The Path to Cryptomania - Bitcoin and Beyond

The Path to Cryptomania - Bitcoin and Beyond

These materials will review the factors leading up to Bitcoin and other follow on Crypto offerings. We consider whether the massive increase in crypto related investments could simply be (yet) another asset bubble. However, this might also be a fundamental technological transformation? Only time will tell. v1.02

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Daniel Martin Katz

January 28, 2019
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  1. @ computational professor daniel martin katz danielmartinkatz.com BLOCKCHAIN, CRYPTOCURRENCY AND

    LAW professor nelson rosario THE PATH TO CRYPTOMANIA - BITCOIN AND BEYOND nelsonmrosario.com @ nelsonmrosario BLOCKCHAINLAWCLASS.COM
  2. DANIEL MARTIN KATZ E D U | I L L

    I N O I S T E C H + S TA N F O R D C O D E X B LO G | C O M P U TAT I O N A L L E GA L S T U D I E S . C O M PAG E | DA N I E L M A R T I N K AT Z . C O M C O R P | L E X P R E D I C T. C O M NELSON ROSARIO B LO G | L AWO F C RY P TO C U R R E N C Y. C O M PAG E | N E L S O N M RO S A R I O . C O M F I R M | S M O L I N S K I RO S A R I O L AW P. C . BLOCKCHAINLAWCLASS.COM L A B | T H E L AW L A B . C O M E D U | I L L I N O I S T E C H - C H I C AG O K E N T L AW
  3. BLOCKCHAINLAWCLASS.COM CRYPTOMANIA

  4. https://www.nytimes.com/2018/01/13/style/bitcoin-millionaires.html

  5. EVERYONE WANTS TO TALK ABOUT THE PRICE ACTION IN CRYPTOCURRENCY

    BLOCKCHAINLAWCLASS.COM
  6. BLOCKCHAINLAWCLASS.COM BITCOIN BUBBLE

  7. BLOCKCHAINLAWCLASS.COM BITCOIN BUBBLE (2013)

  8. BLOCKCHAINLAWCLASS.COM BITCOIN BUBBLE (2013) BITCOIN BUBBLE (2017- 2019)

  9. BLOCKCHAINLAWCLASS.COM AND FROM THERE …

  10. THE PRICE IS (ARGUABLY) THE LEAST INTERESTING THING ABOUT CRYPTOCURRENCY

    OKAY PERHAPS THE PRICE $$ IS A LITTLE BIT INTERESTING :) BLOCKCHAINLAWCLASS.COM
  11. SO - WHAT IS INTERESTING ABOUT CRYPTOCURRENCY? BLOCKCHAINLAWCLASS.COM

  12. TIME FOR A LITTLE HISTORY... BLOCKCHAINLAWCLASS.COM

  13. THE 2008 BITCOIN WHITE PAPER https://bitcoin.org/bitcoin.pdf BLOCKCHAINLAWCLASS.COM

  14. WHO IS SATOSHI NAKAMOTO ? BLOCKCHAINLAWCLASS.COM

  15. WHO IS SATOSHI NAKAMOTO ? NOT ACTUALLY THE REAL SATOSHI

    NAKAMOTO HE JUST WANTED A ‘FREE LUNCH’ FROM A REPORTER BLOCKCHAINLAWCLASS.COM
  16. ON OCTOBER 31 2008 AN ANONYMOUS INDIVIDUAL GOING BY THE

    NAME SATOSHI NAKAMOTO PUBLISHES A PAPER TO A CRYPTOGRAPHY MAILING LIST …. BLOCKCHAINLAWCLASS.COM
  17. “I'VE BEEN WORKING ON A NEW ELECTRONIC CASH SYSTEM THAT'S

    FULLY PEER-TO-PEER, WITH NO TRUSTED THIRD PARTY.” THE PAPER CLAIMED BLOCKCHAINLAWCLASS.COM
  18. TIME FOR A LITTLE MORE HISTORY ... BLOCKCHAINLAWCLASS.COM

  19. 2008 - FINANCIAL CRISIS LIVE SHOT OF BEN BERNANKE’S DESK

    9/15/08 BLOCKCHAINLAWCLASS.COM
  20. 2008 - FINANCIAL CRISIS 9/15/2008 - LEHMAN BROTHERS FILES FOR

    BANKRUPTCY 5/29/2008 - BEAR STEARNS IS SOLD AT MASSIVE DISCOUNT 9/14/2008 - MERRILL LYNCH IS SOLD AT MASSIVE DISCOUNT BLOCKCHAINLAWCLASS.COM
  21. THE RESPONSE = BAILOUTS + QUANTITATIVE EASING BLOCKCHAINLAWCLASS.COM

  22. BAILOUTS + QUANTITATIVE EASING BLOCKCHAINLAWCLASS.COM

  23. TREMENDOUS AMOUNT OF MONEY FROM CENTRAL BANKS PROPPED UP THE

    FINANCIAL WORLD BLOCKCHAINLAWCLASS.COM
  24. THE CREATOR OF BITCOIN WAS HOSTILE TO THIS TYPE OF

    MONETARY POLICY BLOCKCHAINLAWCLASS.COM
  25. HOSTILITY TO CENTRAL BANKERS IS ONE OF THE REASONS BITCOIN

    HAS A HARD CAP OF 21 MILLION BITCOIN TOTAL BLOCKCHAINLAWCLASS.COM
  26. None
  27. THIS DOESN’T TELL THE WHOLE STORY BLOCKCHAINLAWCLASS.COM

  28. GOTTA GO BACK EVEN FURTHER... BLOCKCHAINLAWCLASS.COM

  29. 1996 - 2004 - DOT COM BUBBLE BLOCKCHAINLAWCLASS.COM

  30. TRUCKLOADS OF MONEY ARE DUMPED INTO ANY COMPANY CLAIMING TO

    DO ANYTHING RELATED TO THE INTERNET BLOCKCHAINLAWCLASS.COM
  31. SOUND FAMILIAR? BLOCKCHAINLAWCLASS.COM

  32. OKAY TIME TO SHIFT GEARS FOR A SECOND … BLOCKCHAINLAWCLASS.COM

  33. THE INFRASTRUCTURE OF THE INTERNET IS FOCUSED ON HOW DATA

    IS HANDLED AND HOW IT IS SENT THROUGH THE NETWORK BLOCKCHAINLAWCLASS.COM
  34. OPEN SYSTEMS INTERCONNECTION (OSI) MODEL BLOCKCHAINLAWCLASS.COM

  35. INTERNET INFRASTRUCTURE BLOCKCHAINLAWCLASS.COM

  36. None
  37. WHAT’S MISSING FROM THE INFRASTRUCTURE? BLOCKCHAINLAWCLASS.COM

  38. TRUST AND IDENTITY BLOCKCHAINLAWCLASS.COM

  39. THE PROBLEM OF TRUST AND IDENTITY WHO CAN YOU TRUST?

    WHAT CAN YOU TRUST? BLOCKCHAINLAWCLASS.COM
  40. THESE PROBLEMS LIE AT THE CORE OF WHAT BITCOIN PURPORTS

    TO DO BLOCKCHAINLAWCLASS.COM
  41. THE ECONOMIST CALLS BLOCKCHAIN ‘THE TRUST MACHINE’ BLOCKCHAINLAWCLASS.COM

  42. BLOCKCHAINLAWCLASS.COM BUT IT ALL BEGINS WITH BITCOIN...

  43. SO LETS GO BACK TO THE 2008 BITCOIN WHITE PAPER

    https://bitcoin.org/bitcoin.pdf BLOCKCHAINLAWCLASS.COM
  44. THE DOUBLE SPEND PROBLEM “A payee can verify the signatures

    to verify the chain of ownership. The problem of course is the payee can't verify that one of the owners did not double-spend the coin. A common solution is to introduce a trusted central authority, or mint, that checks every transaction for double spending.” https://bitcoin.org/bitcoin.pdf BLOCKCHAINLAWCLASS.COM Bitcoin White Paper
  45. THE DOUBLE SPEND PROBLEM HOW CAN YOU BE SURE THAT

    THE DIGITAL MONEY YOU RECEIVED HAS NOT ALREADY BEEN SPENT? TRADITIONALLY BANKS PROVIDED THE SOLUTION — BITCOIN OFFERS A DECENTRALIZED SOLUTION BLOCKCHAINLAWCLASS.COM
  46. THE DOUBLE SPEND PROBLEM TRANSACTIONS ON THE BITCOIN NETWORK ARE

    PUBLIC TO EVERYONE IN THE NETWORK BLOCKCHAINLAWCLASS.COM (BLOCKCHAIN CAN BE PRIVATE IN OTHER INSTANCES)
  47. THE DOUBLE SPEND PROBLEM THUS, ANYONE CAN VERIFY THAT FUNDS

    ON THE BITCOIN NETWORK HAVEN’T BEEN SPENT YET BLOCKCHAINLAWCLASS.COM
  48. DIGITAL ASSETS BITCOIN RESULTS IN THE FIRST UNIQUE VERIFIABLE DIGITAL

    PROPERTY BLOCKCHAINLAWCLASS.COM
  49. ‘THE TRUST MACHINE’ CRYPTO INFRASTRUCTURE IS A NEW WAY TO

    HANDLE TRUST ON THE INTERNET BLOCKCHAINLAWCLASS.COM
  50. None
  51. 2009 - BITCOIN NETWORK GOES LIVE BLOCKCHAINLAWCLASS.COM

  52. SO THEN WHAT ? BLOCKCHAINLAWCLASS.COM

  53. SO THEN WHAT ? BUY PIZZA BLOCKCHAINLAWCLASS.COM

  54. 2010 - THE BITCOIN PIZZAS ON MAY 22, 2010 A

    PROGRAMMER BOUGHT TWO PAPA JOHN’S PIZZAS FOR 10,000 BITCOIN BLOCKCHAINLAWCLASS.COM
  55. 2010 - THE BITCOIN PIZZAS 10,000 BITCOIN CURRENT VALUE $35

    MILLION+ IN 2019 BLOCKCHAINLAWCLASS.COM
  56. OKAY, MAYBE TRADE SOME BITCOIN BACK AND FORTH IN CASE

    IT’S WORTH SOMETHING LATER BLOCKCHAINLAWCLASS.COM TRADE AND MINE
  57. 2010-2014 - MT. GOX BLOCKCHAINLAWCLASS.COM

  58. 2010-2014 - MT. GOX BLOCKCHAINLAWCLASS.COM EARLY ON MT. GOX WAS

    THE LARGEST BITCOIN EXCHANGE
  59. 2010-2014 - MT. GOX BLOCKCHAINLAWCLASS.COM AT ITS HEIGHT MT. GOX

    HANDLED 70% OF ALL BITCOIN TRANSACTIONS
  60. 2010-2014 - MT. GOX BLOCKCHAINLAWCLASS.COM IN 2013, MT. GOX ‘LOST’

    850,000 BITCOINS VALUED AT $450 MILLION (NOW WORTH MORE THAN 7 BILLION)
  61. HOW TO BURST A BUBBLE BLOCKCHAINLAWCLASS.COM

  62. OTHER UNSAVORY THINGS BLOCKCHAINLAWCLASS.COM 2011 - 2013 SILK ROAD

  63. SILK ROAD WAS EBAY FOR ILLEGAL STUFF BLOCKCHAINLAWCLASS.COM 2011 -

    2013 SILK ROAD
  64. THE END OF THE ROAD 2015 RECEIVES LIFE SENTENCE FOR

    MONEY LAUNDERING, COMPUTER HACKING, CONSPIRACY TO TRAFFIC NARCOTICS ROSS ULBRICHT AKA THE DREAD PIRATE ROBERTS
  65. PARODY COINS? BLOCKCHAINLAWCLASS.COM 2014 - 2014 COINYE

  66. PARODY COINS? BLOCKCHAINLAWCLASS.COM KANYE WEST SUED CONYE AND THUS THE

    COIN NEVER WENT LIVE
  67. PARODY COINS? BLOCKCHAINLAWCLASS.COM DOGECOIN STILL HAS MARKET CAP OF 225M

    IN 2019
  68. BLOCKCHAINLAWCLASS.COM WHILE THESE CRAZY PROJECTS WERE GOING ON … SOMETHING

    WAS HAPPENING
  69. INNOVATORS AND EARLY ADOPTERS BLOCKCHAINLAWCLASS.COM

  70. ORGANIZATIONS START TO GET EXCITED ABOUT THE TECHNOLOGY THAT UNDERLIES

    BITCOIN THE BLOCKCHAIN BLOCKCHAINLAWCLASS.COM
  71. None
  72. BLOCKCHAIN PATENTS FILINGS START MOVING 2011 - 2016 BLOCKCHAINLAWCLASS.COM

  73. BLOCKCHAIN PATENTS FILINGS START MOVING http://patentvue.com/2018/01/12/blockchain-patent- filings-dominated-by-financial-services-industry/ BLOCKCHAINLAWCLASS.COM

  74. BLOCKCHAIN PATENTS FILINGS START MOVING BLOCKCHAINLAWCLASS.COM http://patentvue.com/2018/01/12/blockchain-patent- filings-dominated-by-financial-services-industry/

  75. LARGE ORGANIZATIONS START TO KICK THE TIRES ON CRYPTOCURRENCY AND

    BLOCKCHAIN TECHNOLOGY BLOCKCHAINLAWCLASS.COM
  76. BIG PLAYERS SHOWING UP

  77. ENTERPRISE CONSORTIUMS 25 GLOBAL CONSORTIUMS 13 IN FINANCIAL SERVICES 2

    IN HEALTHCARE 10 IN THE USA, THREE IN THE UK 22 STARTED IN 2016 BLOCKCHAINLAWCLASS.COM SOURCE: DATA FROM 2016, WILLIAM MOUGAYA
  78. FOUR WORKING ON ASPECTS OF STANDARDS AVERAGE NUMBER OF MEMBERS

    IN EACH: 25 LARGEST MEMBERSHIPS: 100 (HYPERLEDGER AND ISITC) TOTAL NUMBER OF PARTICIPANTS: 550 ENTERPRISE CONSORTIUMS SOURCE: DATA FROM 2016, WILLIAM MOUGAYA BLOCKCHAINLAWCLASS.COM
  79. BLOCKCHAIN + ROBOTICS BLOCKCHAIN + AUTOMATION BLOCKCHAIN + INTERNET OF

    THINGS BLOCKCHAIN + ARTIFICIAL INTELLIGENCE BLOCKCHAIN + OTHER EMERGING TECH BLOCKCHAINLAWCLASS.COM
  80. LAW FIRMS WADE INTO THE WATERS BLOCKCHAINLAWCLASS.COM

  81. ADDITIONAL EARLY EXAMPLES IN LAW-LAW LAND

  82. None
  83. None
  84. None
  85. None
  86. legalconsortium.org

  87. AS A MATTER OF FULL DISCLOSURE LEXPREDICT IS A COMPANY

    CO- FOUNDED BY DAN KATZ https://agreements.network/ (ONE OF THE INSTRUCTORS OF THIS COURSE) (ONE OF THE INSTRUCTORS OF THIS COURSE)
  88. THE NUMBER OF COINS BLOCKCHAINLAWCLASS.COM GROWS SUBSTANTIALLY

  89. “EVERY TIME THERE IS A NEW ICO A SECURITIES LAWYER

    GETS THEIR WINGS …” ICO’S TAKE OFF BLOCKCHAINLAWCLASS.COM
  90. https://www.cnbc.com/2017/11/27/bitcoin-exchange-coinbase- has-more-users-than-stock-brokerage-schwab.html https://www.cnbc.com/2017/11/27/bitcoin-exchange-coinbase-has- more-users-than-stock-brokerage-schwab.html COINBASE VS. CHARLES SCHWAB BLOCKCHAINLAWCLASS.COM

  91. BUBBLE MANIA ? BLOCKCHAINLAWCLASS.COM

  92. SPEED OF TECHNOLOGY ADOPTION BLOCKCHAINLAWCLASS.COM

  93. SO IS IT CRYPTOMANIA ? BLOCKCHAINLAWCLASS.COM

  94. OR IS THIS A FUNDAMENTAL TECHNOLOGICAL TRANSFORMATION ? BLOCKCHAINLAWCLASS.COM

  95. ONLY TIME WILL TELL … BLOCKCHAINLAWCLASS.COM

  96. BLOCKCHAINLAWCLASS.COM FOR MORE MODULES VISIT

  97. DANIEL MARTIN KATZ E D U | I L L

    I N O I S T E C H + S TA N F O R D C O D E X B LO G | C O M P U TAT I O N A L L E GA L S T U D I E S . C O M PAG E | DA N I E L M A R T I N K AT Z . C O M C O R P | L E X P R E D I C T. C O M NELSON ROSARIO B LO G | L AWO F C RY P TO C U R R E N C Y. C O M PAG E | N E L S O N M RO S A R I O . C O M F I R M | S M O L I N S K I RO S A R I O L AW P. C . BLOCKCHAINLAWCLASS.COM L A B | T H E L AW L A B . C O M E D U | I L L I N O I S T E C H - C H I C AG O K E N T L AW
  98. @ computational professor daniel martin katz danielmartinkatz.com BLOCKCHAIN, CRYPTOCURRENCY AND

    LAW professor nelson rosario THE PATH TO CRYPTOMANIA - BITCOIN AND BEYOND nelsonmrosario.com @ nelsonmrosario BLOCKCHAINLAWCLASS.COM