Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi, and Prognostications

1

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Michael A. Ramalho, Ph.D.�IEEE Florida West Coast Section Blockchain Local Group Founding Chair�mar42@cornell.edu

Sponsored by FWCS Blockchain Local Group and�University of Maryland Global Campus

October 24, 2025

Today’s Objectives:

• Introduction to Blockchain and Distributed Ledger Technology.
• History of Public Permissionless Blockchain and Bitcoin’s Problem to Solve.
• Software/Cryptographic advances that enabled Cryptocurrency.
• Hash Functions and Binary Hash Trees, Consensus Algorithms, Digital Encryption, Cryptographically Secure Pseudo Random Number Generators, and Virtual Machines.
• Essential Bitcoin and Ethereum Operation. Enabling Decentralized Finance (DeFi)
• Bitcoin consensus algorithm, Bitcoin power consumption, and blockchain attacks.
• Ethereum solves power consumption issue (by transitioning to new consensus algorithm).
• Ethereum adds virtual machines (and state) enabling DeFi “smart contracts” and “tokenization”.
• Scaling both cryptocurrencies and smart contracts for tomorrow’s new financial order.
• Miscellany: Stablecoins, CBDCs, Layer 2 Blockchains, Crypto Policy/Governance,�Crypto Investment Opportunities, How to “own” crypto.

2

© 2025 FWCS IEEE SP/COMM. All rights reserved.

DISCLAIMER:

​

​

Primarily a technical talk on blockchain mechanics, operation, and theory.

​

• Talk is ...�
• NOT INTENDED to render any guidance on crypto value now or in the future.�
• NOT INTENDED to render any guidance on issues relating to how blockchains�or crypto are governed or regulated now or in the future.�
• NOT INTENDED to render any guidance on issues relating to how blockchains or�crypto can be exploited for any purpose now or in the future.�

Technical Analysis and Appraisal - Use at your own risk.

3

© 2025 FWCS IEEE SP/COMM. All rights reserved.

What are Blockchains?

Blockchains are software-defined data structures in which:�

• “Blocks of data” are created via a standardized structure (header and payload) in which:
• “Validated transactions” (and optionally other state) are recorded in a given block.
• Each newly-formed block is “connected/tied/referenced” to the immediately preceding block (via a cryptographic identifier) – forming a “chain”.�
• “Consensus Mechanisms” are used to:
• Validate transactions within the block’s “payload”.
• Validate all summary information in the block’s “header”.
• Determine the “active chain” (when multiple possibilities exist).
• Protect against malicious blockchain participants.

​

• An irreversible set of blocks is created in an ever-increasing chain.

Newest Block

..... Older Blocks .....

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Bitcoin/Ethereum: Public Permissionless Blockchains & DeFi

5

Key Technologies:

• Distributed Ledger Technology (DLT): Public, immutable, distributed.
• Permissionless: Any miner/validator can join blockchain network.
• Transactions: Secured by Public-key cryptology.
• Blocks of Data: Header and Payload (contains transactions).
• Consensus Mechanisms: Defense against malicious actors,�bad/faulty nodes, unreliable communications.
• Virtual Machines: Enables DeFi. Adds “Smart contracts” and their associated state to an existing blockchain.

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

6

Public-Key�Cryptography�Basic Concept

• Bitcoin uses Public-Key Cryptography.
• People send you Bitcoin to your “Bitcoin address” on the blockchain.
• You send Bitcoin to others at their “Bitcoin address” on the blockchain.
• Your Bitcoin address is essentially your Public Key for transactions.
• Given 2²⁵⁶ address space, you can have many addresses.
• Your Bitcoin address is pseudonymous ...
• Generally, people don’t know it unless you tell them.
• Exception: If you use a US-based crypto exchange - a lawful government request can obtain your addresses.
• Once exposed, everyone can then know that it belongs to you. But you can begin to use a new address!
• If you directly own crypto, you MUST own (or have a custodian maintain) a software wallet or a hardware wallet.
• If you don’t “own your keys”, you don’t “own crypto” – your crypto brokerage does (or ETF custodian)!

