An introduction to Bitcoin, Blockchain, and Ethereum by Justin Wu, sponsored by Premium Minds, a software house in Lisbon, Portugal

1. An Introduction to
Bitcoin, Blockchains,
Ethereum
Justin Wu, MBA
@blockchainLX
justinwuglobal@gmail.com
+351 967 461 477

2. Sponsored by

3. What is Bitcoin?
❖ Digital Money you can send through the
Internet
❖ Transferred directly from peer-to-peer via
the net, without going through a bank or
clearing house (Decentralization,
Disintermediation)
❖ Fees are much lower; usable wherever
there's Internet; account cannot be frozen;
no arbitrary limits…vs. Fiat Currency
❖ Sending BTC is similar to sending an
email
❖ Purchase (mostly) anything with bitcoins
It’s Money!!!

4. Core Technologies
❖ Public/Private Key Cryptography
❖ Cryptographic Hash Function
❖ Peer to Peer Networking (Wei-Dai's B-Money +
Bittorent = Idea for Bitcoin?)
❖ The Blockchain
❖ Proof of Work (How to Solve Byzantine General’s
Problem)

5. Bitcoin: What’s the Big Deal?
❖ Tim Draper, DFJ Venture Capital:
Banks “hugely threatened" by
Bitcoin
❖ Marc Andreessen, Co-Founder of
Netscape, Andreessen Horowitz VC:
Bitcoin “Like the Internet in 1994.”
❖ Patrick M. Byrne, CEO of
overstock.com : “Money is too
important to leave in the hands of
government…the long-run value of
all fiat currencies goes to zero.”

6. Purchasing Power of USD from when Gold Standard Abolished

7. Not Possible with Bitcoin
❖ Supply strictly capped at 21
Million coins by 2140
❖ Supply increases by 25 coins
every 10 minutes as rewards go
to miners for securing the
network
❖ Bitcoins cannot be “printed out
of thin air” like fiat currency
❖ “Proof of Work” vs. “Proof of
Violence”
❖ Based on a “Blockchain”

8. Blockchains, Transactions, Miners
❖ A Blockchain is simply a database for recording
transactions, one that is copied and updated to all
computers participating in a network: a
“distributed ledger”.
❖ “Blocks” in a blockchain are individual pages in
the ledger, like pages in a physical book.
❖ Blocks have “headers” for meta-data and content,
such as transactions
❖ Participants called “Miners” verify legitimate
blocks and reject illegitimate ones, getting
rewarded for their efforts with newly minted
bitcoins.
❖ Each verified block is linked to the previous block
in a chain, all the way to the first, hence a
“Blockchain”.

9. Advantages of a Blockchain
❖ Secure: Using a blockchain is cryptographically secure - the ledger is
distributed across all nodes in the system making hacking near-impossible.
❖ Transparency: All transactions are publicly recorded, and available for
scrutiny
❖ Low-Counterparty Risk: No party can transfer assets (e.g., money, authority,
property, data rights) they do not have and all transactions are recorded and
cannot be revoked or tampered with…VS. Fraud
❖ Decentralized: No single authority has control -- the network cannot be
distorted or manipulated by a single controlling authority…VS. The Fed
❖ Privacy: Users are anonymous and do not need to provide credentials beyond
their node address…VS. Your Local Bank
❖ Low Transaction Cost: The system removes the need for intermediaries and
thus lowers transaction costs…VS. Western Union, Paypal, etc.

10. Blockchain: A Summary
❖ A Single Source of Collective Truth
❖ A common ledger that all Bitcoin (or Ethereum) users
share and agree upon
❖ Secured by Mining (mathematical proofs) to validate
legitimate transactions and reject illegitimate ones
❖ Consensus: everyone agrees on who has what with no
middle man extracting fees acting as a trusted third
party

11. Blockchain: The Trust Machine

12. Blockchain Technology: Who Cares?
❖ “Business decision-makers on the boards of every
Fortune 500 company are essentially mandating
their technologists to understand what the
blockchain is and how it can effect their business.” -
Andrew Keys, Consensys - Microsoft Partner Firm
❖ "Distributed ledger technologies have the potential
to help governments to collect taxes, deliver benefits,
issue passports, record land registries, assure the
supply chain of goods and generally ensure the
integrity of government records and services.” -
Mark Walport, UK Gov’t Chief Scientific Advisor
❖ “Blockchain will become a reality in 2016.”
- Eric Piscini, Deloitte

