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Write a short abstract of the report. Can optionally include a summary of the key lessons learned (5%).
2. Seminar Content
Describe the content of the seminar and its key messages. Note that you are not supposed to repeat word by word as to what are on the ppt (20%).
3. Analysis & Discussion
Analyze and discuss the seminar content. It is important that you can give insights that you obtain through background research and/or provide personal opinions. You can also share your own experience here if it is relevant to the seminar content (45%).
Give a short conclusion of the discussions made in the report (5%).
If you use additional information from the internet or other sources in your report, list them here. Don’t forget to mention the references in the text where applicable (5%).
Ir Dr. Daniel Ng
1. Chairman 2017/18, HKIE MI Division
2. Director, DAMA China & TsingHua University Big Data Lab
3. Director, Kun Hang Group (Beijing Startups, Gold Import &
Refinery and Oil & Gas Trading)
4. Editor, IGI and Taylor Francis
Blockchain and Cryptocurrency – a managerial
Bitcoin catches the world attention when CBOE (Chicago Board of Exchange) launches the
ever first exchange-trade cryptocurrency future end of 2017. The price of bitcoin and other
crytocurrencies jet up multiple times. he custodianship and risk involved are mythic. In this
short lecture, the speaker will portrait the current landscape of all cryptocurrency (and
associated blockchain technology), market capitalization of respective cryptocurrencies, the
liquidity issue, the impact to market and financial infrastructure, the reason of price surge,
the exchange-ability with physical assets, hacked-ability of cyrptocurrency, role of bitcoin
mining, next gen cryptocurrency (such as ZenCash), Japan and Korea regulators on Bitcoin
exchanges, ICO marketplace and other management issues. The objective is for students to
have peel-off views on this emerging global medium of monetary exchange.
• Speaker introduction
• Cryptocurrencies Landscape
• How Bitcoin price is fixed
• What is Ethereum
• Buy Bitcoins, Ethers and others
• Convert Cryptocurrencies to to physical assets
• Blockchain – underlying technology for
• Impact of next gene Cryptocurrency – ZenCash
• ICO – Initial Coin Offers
Hong Kong Securities and Future Commissions (SFC)
forbids UNLICENSED representation, promotion,
invitation and advisory on financial products.
All materials in this guest seminar are solicited from
The speaker is NOT a SFC-licensed personnel and all
presentation is for academic research ONLY. It has
nothing to do with investment, crowd-funding and
other financial activities
Full list of Cryptocurrencies
https://coinmarketcap.com/all/views/all/ (Goto Internet)
Bitcoin Whitepaper – 2008.10.31*
Suspected to be
a group of
Gox used to the
Features of Bitcoin
• Essentially it’s “deflationary” – the reward is cut in half every four
years, and tokens can be irrevocably destroyed
• Nearly infinitely divisible currency units supporting eight decimal
places 0.00000001 (known as a Satoshi or Noncent*)
• Nominal transaction fee’s paid to the network
– Same cost to send $.01 as $1,000,000
• Consensus driven – no central authority
• Counterfeit resilient
– Cannot add coins arbitrarily
– Cannot be double-spent
• Non-repudiation – aka “gone baby gone” – no recourse and no one
to appeal to return sent tokens
When did it start?
• “Satoshi Nakamoto” created the reference implementation that
began with a Genesis Block of 50 coins
– August 18 Domain name “bitcoin.org” registered
– October 31 Bitcoin design paper published
– November 09 Bitcoin project registered at SourceForge.net
– January 3 Genesis block established at 18:15:05 GMT
– January 9 Bitcoin v0.1 released and announced on the
cryptography mailing list
– January 12 First Bitcoin transaction, in block 170 from Satoshi
to Hal Finney
Bitcoin Market Capitalization
The tumble in cryptocurrencies that erased nearly $500 billion of
market value over the past month could get a lot worse,
according to Goldman Sachs Group Inc.’s global head of
Most digital currencies are unlikely to survive in their current
form, and investors should prepare for coins to lose all their value
as they’re replaced by a small set of future competitors,
Goldman’s Steve Strongin said in a report dated Feb. 5. While he
didn’t posit a timeframe for losses in existing coins, he said recent
price swings indicated a bubble and that the tendency for
different tokens to move in lockstep wasn’t rational for a “fewwinners-take-most”
“The high correlation between the different cryptocurrencies
worries me,” Strongin said. “Because of the lack of intrinsic value,
the currencies that don’t survive will most likely trade to zero.”
Full list of Cryptocurrencies
https://coinmarketcap.com/all/views/all/ (Goto Internet)
Core issues of Cryptocurrencies
• Private Exchanges
• No Asset Backed
• Convert-ability to/fro physical asset
How Bitcoin price is
How did Bitcoin price develop?
