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“The root problem with conventional currency is all the trust that’s required to make it work…the history of fiat currencies is full of breaches of that trust.”
— Satoshi Nakamoto (creator of Bitcoin)
What if?New financial system built on integrity instead of trust…
What if?New type of database with built-in integrity
What if?Replicate it everywhere so everyone has a copy
What if?All participants validate every change to the database
What if?We created a tamper-proof audit log of all transactions.
Transactions
Transactions
Transactions
Transactions
January 3, 2009
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.
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A
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B
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B
Let’s combine the best of peer-to-peer…
Peer to Peer
No fees
Resilient
No single point of failure
Distributed power
Freedom to innovate
No large attack target
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C
And the best of centralization…
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A
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Central Counterparty
Increased reliability
Reduced reconciliation
Single connection
Universal system of record
Reduced complexity
Transaction safety
A
To create the best of both worlds…
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A
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C
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B
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Central Counterparty
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A
B
B
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B
Peer to Peer
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B B A
C
A
A blockchain built on integrity
Blockchain Solution
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A B
Alice wants to send money to Bob.
How does a blockchain work?
The transaction is posted to a block along with other transactions.
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G H
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O P
K L
Q R
The block is sent to all validators in the network
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G H
M N
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Q R
Node A
Node B
Node C
Node D
Node E
The network approves the valid transactions.
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C D E F
G H
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Q R
Node A
Node B
Node C
Node D
Node E
The block is added to the blockchain
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Block 432568
+ 10 Transactions
Block 432567117 Transactions
Block 432566117 Transactions
Block 432568
+ 10 Transactions
Block 432567117 Transactions
Block 432566117 Transactions
As the chain builds, the transaction becomes immutable.
Block 432568
+ 10 Transactions
Block 432567117 Transactions
Block 432566117 Transactions
Block 432569
112 Transactions As the chain builds, the transaction becomes immutable.
Block 432568
+ 10 Transactions
Block 432567
Block 432569
112 Transactions
Block 432570
38 Transactions As the chain builds, the transaction becomes immutable.
Block 432568
Block 432569
112 Transactions
Block 432570
38 Transactions
Block 432571
96 Transactions As the chain builds, the transaction becomes immutable.
Blockchain is…
..a technical tour-de-force- Bill Gates
…a once in a generation opportunity- PriceWaterhouseCoopers
…the first native digital medium for value, just as the internet was the first native
digital medium for information- Harvard Business Review