13. What does this mean for…
❖ Application Developers?
❖ Businesses with large data
silos?
❖ Governments with various
branches that don’t necessarily
talk to each other?
❖ Napster vs. Bittorent.
(Centralized Server
architecture vs. distributed
network of nodes)
❖ Reduce costs; Increase Security
❖ Streamline inter-agency
cooperation and information
sharing; serve the public better

14. Bitcoin is Awesome! But…
❖ It is only has one function: currency
❖ Proof of Work is very wasteful
❖ What if you wanted to do more with “Blockchain
Technology?”
❖ Enter…

16. What is Ethereum?
❖ “A planetary scale computer built on
blockchain technology”
❖ Open for all to use; zero infrastructure
❖ Turing-Complete: Build arbitrarily
complex applications
❖ “Ethereum is a decentralized platform
that runs smart contracts:
applications that run exactly as
programmed without any possibility
of downtime, censorship, fraud or
third party interference.”
❖ Ethereum Virtual Machine, runs on
Ether, Pay per computational step

17. Ethereum Virtual Machine (EVM)
❖ A Turing Complete Virtual Machine accessible from
anywhere in the world has a number of benefits for the
automated-economy:
❖ The Ethereum Blockchain is:
❖ A blockchain with a built-in programming language
❖ A decentralized, massively replicated database where
the current state of all accounts is stored
❖ A consensus-based globally executed virtual machine
Source: Melanie Swan; https://github.com/ethereum/wiki/wiki/Ethereum-Development-
Tutorial

18. Ethereum Virtual Machine (EVM) Cont.
❖ The Ethereum Virtual Machine (EVM) handles internal state and computation
❖ States are stored on the distributed global ledger: The Ethereum Blockchain
❖ Computation is paid for with Ether, per computational step
❖ Large decentralized computer with millions of account objects
❖ Each account object:
❖ Has its own internal code (Smart Contract)
❖ Contains a 32-byte key/value database called storage
❖ Can call or send messages to other objects
Source: Melanie Swan; https://github.com/ethereum/wiki/wiki/Ethereum-Development-
Tutorial

19. Bitcoin vs. Ethereum

20. With Ethereum You Can
❖ Build Unstoppable Applications
❖ Write Immutable, Self-Enforcing Smart
Contracts
❖ Pay-for-play. No centralized servers or
worrying about uptime
❖ Access new and once impenetrable markets
❖ Ethereum is sometimes defined as a ‘world
computer’ but this definition doesn’t really
convey its core value proposition.
❖ Access a “generalised platform for
marketplaces where individuals can adopt
various roles and freely participate in
economic interactions.”
❖ Programmable Money

21. Smart Contracts
❖ What if a contract could enforce
itself without the need of lawyers,
courts, governments?
❖ Smart Contracts are: Pre-written
logic (code); stored and replicated
on a blockchain; self-executing by
running the code; can enforce the
code to make payments, update
blockchain, transfer ownership, etc.
❖ Breach of Contract not possible
from any party once the Smart
Contract is “live”
❖ Disintermediation factor: High

22. Ethereum + Smart Contracts + Devices =
❖ The Internet of Things
❖ slock.it : “If you can lock it,
we’ll let you rent, sell, or share
it.”
❖ Use Cases: Home Automation,
Rent Your Mostly Unused
Property: Flat / Car / Parking
Spot / Bike / Other Stuff
❖ Smart Locks, Smart Lights,
Smart Sensors
❖ Decentralized Sharing Economy

23. Ethereum + Smart Contracts + Oracles =
❖ Decentralized Prediction Markets
❖ Augur: Bet on the outcome of any event, most accurate future forecasting
❖ Augur (DPM) + slock.it (smart sensors) = Information Economy
❖ Ex: Sell your information to be used in prediction markets: Who will win the 2016 US
Presidential election?
❖ Smart sensors count number of people going to district polling centers—> Smart
contract compares this data with historical Rep/Dem districts —-> Publish data to
blockchain OR encrypt data for sale to private oracles —-> Prediction market resolves
❖ Prior to the outcome of election, the current share price is the most accurate prediction
of who will win.
❖ Real World Example: Intrade correctly predicted 48 out of 50 states election results in
2012

24. Ethereum + Smart Contracts + Biometrics =
❖ Self-Sovereign Identity vs.
Facebook
❖ Link “meat-space” actors to
digital persons on the
blockchain: Birth Cert/KYC
❖ Reputation Systems
❖ Digital Mapping of Social
Structures (Community
Formation)
❖ Humanitarian/Identity Theft/
Supra-National Identity
❖ Next-Generation Sharing and
Attention Economy
Source: The Verge

