Guests of O'Sullivan Davies Lawyers at the latest OSD Presents event were given valuable insight into Bitcoin and blockchain technology.
The presentation by Ian Love, founder and CEO of Blockchain Assets, demystified Bitcoin, first with an overview of the history of money and Bitcoin and then covering blockchain technology more generally.
"Bitcoin is the most significant monetary invention in history," said Mr Love.
Bitcoin enables transactions to occur peer-to-peer, facilitating payments directly from one party to another without going through a bank or financial institution. State issued currencies, which are controlled by central banks, are often deliberately devalued so as to stimulate domestic economies, this can create inflation. Bitcoin on the other hand is a deflationary currency because its supply is fixed and the rate at which it is issued is decreasing.
The total current value of Bitcoin in circulation is over USD $1 trillion. It has a scarce supply as there will only ever be 21 million Bitcoins issued – this limitation makes Bitcoin valuable. However, each Bitcoin is made up of 100 million Satoshi's (named after the founder of Bitcoin, Satoshi Nakamoto), so more people are able to own some part of a Bitcoin.
Mr Love commented that "Bitcoin is a store of value based on sound money principles, it could in time become a global reserve currency."
Blockchain is the name given to the technology that enables the ownership of Bitcoins to be tracked and accounted for on a coin by coin basis. Rather than using a centralised record keeping database, the records are distributed around the world and each transaction is verified by 'miners' who can be likened to bookkeepers. Miners are paid in Bitcoin for their work.
Blockchain technology also has the ability to undertake ownership record keeping for any asset. By way of a simple example: in the current system, you sell your car to Joe, Joe gives you the money, and then you both register the transaction at the Department of Transport to prevent any future disputes about the ownership of the car. With blockchains, the sale of your car is registered on a decentralised ledger, and by design, cannot be altered without alternation of all records. There is no need for control or regulation because each transaction is verified by a paid 'miner' (who could be anywhere in the world), connected to the previous transaction and permanent, hence the 'chain'. Naturally, it's more complex and robust – further reading is recommended below.
"If you think about how the internet has fundamentally changed our lives, think about this: Bitcoin is likely to be ten times more impactful than the internet," said Mr Love.
The insightful presentation gave a great overview in layman's terms about the future of blockchain as an "antifragile" system and Bitcoin as sound currency.
For further reading into Bitcoin and Blockchains, visit Mr Love's blog www.blockchainlegal.com.au. Mr Love also recommends the following books:
- Digital Gold by Nathaniel Popper
- The Bitcoin Standard by Saifedean Ammous
- The Truth Machine by Michael J Casey and Paul Vigna
- The Infinite Machine by Camila Russo
Further Blockchain reading:
- The New Technologies of Freedom by Darcy W E Allen, Chris Berg and Sinclair Davidson
- Cryptoassets by Chris Burniske and Jack Tatar
Mr Love is holding another presentation, this time with Caroline Bowler, CEO of BTC Markets, Australia's leading cryptoasset exchange, at the Royal Perth Yacht Club on Wednesday 10 March at 6:00pm. Registration is free but required for attendance.