Open Lecture Series “FinTech for Everyone” by Asst. Prof. Bora Erdamar - Episode 1

Open Lecture Series “FinTech for Everyone” by Asst. Prof. Bora Erdamar - Episode 1

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[Music] [Applause] [Music] well hi to everyone uh this is an open course series under fintech masters program of pakishare university this is bora ardamar and i am the director of the blockchain center and also the coordinator of this fintech masters program well beginning from this week in every two weeks we are planning to share information with anyone interested with financial technologies blockchain technology cryptocurrencies and anything related to those new and transforming technologies for the world i see in the audience already some of our existing students and i want to say one more time welcome to everyone and i would like to start by the motivation of this series we have already lots of online teaching courses in especially in these pandemic times so why we are organizing such an open series lectures because i think sharing information and collective intelligence is very important especially in these days and in these kind of struggling days for everyone who are interested in these technologies well what do i mean by this let's start by discussing the main actors and main agents of these technologies by whom we can think of who would be like the main actor in financial technologies is there such a boss in these new worlds or as the promise of blockchain technology are we really evolving into a decentralized world where there is no bosses that where there are no authorities so i would like to start with the discussion of this and of course uh for everyone who is interested and who know me from the previous lectures i really believe in interactions i really believe in discussions so whenever you wish to ask a question whenever you wish to manage the direction of the topics please you are more than welcome to contribute to the comment session i can see it simultaneously while i'm presenting the material so uh well let's start with the latest comment chart says yes there is a boss in financial technologies and she is called bitcoin well i really like the comment uh well let's uh discuss uh and let me also make some uh comments to the audience i see some turkish comments there well as a disclaimer we had announced this through the social media as well so the financial technology program is in english with lots of international students and we have already lots of turkish content actually in our youtube channel actually probably more than 95 percentage of all of those videos are in turkish and in uh again in every two weeks on wednesdays with uh i should we also broadcast a live youtube program called crypto economy in turkish crypto economics will be the translation of it so you are of course more than welcome to participate in those programs as well but this is especially for international audience because i had lots of demands from many international students who asked lots of even basic questions and not only the international students as far as i could check since there is a huge interest around these topics and some of them are already very senior people who are a bit reluctant to learn about these stuff or who are more reluctant to apply for new for example master's programs or even phd programs so the the content of this lecture series will be indeed a content which is designed for anyone who is interested in i repeat blockchain technologies financial technologies about the law of these issues about the transformation of the world into a more digitalized one and of course many roles are changing including the roles of the banks including the roles of the administrative issues regular administrative institutions sorry and also of course the regulatory bodies uh in that sense i want to start by the latest topics and especially the discussion about cryptocurrency exchanges because the role of these exchanges first of all i think misunderstood by majority of the people especially for the ones who are indeed very willing to buy for example cryptocurrencies bitcoin ethereum and even one of the basic confusions is this people think that they buy bitcoin or ethereum from those exchanges meaning that they assume that those cryptocurrency exchanges sell bitcoin or ethereum well let's start with that of course this is not the case the cryptocurrency exchanges are platforms where buyers and sellers actually meet each other make some orders and the cryptocurrency exchange platforms are by definition the platform which just provides the service of matching these orders between the potential buyers and potential sellers so the cryptocurrency exchanges are indeed marketplaces for cryptocurrencies well why this topic is quite important well very recently the news about turkey for a kind of scam cryptocurrency exchange was in the news and unfortunately uh with lots of misinformation since these topics are quite debatable we shouldn't forget that many traditional financial institutions are labeling cryptocurrency ecosystem as a kind of underground ecosystem with lots of fraud with lots of money laundering black markets etc in that sense i think it is quite important for us and anyone interested in these technologies to inform the media as well in a correct manner uh let's start from that topic so what happened in turkey uh why is it all the time in the news what about regulations should we expect a strict regulation for the turkish cryptocurrency markets will it affect the global markets is turkey such a huge market which will uh any uh regulation lead to a price fluctuation of the bitcoin and ethereum are these possible or not so this is uh indeed i think