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Bitcoin: The Cyberpunk    Cryptocurrency        Kyle Drake
What is money?
There are never enoughresources to provide all ofhumanity with everything.This will never change.
Money helps us to determine thesupply and demand of theselimited resources.Without it, valuation is difficult.Production is...
Star Trek: A dystopian economic              future.
In The Beginning         Bartering          Example:A gallon of milk for a lobster.
In The Beginning                     Bartering• How much milk is worth a lobster?• The milk dealer is a vegetarian (not a ...
Buying a car?
Through the actions of      individuals,a medium of exchange   eventually forms.
“A medium of exchange is anintermediary used in trade toavoid the inconveniences of a     pure barter system.”
Money is a medium of exchange. It is also:  • A unit of account  • A store of value
Good money is (mostly): • Fixed in quantity • Durable • Divisible • Accepted • Convertible
What has been used as      money?
Forms of Money    Manillas
Forms of Money    Manillas
Forms of Money  Cowry Shells
Forms of Money  Cowry Shells 貝 = Cowry
Forms of MoneyPacific Northwest Shell Money        Dentalia shells
Travis S http://www.flickr.com/photos/baggis/5435231427/
Let’s talkprisoner economics.
The Economic Organization     of a P.O.W. Camp        Richard Radford
Prisoner Economics• 50,000 prisoners• Supplies sent by Red Cross• Equal and regular ration distribution• Relative trading ...
Prisoner Economics            Rations:• Tinned Milk      • Sugar• Jam              • Cigarettes• Butter           • Tinned...
Prisoner Economics• Some were vegetarians• Some didn’t smoke• Nobody wanted the carrots• One of them became a currency.
Prisoner Economics             Cigarettes!• Impossible to reproduce in prison camp• Smaller units, easy to hold and count•...
Forms of Money• Used by all (including non-smokers)• Arbitrage helped equalize the prices• Guards could be bribed with the...
After lots of experimentation,      markets found the   best commodity to use.
http://www.flickr.com/photos/digitalcurrency/2438119817
Forms of Money     Gold and Silver• Fixed supply• Adding more requires intense effort• Divisible• Durable (with a little h...
Forms of Money  Gold and Silver• Started as ingots• First known coins: Lydia, 7BC
Forms of Money                       Chinese SyceeNationale Bank van Belgie - Banque nationale de Belgique http://www.flick...
Forms of Money           Chinese Sycee• Qin Dynasty (221-207 BC)• Decentralized (no central mint)• Quality assured by Shro...
Forms of Money  Bank Notes          http://www.flickr.com/photos/epsos/5902557577
Forms of Money Two Types:          http://www.flickr.com/photos/epsos/5902557577
Bank notes backed  by commodity
Fiat Money• USD: Fiat Since 1971• Value from government law• Issued by bank(s)• Easy to make a lot of it
How Currencies Fail
How Currencies Fail  In one word:  debasement.
How Currencies Fail          Debasement:   Lowering the value of coinage byreducing the content of precious metal.
Roman Currency Debasement   The result: price inflation
Roman Currency Debasement              Nero’s Coinage reform                      64 AD             Follows the great fire ...
Roman Currency Debasement
Roman Currency Debasement“Inflation and Financial Policy under the Roman Empire to the Price Edict of 301 A.D.”
Modern Day Inflation
How Currencies Fail               Debasement                   Classic version:Lowering the value of coinage by reducing t...
How Currencies FailWeimar Germany, 1921 to 1924
Jiaozi - Song Dynasty   Chao -Yuan Dynasty     (960 - 1279)         (1271 - 1368)
How Currencies Fail     Zimbabwe
How Currencies Fail         Many More:Tom Chao’s Paper Money Galleryhttp://www.tomchao.com/hb.html
Modern Day Inflation       1971: The “Nixon Shock”Ended the post WWII   Gold Standard  “Bretton Woods”
How Currencies Fail      Venezuela
Modern Day InflationThe US Dollar became the  international reserve        currency. How long will that last?
Modern Day Inflation
Modern Day InflationExcess currency can causeinflation. It can also cause   investment bubbles.
All of the currency forms (paper, gold, cigarettes)        have flaws.
What if you couldalgorithmically design a   better currency?
Bitcoin
Satoshi Nakamoto• Founder of Bitcoin• Wrote the whitepaper, wrote the code• Satoshi is a pseudonym!• Anonymous e-mail serv...
The Genesis Block00000000   01   00   00   00   00   00   00   00   00   00   00   00   00   00   00   00   .................
The Genesis Block00000000   01   00   00   00   00   00   00   00   00   00   00   00   00   00   00   00   .................
The Genesis BlockAlistair Darling has been forced to consider a second bailout for banks as the lendingdrought worsens.The...
Bitcoin• Mathematically designed electronic currency• Introduced in 2008, started up January 2009• Decentralized (network ...
Bitcoin       Controlled Inflation  If Miners are making Bitcoins too fast, the system algorithmically throttles creation o...
Bitcoin        Controlled Inflation  Bitcoin does not add enough to its moneysupply to cause inflation. Rather, it is far mo...
Bitcoin       Deflation When money becomes more valuable over time.Economic policymakers are   terrified of deflation.
Bitcoin         Is Deflation Bad?There are not a lot of answers on this topic.“It is unclear just how much monetary policy ...
We have a bias towards inflation.Changing that would change us.   Maybe even for the better.
But if you must have   money devalue to encourage spending, Ihave a solution for you.
Demurrage     Makes it cost money to hold onto money.Less damaging to economies than inflation, and more                   ...
Alternatives and improvements toBitcoin are already    showing up.
Litecoin
Litecoin                  litecoin.org• Forced wallet encryption• CPU mining, rather than GPU• Lighter blockchain (much fa...
Freicoin         Bitcoin with Demurrage.Really early in development, but interesting.
Conclusions
Bitcoin could be the   most important invention since the     gold coin.
There will be   numerous,   competingcryptocurrencies.
Designer cryptocurrencies  could make ourworld a better, more   stable, more prosperous place.
Thank you!
Good money is (mostly): •
Good money is (mostly): •
Good money is (mostly): •
Good money is (mostly): •
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Good money is (mostly): • Bitcoin: The Cyberpunk Cryptocurrency

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Good money is (mostly): • Fixed in quantity • Durable • Divisible • Accepted • Convertible

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