ASIDE: Direct Participation in Crypto Facilitated by Public Key Cryptography

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

7

Input_Data

“One-Way” Hash Function (SHA-256)

Output_Hash (256 bits for SHA-256)

Arbitrary Length Input

Advanced Encryption Standard (AES)

Deterministic value, but appears random relative to similar looking inputs.

Fixed-length Output (256 bits for SHA-256)

Essential Blockchain Technology: Cryptographic Hash Functions

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

8

What if you interpreted HASH_SHA-256(“string”) as a Unsigned 256-bit number?

• Random-Looking Outputs: NIST (National Institute of Standards and Technology) designs�one-way hash functions to produce a deterministic, but random looking, output.
• Observation: Hash outputs were never designed to be interpreted as a uint256!�
• Huge Space: 2²⁵⁶ is roughly on the order of the number of atoms in the observable universe.�
• Can’t Guess Output: Guessing the hash output is similar to the challenge of finding�one specific atom hidden among every atom that exists (key to one-way property).

​

• Implication: Be wary of any hash output that DOES NOT appear RANDOM!
• Non-random output is unexpected (i.e., highly-unlikely).

​

• Bitcoin interprets the output as a uint256 ... during it’s “blockchain consensus”!

​

• Bitcoin also uses hashing in the traditional manner (as a random-looking identifier) ...

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

9

Cryptographic Hashing for Large Sets of Data: Binary Hash Chain

Pioneer: Ralph Merkle (1979) - Invented Merkle Trees.

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

10

HISTORY: Bitcoin introduced Blockchain to the World in October 2008 - Right?

Bitcoin needed better technology�than New York Times!

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

11

HISTORY/TRIVIA: What was Bitcoin’s Problem To Solve?

Pioneer: Satoshi Nakamoto and colleagues.

• “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.”
• Intent was to be a “medium of exchange”, NOT an investment, NOT a currency!
• No more intermediaries needed (banks, SWIFT, etc.) - but everyone needs to “Trust the Code”.

​

• Fun Facts: 1st Bitcoin client on January 9, 2009 contained a message and the first 50 BTC.
• First transaction: Two Papa John’s pizzas for 10,000 Bitcoins (over $1.1 Billion today, then ~$40).

​

• Leveraged public-key cryptology for pseudonymous transactions in block payload.

​

• 21 Million Bitcoin limit was elegantly specified in two lines of code (originally)!

​

• Incredible achievement: Not one fraudulent transaction has persisted on the blockchain.

​

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Bitcoin: Cryptographic Hashes Tie All the Blocks Together

12

• The “payload hash” (the Merkle Root) is an element in the present block’s header (it looks random).
• The “header hash” of the previous block’s header is an element in the present block header.
• The “header hash” of the present block’s header is an element in the subsequent block header.
• This hash ensures immutability of all headers and all payloads prior to it.
• The header hash is the cryptographic mechanism tying together the blocks in “history order”.
• By design, Bitcoin header hashes have a lots of “leading zeros” (i.e., they don’t look random!).

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Bitcoin: Requires Miners to ”Find a Header Hash” below a Target Value

13

• Let’s look at the hash output value as a uint256 (unsigned 256-bit number).
• And assume the target value is between two extremes (here a power of 2).

The number of leading zeros tells�us what the target value was�(to within a power of 2).

Header Hash for Block 833,954 (Mar 9, 2024, 3:25:31):

0x000000000000000000031ae555d445f1f0349d68afba1da7c3bd9b908868dd6c

78 leading zeros (19*4+2). Thus k = 77. Target value was < 2^(255-77) , but also ≥ 2^(255-78)��2¹⁷⁸ > Bitcoin Block Target Value ≥ 2¹⁷⁷

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

OK ... So how does Bitcoin find such a hash value?

14

Bitcoin: How do you ”Find a Header Hash” below a Target Value?

HASH{[Bitcoin Block Header without Nonce field] : [Nonce]} = “256-bit Number”

Let’s see what happens when we increment the Nonce

... and ...

We interpret the result as a 256-bit unsigned integer

Question: How many Nonces do we need to try on average to get this result?