In 2009, the year Bitcoin was created, nobody could have thought it would gain such
popularity. The initial price was about $0.001. Over the next five years there were no
significant events, so the price rose slowly with little fluctuations.
In 2013, Bitcoin attracted a lot of attention because of the Cyprus banking crisis. In
November 2013, the Chinese started to buy BTC in large quantities and the price
increased by 1000 percent. However, it didn’t last long.
In February 2014, there was a DDoS attack on the servers of the exchange Mt. Gox. At
that time, it controlled about 60 percent of Bitcoin transactions. This occasion struck
Bitcoin hard and the price fell by 40 percent. Throughout the year, until January 2015, the
price continued to fall down.
During 2015, Bitcoin gained popularity slowly but firmly and during that year, the price
began to rise little by little.
Since May 2016, Bitcoin has earned the trust of more and more people, and its price has
continued to rise.
In June 2017, the market saw a dramatic fall and the price decreased by 14 percent.
Nowadays, Bitcoin is taking back its positions.
What factors influence Bitcoin price?
Technical issues – Bitcoin has an open source code, so everyone can examine it. New
updates for fixing some bugs and weak points in code can give an impetus for price
growth. Meanwhile, successful account hacks or server attacks can bring down the
exchange rate. In August 2016, some hackers discovered a security problem in
Bitfinex and the price subsequently fell.
Political and economic events worldwide – In the age of globalization, decisions in
just one country can have an influence on the entire world – i.e. accepting Bitcoin as
a means of payment in Japan.
High volatility – Volatility is the degree of trading price variation over time. Volatility
refers to the amount of uncertainty or risk in a security’s value. Higher volatility
means that a security’s value can potentially be spread out over a larger range of
values. In other words, the price of the security can change dramatically over a short
time period in either direction. The volatility of Bitcoin is about 10 percent right now,
but it is going down.
What are the most significant Bitcoin price fluctuations?
There have been some price swings in the history of Bitcoin.
Caused by technical reasons – In February 2011, the exchange Mt. Gox was found,
which allowed people to exchange USD to Bitcoins. Consequently, the price rose from
$0.05 to over $1. In February 2014, Mt. Gox declared a DDoS attack on its servers. At
that moment, Mt. Gox controlled about 60 percent of Bitcoin transactions. As a
result, the price went down by 30 percent.
Influenced by international events – Between October-November 2013, organizations
all over the world announced that they had started to accept payments in BTC. The
Chinese started to buy Bitcoins en masse and, unsurprisingly, the price rose from
$120 to $1,150. In December 2013, the People’s Bank of China forbade payments in
BTC, which saw the price fall to $500.
Influenced by mass media – In April 2010, an updated version of the source code was
published. After that article, the price increased 10 times. In April 2011, Time
magazine published an article about Bitcoin whereby the author talked about the
future of the cryptocurrency. Soon after, Bitcoin price grew from $10 to $30.
What is Ethereum?
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.
The Ethereum project was bootstrapped via an
ether pre-sale during August 2014 by fans all
around the world. It is developed by the Ethereum
Foundation, a Swiss nonprofit, with contributions
from individuals and organizations across the
Turing complete contracts on a blockchain.
• Contracts are the main building blocks of Ethereum.
• A contract is a computer program that lives inside the
distributed Ethereum network and has its own ether
balance, memory and code.
• Every time you send a transaction to a contract, it
executes its code, which can store data, send
transactions and interact with other contracts.
• Contracts are maintained by the network, without any
central ownership or control.
• Contracts are written in languages instantly familiar to
any programmer and powered by Ether, Ethereum’s
• Ether is the crypto-fuel for the Ethereum network.
• Ether is a necessary element – a fuel – for operating the distributed
application platform Ethereum. It is a form of payment made by the
clients of the platform to the machines executing the requested
operations, functioning as the incentive that ensures that developers
will write quality applications, and that the network remains healthy.
• The total supply of ether and its rate of issuance was decided by the
donations gathered on the 2014 presale.
• Developers who intend to build apps that will use the Ethereum
blockchain need ether.
• Users who want to access and interact with smart contracts on the
Ethereum blockchain also need ether.
What is Ether?
Consensus protocols are key to determining the sequence of
actions resulting from the contract’s code. This enables
peer-to-peer trading of everything from renewable energy to
automated hotel room bookings.
“Contracts Get Smarter with Blockchain”, CIO Journal, The Wall Street Journal, World Trade Organization,
International Trade Statistics 2015, 2015, p. 41.
systems drive $18
trillion in transactions
• Hyperledger is an open source collaborative effort created to
advance cross-industry blockchain technologies. It is a global
collaboration, hosted by The Linux Foundation, including leaders in
finance, banking, IoT, supply chain, manufacturing, and technology.
