cryptocurrency trading • Security: Funds lost due to hacking exchanges or wallets

• Power consumption 16

Total number of Mined Bitcoins

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Mining difficulty

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40%

3% 4%

53%

Legal

No Information Restricted Illegal

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Transaction cost

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Buying bitcoins

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Bitcoin Enthusiasts

Billionaire Peter Thiel: “people are underestimating bitcoin and it has great potential left�

Thiel said he is "skeptical" of most cryptocurrencies except bitcoin

He compared bitcoin to gold 27

Bitcoin Skeptics Warren Buffett: “I can say almost with certainty that they will come to a bad ending”

American economist Nouriel Roubini: “the 'biggest bubble in human history, The fundamental value of Bitcoin is zero”

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Blockchain Hype or real!

• Huge focus on advantages and exaggeration of the positive impact of blockchain in majority of publications. Downplaying challenges and drawbacks.

• Another killer app (besides bitcoin) is needed to make it real!

• More R&D and proof of concepts is needed!

• Do your own research!

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Thank you ali.alshidhani@gmail.com

@ali.alshidhani

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