Partial Answer: There is a 50% probability of the first bit being a “0” (p = 1/2¹).

Full Answer: Bernoulli trial. Mean of distribution is 1/p. On average you need 2 trials.

Key Result: To get J leading zeros in the result .. on average expect to try 1/(1/2^J) = 2^J Nonces!

Header Hash for Block 833,954 (Mar 9, 2024, 3:25:31):

0x000000000000000000031ae555d445f1f0349d68afba1da7c3bd9b908868dd6c

Bitcoin’s Target uint256 had 78 leading zeros (19*4+2) ⋍ 2⁷⁸ nonces tried ⋍ 3*10²³ Hashes�Network Hashrate* of > 5 x 10²⁰ Hashes per Second!

Need >10²⁰ guesses/sec!�Until HASH_SHA-256 is broken�there is no other way!

* - 3*10²³ hashes / 600 sec = 5 *10²⁰

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

15

Bitcoin (and all Proof-of-Work Crypto) is a Horrible Waste of Power!

Bitcoin power consumption estimated�to be 138 ~ 194 TWh (terawatt-hours).

Equivalent to electricity use of Belgium�and the Netherlands – COMBINED!

IMHO, Should be called�“Proof of Random Guessing”�(or “Proof of Effort”)

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Public Permissionless Blockchain Consensus Algorithms

16

The inventors of blockchain (Drs. Haber & Stornetta in 1990) used the NY Times �as their “single point of proof” for storing the hashes.

The inventor of Bitcoin (Satoshi Nakamoto in 2008) “solved” the problem�of “a single point of proof” by:

• Making the ledger/blocks and associated data public to everyone.
• Devising a scheme where only “one chain of blocks” could be “valid”.
• Scheme would exact an overwhelming cost to those wanting to change past data in�older blocks – so much so that it is practically impossible to change past data.
• “Overwhelming cost” can take many forms:
• Effort: Bitcoin uses “Proof-of-Work” (this is Nakamoto’s innovation – next slide).
• Economic: “Proof-of-Stake” schemes* cause bad actors to loose their “staked”�funds (later in this talk).

* - Sunny King and Scott Nadal in their whitepaper “PPCoin: Peer-to-Peer Crypto-Currency with Proof-of-Stake”

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Bitcoin’s “Proof of Work” Consensus Algorithm Resolves Conflicts!

17

B₁

“Nakamoto Consensus” - A Natural Fit for Open Permissionless Systems (any node can join at any time).

A

B₂

C

3/4 miners work here – next block�expected in ~13.3 min ((4/3)*10)

• RULE: Miners always build on “the longest chain”.
• Miners mint a new block when they “solve the hash problem”. Expected time for next block is 10 minutes.
• Given network delays or coincidence – two miners may successfully solve “the hash problem” at same time.

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

• Depending on network propagation and/or miner choice, miners may decide to mine off of “Fork B₁” or “Fork B₂”.
• Example Above: Block C will exist before Block X. The longest chain will then be A, B₂, C.
• Genius of proof of work! Conflict Resolution: Eventually one fork becomes longest (due to math/statistics!).
• Any transaction on Fork B₁ NOT ALREADY RECORDED on Fork B₂ will be introduced into a block on Fork B₂.
• Block B₁: “Orphan Block” in Bitcoin (no block reward) / “Uncle block” in Ethereum 1.0 (with a smaller block reward).

Bitcoin’s Consensus Exploited To Fix August 15, 2010 Overflow Error*

18

B₁

A

* - https://en.bitcoin.it/wiki/Value_overflow_incident

74638

74637

Overflow error (Created 184B BTC to 2 Addresses & 0.01 BTC Block Award)

Community decided: “Bad Chain”

74691

NEW�74638

Result: It is as if the Bad Chain blocks never existed!

• This is the very mechanism of a “51% Attack” - changing history via clients representing > 50% hashpower.
• Why wasn’t this called “A Successful Attack on Bitcoin”? Bitcoin consensus was designed to be immutable!
• Grok (and other AI) parroted back the line that “this was a community change”, therefore not an attack.

Transaction�4a5e1e4baab89f3a32518a88c31bc87f618f76673e2cc77ab2127b7afdeda33b

“Good Chain”

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

19

Can We Solve the Power Consumption Problem? – YES!

Let’s simplify Bitcoin’s mining problem to find solution:

• Assume there are N Bitcoin CPUs – and each CPU has identical hashing power.
• About every 10 minutes, we know 1 of those N CPUs will “solve the hash problem”.
• We just don’t know a priori WHICH ONE of the N CPUs will be the winner!
• Why can’t we just “pick one at random”? – YES!

Ethereum has transitioned from Proof-of-Work to Proof-of-Stake :

• “The Merge” occurred on September 15, 2022. Energy used reduced by 99.9+%!
• Same Cryptographically Secure Pseudo Random Number Generators (CSPRNG) used by all validators.
• Th random numbers used and block hashes now tie together the blocks into chain.

Pioneers: PoS Innovators and Ethereum Core Developers (PoW->PoS)

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Seeding the CSPRNG to Select ONE Validator – in a “Fair Manner”

20

Cryptocurrency Mechanics and DeFi – Part 1�

Problem reduces to:

• Getting all N validators to agree that seed is “fair/unbiased” when ....
• All N validators use the exact same�deterministic CSPRNG!

* - Also called “grinding”.

Hey – this is blockchain problem! �Can’t we solve by adding yet another hash?

Take Away: CSPRNG Schemes Exist to Choose “Fairly” for PoS.

Answer to PoW Power Wastefulness: Proof of Stake (and derivatives)

21

Public Permissionless Blockchain Nodes (validators) are not fully autonomous! Major departure from Bitcoin design.

“THE MERGE” - Ethereum's Transition from Ethereum 1.0 (PoW) to Ethereum 2.0 (PoS)

• Years in planning! Occurred on September 15, 2022.
• 99.9+% reduction in energy costs -- AND -- More Scalability.
• Ethereum 1.0 (PoW) was becoming “increasingly centralized” (5 mining pools - 64.5% of all ETH mined).
• PoS is characterized as “a more secure network” owing to more decentralization ...

... BUT THIS IS DEBATABLE ... BECAUSE ...

• Need to “trust” a lot more code (compared to Bitcoin), and ...
• Validators must “obey” centralized commands AND are becoming (increasingly) permissioned.

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Ethereum Virtual Machines ⋍ {~Bitcoin Transaction Train + Smart Contracts}

22

• Ethereum == {platform for facilitating contracts, via its currency} vs Bitcoin == {alternative to fiat money}

​

• Smart Contract Definition (Nick Szabo, 1994).

A smart contract is a computerized transaction protocol that executes the terms of a contract. The general objectives of�smart-contract design are to satisfy common contractual conditions (such as payment terms, liens, confidentiality, and even enforcement), minimize exceptions both malicious and accidental, and minimize the need for trusted intermediaries.

​

• Thus a "smart contract" is simply a program that runs on a blockchain virtual machine. It is a collection of code (its functions) and data (its state) that resides at specific blockchain addresses.

​

• Need to keep both “transactions” (like Bitcoin) PLUS “world state” on the blockchain.

Smart Contract Execution isn’t free ... It costs “gas”.

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Ethereum Virtual Machines (EVMs) – A Deeper Look

23

Gas fees are paid in Ethereum's native currency, ether (ETH).�Gas prices are specified in gwei (1 gwei = 0.000000001 ETH).

Image Credit: https://ethereum.org/en/developers/docs/gas/

Smart Contact is interpreted code – executed upon an ”event”.

• All opcodes/functions cost gas�(usually different amounts).�
• Using external storage uses a lot of�gas – as it must be instantiated on the blockchain (p/o “world state” noted previously).�
• Modifying external storage�on subsequent invocations is also costly, as it updates state in new blockchain block.�
• If the amount of gas passed to�execute code is insufficient, all�gas available is consumed – but external state “reverts” to state prior (by not updating world state).�

Point 1: Only use external storage when absolutely required.

​

Point 2: Pass Enough Gas!

