ENTER THE MATRIX:

THE WORLD OF BITCOIN,

CRYPTOCURRENCY, AND BLOCKCHAIN

BY MAX WHEELOCK
WHAT WE’LL DISCUSS

• What it is
• How it began
• How it works
• How it will change the world
CREDENTIALS

• Been researching in this space for 7

months
• Been investing for 6 months
• Have made a return of 160% over that
period
• Have introduced into this space and
educated over 50 people
WHAT IS IT?

• Bitcoin – a peer-to-peer electronic cash

system
• Deflationary
• Finite amount

• Cryptocurrency – a virtual currency that

uses encryption to prevent “double
spending”
• Blockchain – a decentralized, trustless
ledger (list of transactions), on which only
additions can be made
• The ledger history can never be changed
• All computers on the blockchain have the
ledger
WHAT IS IT?

• A system that allows for the digital exchange of tangible

assets
 HOW IT BEGAN
• Financial collapse of 2008
• Poor fiscal management by banks, investment
firms, and government
• The world had a need to get away from the
central authority of money
• Satoshi Nakamoto
• Bitcoin’s anonymous creator
• Believed to be a pseudonym
• Published bitcoin’s white
paper in 2009
• Dive Deeper? Yes/No
• 1990s Cyberpunks
• Digicash, Bitgold and others
• First known experimentation with virtual
currency
• Could not figure out how to make it trustless
BLOCKCHAIN EXPLAINED
• The Yap Tribe

This giant stone is their

currency

• All tribespeople know and keep track of every

transaction within their village
• They all know who owns what and how much
• Any time a transaction is made all the people in
the tribe are gathered and are told of the
transaction
• Subsequently, they all “update” the database in
their head of who owns what
HOW IT WORKS
 HOW IT WORKS

• Hashing – takes input of any

size, performs an operation,
and returns an output of a
fixed size

• Common for password

storage

• This is how the blockchain is

able to securely encrypt
transactions
 WHERE DOES IT COME FROM?

• Mining (mining rigs) –

computer processors
connected to the blockchain
that validate transactions by
solving complex
cryptographic hashing
algorithms

• Coins are given as rewards

to the machine/person that
solves the algorithm
 BASIC PURPOSES

1. Confirms transactions

2. Adds block to blockchain

WHAT GIVES IT VALUE?
• It is worth what people will pay for it
• Supply and Demand
• What gives our dollars value?
FIAT VS CYRPTOCURRENCY
Fiat (USD, Euro, GBP) Cryptocurrency (Bitcoin, Ethereum, IOTA)

• Controlled by banks and governments • Controlled by the people that use it

• Created by governments • Created by solving math algorithms
(mined)
• Inflationary
• Deflationary
• Infinite supply
• Finite supply
• Can be created at any time
• Set amount released every year
• Open M – F, 9 to 5
• Open 24/7/365
 IS IT SAFE?
• Blockchain is unhackable
• Altering the ledger would require 51%
ownership/takeover of the network

• Personal
Typical Database Security = 1
• Hashing and cryptography hide central point for hackers to focus
password input on
• Private keys are 64 characters long
• XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXX

• Danger still lies in 3rd party

Blockchain Secutiry = millions of
exchanges holding your wallet
points, hacker would have to
simultaneously hack every
computer
HOW IS IT TAXED

• IRS Notice 2014-21

• Has yet to make a formal statement on 1031 exchange

• https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21
 HOW IT WILL CHANGE THE WORLD
• People are in control of their money
• Electronic trading of tangible assets
• real estate
• vehicles
• Instantly and extremely cheaply send money abroad
• Avg transaction fee (Ethereum) = $1.10
• Avg transaction fee (Western Union) = 9-10%
• Avg transaction fee (Visa) = 3%
• Give access of the global financial market to the nearly 2 billion people who
do not/cannot get bank accounts
• Prevent fraud
• Voting
• Banking
 IS IT TOO LATE TO INVEST?

• According to a study
by Cambridge
Center for
Alternative Finance
in May 2017
approximately 3
million people own
cryptocurrency
QUESTIONS?