• Business Blockchain Frameworks are hosted with Hyperledger.
• Hyperledger addresses important features for a cross-industry open
standard for distributed ledgers. The Linux Foundation hosts
Hyperledger as a Collaborative Project under the foundation.
• To learn more, visit: https://www.hyperledger.org/.
Alternate – Hyperledger
Buy Bitcoins, Ethers
A contract for difference (CFD) is a popular form of derivative trading. CFD trading
enables you to speculate on the rising or falling prices of fast-moving global financial
markets (or instruments) such as shares, indices, commodities, currencies and
Why Is CFD Illegal In The US. … Contract for Difference trading is illegal in the US
because over-the-counter financial instruments are strictly regulated by the Securities
and Exchange Commission. Or to put it even more simply, CFD is illegal in the United
States because it is against the law.
Not draw down in Bitcoin!
No different to your HK ETF account. Just deposit money and you may not own a Bitcoin
More like a social club
CFD – another kind of derivative
to physical assets
Crypto Currencies to International Payments
Bitcoin Debit Card
Update [2018-01-12]: Due to recent Visa ban, most of the Visa
bitcoin debit cards listed below are disabled and NOT working.
Visa exceptions are:
– Monaco Visa card that is going to be shipped sometime soon
Mastercard that works:
– Advanced Cash, but has high fees!
– Centra in preorder
Banned Bitcoin Debit Card
Cryptopay, Wirex, Spectrocoin, Xapo, AdvCash, Shift Card,
ANXPRO, Bitwala, WageCan,
Not True Anonymity
underlying technology for
Blockchain technology is a digital
innovation that is poised to significantly
alter financial markets within the next
few years, within a cryptographic
ecosystem that has the potential to also
significantly impact trusted computing
activities and therefore cybersecurity
concerns as a whole.
Simply defined a Blockchain is little more
• The “digital wallet” operates in a peer to peer mode
• When it starts it bootstraps to find other wallets
– Originally it used the Internet Relay Chat (IRC) network
– Now based on DNS and “seed nodes”
• The wallet will synchronize with the network by
downloading ALL of the transactions starting from the
GENESIS block if necessary
– 338,540 blocks at time of slide prep
– Just over 20 GB
• Using a “gossip protocol” the wallets share all
transaction information with their peers
• Using public key cryptography, specifically
Elliptic Curve Cryptography due to its key
strength and shorter keys
• Transactions are sent to public key
Addresses are like Accounts
• The wallet listens for transactions addressed to any of
its public keys and in theory is the only node that is
able to decrypt and accept the transfer
• “Coins” are “sent” by broadcasting the transaction to
the network which are verified to be viable and then
added to a block
• Keys can represent a MULTI-SIG address that requires a
N of M private keys in order to decrypt the message
• Every viable transaction is stored in a public
• Transactions are placed in blocks, which are
linked by SHA256 hashes.
Impact of next gene
ZenCash is essentially the great grandson of Bitcoin. Bitcoin, the OG of crypto,
was the originator of cryptocurrency. ZenCash was derived from ZClassic (ZCL),
which was forked from ZCash (ZEC), which was ultimately a clone of Bitcoin
(BTC). ZenCash was created essentially to birth a new crypto that could meet
their goals and ideologies under their control.
Privacy Coin for Secure Transactions
ZenCash is a privacy coin. Privacy coins allow users to send secure, off-the-grid
transactions to other users. So if I wanted to send you 1 Zen, I would just send it
to your address from mine. Zen also has the capabilities to include private
messages with their transactions. So users can include messages with their
transactions. These messages can add context to payments.
Secure Anonymous Publishing Platform
ZenCash can also be used for secure and anonymous publishing. End-users can
provide private communications on blockchain, enabling worldwide anonymous
publishing. This allows users to safely and anonymously create posts, without
revealing their identity. In my opinion, I think this avenue for anonymous posting is
one of the features that will be critical to ZenCash’s success.
ZenCash is a minable cryptocurrency or a POW (Proof of Work) cryptocurrency. That
means when I send you ZenCash, it needs to be verified on the blockchain. The
miners do the work behind that by connecting their mining rigs to the ZenCash
network to verify transactions and solve the equihash algorithm on the blockchain.
They essentially run the network for ZenCash. In exchange for the mining and
contributed computing power, they receive block rewards. For every block that is
solved, pieces of Zen go to a mining pool where people who built the GPU miners and
who are connected to the ZenCash network, receive a small token of ZenCash for
their work. The work is essentially outsourced (which allows the network to be
decentralized) and then the work is paid for. This decentralization is a key component
Initial Coin Offers
Source: Autonomous NEXT, Google Search Trends