26. Synergies on Ethereum: Key Considerations
❖ Just like different programs on a computer can increase productivity and
value, so too different Dapps on the Ethereum World computer.
❖ Ethereum is a “a generalized platform for marketplaces where
individuals can adopt various roles and freely participate in economic
interactions.”
❖ Zero-Infrastructure and open-source means rapid iteration/evolution,
meme-like spread: survival of the fittest Dapps and Developers
❖ Low to Zero switching costs for users
❖ Infrastructure, security, identities, payments, execution/enforcement all
built into the Ethereum platform.
❖ Huge or unlimited upside, downside only limited to developer time
building new Dapps

27. Putting it all together for Portugal
❖ High-levels of Internet
Use and Innovation
Good for Blockchain
Acceptance
❖ High Disintermediation
potential in Public
Institutions and Banking
❖ Streamlined taxation
❖ Other Use Cases not yet
conceived

28. Thank You
❖ Justin Wu
❖ +351 967 461 477
❖ justinwuglobal@gmail.com
❖ Follow Me On Twitter: @blockchainLX
❖ https://pt.linkedin.com/in/justinwuglobal

29. Reflection Tasks
❖ Introduce yourself to one person you don’t know, and find out one
thing you two have in common
❖ Find another pair(s) of people to speak to and discuss the following in
a group of four or more:
❖ Who are the worst middlemen in Portugal, and how could you
replace them with a smart contract/Dapp?
❖ What existing applications could be decentralized and coded in
Ethereum to increase revenue/save money/increase security and
insurance?
❖ How could you use the synergies of Ethereum to create the next
big Dapp?

30. Sources
❖ https://xabierbarandiaran.wordpress.com/2016/01/03/everything-you-need-to-know-
about-bitcoin-blockchain-and-ethereum-in-less-than-90-minutes-of-short-videos/
❖ https://medium.com/@creole/1-a-simple-view-of-blockchain-500654a55d1d#.buxxtsb7t
❖ http://www.coindesk.com/bitcoin-explained-global-currency-wall-street-veteran/?
utm_content=bufferfc796&utm_medium=social&utm_source=twitter.com&utm_campaig
n=buffer
❖ https://www.oreilly.com/ideas/blockchains-by-analogies-and-applications
❖ http://realmoney.thestreet.com/articles/01/21/2016/bitcoin-dead-long-live-blockchain
❖ http://dailyfintech.com/2016/02/05/ethereum-is-winning-in-both-enterprise-
consumer-markets/
❖ https://bitcoinmagazine.com/articles/imf-virtual-currencies-and-their-underlying-
technologies-can-provide-faster-and-cheaper-financial-services-1454089937

31. Sources Continued
❖ http://www.bizjournals.com/newyork/news/2016/02/01/ernst-and-young-
blockchain-future.html?ana=twt
❖ http://www.bbc.com/news/business-35370304
❖ http://www.coindesk.com/deloitte-report-blockchain-use-cases-adoption/
❖ http://bitsonblocks.net/2016/02/01/a-gentle-introduction-to-smart-contracts/
❖ https://www.pwc.com/us/en/financial-services/fintech/blockchain.html
❖ http://www.forbes.com/sites/laurashin/2016/01/26/how-will-bitcoin-
technology-go-mainstream-an-analysis-of-5-strategies/#9ad50813c31d
❖ https://medium.com/@angelomilan/ethereum-explained-to-my-mom-
infographic-673e32054c1c#.klu0ytzde

32. Sources Continued
❖ http://www.bizjournals.com/newyork/news/2016/01/26/brooklyn-s-new-kid-on-the-blockchain-in-talks-with.html?
ana=twt
❖ http://www.coindesk.com/coin-center-bitcoin-securities-report/?
utm_content=bufferdb87d&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
❖ http://www.lawgazette.co.uk/news/bitcoin-technology-heralds-smart-contracts-era/5053220.article?
utm_content=buffer4d550&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
❖ https://medium.com/@ConsenSys/programmable-blockchains-in-context-ethereum-s-future-cd8451eb421e#.
6nuj41pfa
❖ http://cointelegraph.com/news/116127/eu-hearing-virtual-currencies
❖ http://www.the-blockchain.com/2016/01/19/uk-government-rolls-out-blockchain-report/
❖ http://qz.com/586006/interactive-graphic-how-nations-compete-on-technology-innovation-and-financial-
development/
❖ https://medium.com/@maciejolpinski/why-i-m-optimistic-about-ethereum-even-though-most-dapps-will-fail-
ab122b569be9#.rpuj71165
❖ https://coincenter.org/2016/03/what-is-ethereum/?
utm_content=buffer8707e&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer