the ethereum split - by dr. vic arulchandran - coo nivaura

THE ETHEREUM SPLIT

Dr. Vic ArulchandranCOO, Nivaura

WHAT NOW?

Introduction

What is the blockchain?

The DAO Exploit

How is the Blockchain regulated?

Financial Crime themes

Offshore Markets

What should you do

AGENDA

ABOUT US

INTRODUCTION

“Bitcoin will not survive”

Jamie DimonCEO, JPMorgan

“I do think Bitcoin is the first encrypted money that has

the potential to do something like change the

change the world”

Peter ThielCo-founder, Paypal

358m

Bitcoin market cap USD 11.6bn

Bitcoin transactions in 2015 358m

Over 12m Bitcoin wallets

$11.6bn

The Numbers Don’t Lie

WHAT IS BLOCKCHAIN?

Value + Trust

Secure, distributed, and immutable record of transactions.

Enables safe transaction of value between two people, without any intermediaries.

New transactions aggregated into a block which is then added to previous blocks, hence ‘block-chain’ is a linked list of blocks of transactions.

Bitcoin Blockchain

Inspired by Bitcoin, Ethereum is a programmable blockchain.

Enables the creation of distributed applications (dapps) using smart contracts.

Automate processes with extreme fault tolerance and zero downtime.

Ethereum Blockchain

Collaborative Project from Linux Foundation with notable contributors such as IBM, JPMorgan, Intel and more.

Allows businesses to build custom distributed ledger solutions.

Focussed on developing protocols for private, permissioned blockchains

Hyperledger

Litecoin

Monero

Ethereum Classic

ZCash

Other BlockchainsMany other blockchains and distributed ledger technologies exist.

Some are public, others are private.

Each has it’s own kink.

Code which allows e-commerce contractual logic to be emulated digitally.

Business processes and legal contracts can be programmed onto smart contracts.

Smart contracts + blockchains could automate many legal and business processes with virtually no downtime.

Smart Contracts

Once deployed on an ‘immutable’ ledger, smart contracts cannot be withdrawn or edited.

If the contract has vulnerabilities when it’s deployed, then it can be exploited/hacked.

Who is legally responsible for the deployment of a smart contract and it’s ongoing activity?

Smart Contract Risks

DAO ‘HACK’

A decentralised venture capital fund created by a smart contract on the Ethereum Blockchain.

The DAO was billed as a revolutionary funding model poised to threaten the financial system.

The DAO crowdfunded the then equivalent of ~$160m in Ether, but then disaster struck...

The DAO

There were murmurings of vulnerabilities in the DAO smart contract before and after it went live, but these were not addressed adequately.

DAO creators claimed to have audited the code, but no proof shown.

An unknown entity took advantage of the DAO vulnerability and siphoned off ~$60m worth of Ether.

The ‘Hack’

Hard forks to fix protocol changes are best practice. Hard forks to change ‘immutable’ ledgers are not.

The DAO Hard fork resulted in a competing chain, the original Ethereum, Ethereum Classic.

How does this fit in with finance and risk?

What considerations do we need to take if legal contracts are involved?

The Fork

Aim to make charitable functions more decentralised and transparent.

Amount raised will be capped this time.

Donors decide where the funds are allocations.

Ethereum - DAO - fork 2?

The DAO 2: Charity DAO

ETHEREUM CLASSIC

Many in the community rebelled against the idea of a central authority.

We decided to support the old Ethereum chain, thus Ethereum Classic was born.

The Empire Strikes Back

Global Launch

What Now?Roadmap

Fundonomy

Keep Building

https://ethereumclassic.github.io/

THANK YOU

Dr. Vic Arulchandranvic@nivaura.com@vicarulchandran