very important topic which is not a local issue about turkey but i think a matter of global discussion so i would like to start from that point well first of all there are some quite fundamental wrong information about bitcoin ethereum and any other cryptocurrencies so the number one argument they say that well these are virtual currencies implying that there are there is no uh real uh fundamentally supporting mechanism in terms of evaluation of this people have a tendency to see those cryptocurrencies creating value out of nowhere there are also lots of how to say that accusations about these cryptocurrencies blaming them to be just like ponzi schemes uh if you have any uh ideas or comments of course you can write those into the comment session if you think that bitcoin is upon this king and if you think that you have a strong argument please don't hesitate to write your argument and actually this is a kind of open challenge for you because uh personally i don't think that this is true at all uh to understand why this is not true why bitcoin might be indeed as planned a peer-to-peer cash uh transfer system for the world you need to understand of course the supply mechanism behind it and for the valuation and no one should forget that the interaction of demand and supply will determine the price of valuation of anything but that price mechanism might be not as simple as econ 101 cross demand and supply cross models so in bitcoin and cryptocurrencies actually much more advanced economic models are behind the scene such as dynamic double auctions which is unfortunately only told on phd programs well let's start from bitcoin and the basics of blockchain in just one sentence well it is a globally shared in a decentralized manner open to the participation of anyone interested distributed ledger so in this ledger the goal is to create a financial record system who is owned by nobody meaning that potentially by everyone and the financial system the all of it can be rebuilt in this decentralized world so this is the potential this is the promise of satoshi nakamoto from 2008 but of course we should question this after so many years well it has started by 2008 now it has been kind of uh 12 to 13 years uh well is there any test which we would indeed show us that a bitcoin is not vulnerable to financial crisis and can be ruled by no one and it is indeed towards the direction of decentralizations this is a very hot and very important topic especially when we think of the majority of the miners are around some same regions especially in china well with that much concentrated mining power towards only one country can we say indeed that bitcoin is the decentralized currency for the whole world or this is just an utopia these are uh important questions that we will revisit through the forthcoming episodes in this lecture series uh well uh i would like to share one comment from uh black swan uh black swan says that bitcoin is not a ponzi but like ponzi it has first corner advantage in price it is i think a quite important command indeed and thank you uh black swan well let me give you one more explanation i see that the comment section is full of turkish sentences uh well as a kind of good news there will be turkish subtitles uh very soon after this lecture is ended so still if you have difficulty in following it in english you can still make benefit of it later when you uh watch it in turkish subtitles but as i've mentioned we have lots of turkish content already so this lecture is for international audience we have started with the questioning of the decentralization level of bitcoin but of course this is an open question and a valid question for any cryptocurrencies which are now more than 9 000 so what about ethereum for example can we safely say that this is decentralized indeed or again can we speak of some central authorities for ethereum what about other coins like dodge coin which has quite a lot price fluctuations in the recent days and apparently just elon musk can want to beat affect the prices so i really believe in criticisms but not to kill one argument but just to improve it we need to question the potential of cryptocurrencies we need to uh question the potential of decentralization but uh we need to understand first of all the basics of it and we need to understand also the utopia around it i think this distinction is quite clear after this we can develop further and better projects in the cryptocurrencies ecosystem and maybe more importantly as i've mentioned there are lots of institutions there are lots of people from traditional finance who believe that these cryptocurrencies will not last for long but in a couple of minutes there will be no real value in it so let's start with the ownership issues which we will again bring us the main topic of uh cryptocurrency exchanges and the role of them many people as at the beginning as i mentioned think that they uh buy and sell uh those cryptocurrencies uh just with the support of those exchanges and many people are still not that much aware about for example decentralized finance and decentralized exchanges through these open series we will revisit uh many components in the cryptocurrency ecosystem which includes banks which includes regulatory bodies which includes exchanges well as well as decentralized finance a new wave about nfts which are probably the most promising technology in the entire section of supports arts and blockchain technology in general in that sense i would like to focus on this question in a digital arena in a digital platform when we talk about some value what is the proof that you own that value this name value stands for anything which can be bought sold transferred and stored let's start with the most important one the biggest player in the game about bitcoin well you think that you own some bitcoins probably many of you already bought some of it and you think that you are storing it safe is it the case what kind of argument convinces you that you store and you own your bitcoins forever for example what guarantees that how do you manage for example your cryptocurrency accounts do you only use the exchanges or do you use wallet structures maybe you heard of the hot wallets or the cold wallets and do you really think that are they safe or do you think that this is another type of illusion so these questions are as i mentioned just to challenge the security level of the blockchain technology because another type of confusion is this when an exchange is hacked by some reason or when uh there's a mismanagement of a hot wallet a people have a tendency to blame the whole cryptocurrency ecosystem they also blame with this question that oh you mentioned that blockchain technology is safe it is secure then why we lost our cryptocurrencies it all starts with one lack of fundamental knowledge which brings us to the wallet structure another important point i believe the name of wallet is a kind of misfortunate selection misfortunate choice for the concept because we have a tendency to think wallets as the physical ones in which we of course store our banknotes the actual money on the other hand on blockchain a wallet is simply actually key manager where he refers to your proof of ownership to share with you one reference i would like to present you one reference let me do that in just one second okay so this is a guide for everyone now you say it i believe okay so this is an ultimate guide to wallets in general which explains i think very briefly uh the private keys public keys addresses and seats actually all of them are parts of the wallet structures which is the most fundamental thing to learn about and according to the misinformation around i think it is worthwhile to visit from the basics well first of all whenever you create a wallet it is like your identity in the blockchain ecosystem well your ownership is proved by the key inside of this wallet and when i refer to key first of all the most fundamental one is actually the private key well what is a private key well private key might be first of all uh resembled to atm pin numbers when you show and you prove that you have the control of that bank account well in blockchain a private key is actually 256 number which is a random regenerated between 0 and this huge number for the security and with that private key you actually create a right of ownership and a right to send your bitcoin from one account to another but of course these uh private keys are since they are large numbers uh they are not that much uh human readable as we say they are not that much friendly for human eye so for storing them for copying them for writing them we have another layer another representation for these private keys which is used by all type of wallet structures and this is called seed phrase seed phrase is usually 24 words permutation from a list of 2048 words and there are some synonyms for these seed phrases which are called mnemonic phrases or seed birds or backup seeds or recovery recovery phrases but the most important thing to remember is seat races are kind of equivalent to private keys meaning that you need to keep these seat races safe and you shouldn't share with no one because as i emphasize one more time this is your ownership right or proof of ownership for the cryptocurrency uh that you are creating the wallet for and uh if this is the basic information about uh of ownership then what are the meanings of addresses or for bank accounts for example we use ibands for sharing information about our accounts if we want to receive someone if we want to receive some money to our bank account uh the iban is the one which is used as a public message publicly shared information so for any wallet of course we need a corresponding concept and that is called public key so public key is on the other hand not independent from the private key and according to this illustration a seat phrase is kind of equivalent to private key and the public keys are actually generated with private keys so in that sense private key is indeed the most essential concept of the wallet structure and a wallet is in that sense actually just a key managing tool which means in a wallet there are no cryptocurrencies the cryptocurrencies are registries in a blockchain they are records there are financial records in this descent rules i decentralized a ledger so a wallet is just a key manager where one of the keys which is the private key is the proof of ownership for you and also uh the right for you to send those cryptocurrencies in your wallet to another address on the other hand a public key which is generated through the private key is then used for creating a valid address which is similar to an iban number for a traditional bank account so this very basic very fundamental information which is actually also on many youtube videos is unfortunately not well known by many people and which brings us lots of confusing information because uh when we talk about the cryptocurrency exchanges we might have a tendency to forget that those exchanges are creating platform services functions as a marketplace where creating some room for buyers and sellers gathering uh and then sharing uh price signals with each other and according to those price signals i refer to the sell orders and buy orders the matching mechanism works apart from that well you need to remember that while creating a cryptocurrency exchange account actually no one is giving you private keys which brings us to the main motto of uh one of the main models of the cryptocurrency ecosystem not your keys not your coins so you need to be careful in creating wallets and you need to understand the difference of creating an account than uh creating a cryptocurrency exchange account those cryptocurrency exchange accounts are actually for you to have the right to sell or buy uh cryptocurrencies from the others or to others but apart from that if you want to store your cryptocurrencies you need to create your own wallet where you need to store the private key for that wallet very securely very safely preferably in an offline method not any records on any digital platform because when we talk about uh hacks related to cryptocurrencies one of the most common ones are actually your computer might be hacked and by that way someone else can access your private keys and by definition this means from then actually they own your cryptocurrencies not you anymore as the very first episode of this open lecture series i wanted to start with this distinction the distinction between a wallet structure and the services of cryptocurrency exchanges and for anyone this actually reference material will be available in the comment section of the of this youtube video later so there are actually many other topics related to this what about the storage services what about the ways of those secure exchanges which also provide the cost of the services how do they manage these keys does it mean that for every customer a cryptocurrency exchange is a creating a wallet and creating a private key and all the time as many as the customers it means they try to keep the private keys for them or there are some other structures we will visit this topic in the forthcoming episodes but it might be useful for you to just have a look of look at this resource because uh in the later sections uh there there is a new topic which uh mentions about first of all malta signature method and also the hierarchically deterministic wallet structures these are a bit more advanced topics but very important ones and i think uh if you are a user of a cryptocurrency exchange it is about the number one questions that you should ask to that uh exchange market about the management of these uh keys well as a kind of summary of what we have covered so far uh please remember that uh well the seed phrases is actually just a representation human readable representation of the private key which is just a random number uh on the other hand uh it is so critical that if you lose your private key you lose your ownership of that uh cryptocurrency this example is created for bitcoin but for any cryptocurrency a similar structure is actually used your public key is generated from private key and then from that public key actually addresses are created so there is another confusion there that many people think public keys are equivalent to world of addresses that they are not so waldot addresses are generated from public keys and in the forthcoming lectures i will talk about hierarchical hierarchical deterministic wallets which are very important especially as i mentioned for cryptocurrency exchanges so let's go back to the main topic of let me just stop sharing this so let's discuss a bit more about the main agents we discussed already for uh the role of the cryptocurrency exchanges which are of course providing a very important service thanks to doom the ecosystem grows and we should of course mention about the large exchanges around the world including also the local ones uh from turkey and i think it is quite unfair to uh question all of the cryptocurrency exchanges when uh some uh [Music] fraud ones are already on the news i think any regulations any licensing criteria should be designed in a way that the ones who provide nice services should be able to improve their businesses in a positive way and the ones who have with bad intentions and have some plans to kind of use the ownership rights of the people's accounts in a bad way of course they should be forbidden and they should be avoided from the ecosystem i would like to finalize this first meeting with a couple of forthcoming questions just as just i see uh dear taha's question should we keep safe or public key and just use the address to receive bitcoin well there is actually no uh consensus answer to this question some experts think that yes public keys should not be also uh shared openly as openly as wallet addresses so wallet addresses are there to share with anyone uh so but the argument there is actually not because of a huge risk but just to emphasize the extra layer of security well public key is just one layer different than the private key but wallet address is two layers uh different than the private key and since the private key is the most important thing any tool which is as far as as far from as the private key is better in terms of security and adnan ginger asks as rp public keys like iban well i would say wallet addresses are like iban not public keys so any wallet is composed of two main structures the private keys and the public keys but we can even reduce it to one single parameter which is private key anything else is kind of related or generated through private keys the seat phrase is human readable representation of private key well public keys are generated from private keys to generate wallet addresses which is exactly like iban address so you can share it with anyone in a safe in a safe manner for technical details for technical references for for example some basic information about hexadecimal numbers or what is the meaning of hash so how do we take the hash of a public key to generate a wallet address etc for those technical details there will be references just below this video for the next lecture first of all your feedbacks sorry will be quite important for us because i'm trying to collect first of all fundamentally unknown topics first importance level for us then uh the second important type of information is actually the misinformation or myths about cryptocurrencies or blockchain technology in general because i think those myths are so important they are used as kind of official arguments against the cryptocurrencies and one of the uh unfortunately hardest task for the experts is this when there are bad news about cryptocurrencies some hex issues some fraud issues those fundamental misinformation is used together with the actual news which makes things of course a lot more confusing for everyone so this is one of the main motivations for this lecture series covering some fundamental topics for everyone uh clarifying the misinformation used by people maybe with not bad intentions but still one once misinformation is there it is quite hard for everyone to clarify the reality and of course the third most component i would like to cover in this lecture series is about your questions so for example it is for you to write in the comment section in the next lecture which topic is most interesting for you what would you like us to cover so that you think it is a contribution for the whole ecosystem anyone would be interested in that and please once we once we refer to ecosystem uh people have a tendency to think others like themselves but uh based on experiences for example along our students well the backgrounds are quite heterogeneous we have lawyers who are interested in this technology we have people in profession of sociology who think about the governance issues in the blockchain technology we have of course people from banks and they are experts in the financial system in the traditional way but they are very interested in the evolutionary procedures provided by this decentralization what will be the role of banks in the near future if these decentralized technologies are becoming more dominant around the world and then we have of course the main players of financial technologies when we refer financial technology for especially the technology integrated to the traditional actors especially through the payment solutions well the payment solutions are a topic on its own which we will cover in the forthcoming lectures because especially in these pandemic times where everyone is using online shopping and online trading more than ever the payment solutions and the services which provide these solutions in the most efficient way probably they they will be the biggest players in the financial technology ecosystem and last but not least we have the central banks which are planning to have regulations some of them are already planning to develop their own digital currencies and when we look at the ecosystem we see digital currencies uh well managed and worked by firms central banks and on the other hand we have of course the cryptocurrency ecosystem together with nft platforms and decentralized finance we have huge communities including many big whales as we say big investors who believe in the idea or utopia of decentralized worlds and they are seeing these decentralization as indeed a strict alternative and even a substitute for the traditional finance which we will uh emerge more there will be a kind of competition among these traditional finance and decentralized finance methodologies or they will live together and they will learn from each other so these are the main questions that we will try to discuss we will try to have debates with you uh there are lots of comments probably many of them i couldn't read uh simultaneously while i'm talking but i will read all of them and i will answer almost all of the questions in the forthcoming lectures we have planned these two we planned these lectures live in every two weeks so we have lots of time to design the forthcoming lecture let me read the uh there are could chilex command dearness radamar is there a determined schedule just for this insect for everyone open series if yes can you please share the program if it is suitable for you thank you in advance well of course we have a kind of syllabus for the actual uh lectures which is part of the financial technology program and the audience part of the audience is our fintech 1-0 students of course i can share the syllabus with everyone but for this open lecture series as i've tried to mention i want to even design the content together with the audience so this i think this is more meaningful because uh maybe among you there are some people who are willing to learn some topics which are out of any syllables but still very important and these topics are evolving very rapidly the ecosystem is evolving very rapidly so long story short your comments your suggestions your demands for new topics they are all very valuable if you share those with us we will do our best to design the content of the forthcoming lectures accordingly uh i was i mean to speak frankly i was thinking that the lecture will be around 30 minutes and i was planning about the first lectures content it is almost more than 40 minutes right now so let's stop here please write your comments and suggestions and beginning from next lecture i will also share which topics will be covered in the lecture even before the lecture so that you can participate you can share your ideas and your comments in a prepared manner i would like to thank you for all of the contributions for to the all participants and looking forward to seeing you in uh two weeks again in wednesday night so cheers to everyone and good night

2021-05-13 23:33

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