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Ethereum Smart Contracts (Solidity)

24

The first time this smart contract is called, the “constructor” instantiates the state needed on the blockchain (part of�“world state”). There is a cost (in gas) to instantiate state that will forever be on the blockchain – so don’t ever instantiate�local/temporary state on the blockchain!

Smart Contract execution can trigger other “events” and “errors”.

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Consensus Mechanism Summary: PoW vs PoS

25

”Proof-of-Work” Properties (“The Genius of Satoshi Nakamoto’s Bitcoin” – “Nakamoto Consensus”):

• Consensus (conflict resolution) due to mathematical properties of cryptographic hashes!
• For as long as Hash_SHA-256 isn’t broken – NO CHEATING IS POSSIBLE!
• Result: PoW mechanics are very, very secure in an open/permissionless system.
• Downside: Incredible waste of electrical power and computes.
• However: Any node can mine Bitcoin – there is no “central authority” to enroll.
• Aside: Anyone can copy Bitcoin and generate their own crypto altcoin: “UMGC Coin”�(remember Dogecoin was started as a satirical take on Bitcoin in just a few days).

“Proof-of-Stake” Properties:

• Virtually no power wasted in choosing next validator.
• Consensus can be open-source random number generation and secret/hash enrollment.
• Other probability-based mechanisms exist (e.g., Ava Labs metastable sampling mechanism).
• Next validator probability can be a function of virtually anything!
• Increased scalability relative to Bitcoin (more on scaling soon).
• However: As a validator node, you need to “enroll” to the “central authority” of the blockchain.
• More complexity also admits more threat vectors (e.g., DoS attacks are more successful)!�Result 1: Relative to PoW/Bitcoin – “Minting costs” are virtually nothing!
• Result 2: Validators are not fully autonomous! Moving toward “permissioned” blockchain operation!
• Result 3: Trust in the Blockchain Governance is paramount!

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

On Scaling Public Permissionless Blockchains ...

26

• Bitcoin:
• By design – One block produced every 10 minutes.
• Independent of the number of miners or network hashrate!
• Payload ~1.5 Mb, ~4000 trans/block => ~7 trans/sec. No where near good enough!
• Ethereum:
• Originally like Bitcoin, but moved to PoS and incorporated virtual machines.
• Initially addressed scaling via sharding; then moved to a “rollup architecture” where both scaling and smart contract execution occurs on “Layer 2 Networks” (e.g., Polygon).
• Major motivator for Ethereum tokenization protocol ERC-20 (Binance eqiv: BEP-20).
• ERC-20 allows other crypto, RWA tokens or DeFi apps to use Ethereum blockchain.
• Layer 2 Blockchains (essentially an aggregation layer for Layer 1 blockchains):
• Executes smart contracts and sends only the aggregate results to Layer 1.
• Security/Identity issues are paramount.*
• What is value of Layer 1 blockchain if smart contract execution is now on Layer 2?
• Layer 2 blockchains are not believed to be as secure/immutable as Layer 1!
• Bitcoin becoming Ossified: “A form of money” to “A store of value” (like gold).

* - Many crypto hacks target Layer 1 to Layer 2 interface.

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Blockchain Governance and Challenges in Crypto Regulation

27

A Decentralized Autonomous Organization (a DAO) is a organization - represented by rules encoded as a computer program (smart contract) or in blockchain governance structure - that is:

• transparent,
• controlled by the organization members, and
• NOT influenced/controlled by a central government.

[Member-directed communities without centralized leadership used for ANY purpose.]

​

Bitcoin’s Original Goal: To eliminate the need of a mutually acceptable trusted third party. Just trust the code.

​

But the blockchain code can be changed by the blockchain’s DAO governance!

PROBLEMS/CONCERNS/ISSUES:

• Crypto blockchain governance is typically outside the control/regulation of any particular legal jurisdiction.
• Participation in many cryptocurrency blockchains still have no identification or KYC requirements.
• In most cases, blockchain addresses are at best pseudo-anonymous.
• Thus, crypto is ripe for nefarious activities such as money laundering and terrorism financing.
• AML (anti-money laundering) and CFT (counter-terrorism financing) are huge concerns.
• Different countries regulate crypto differently (security, commodity, property, futures contracts, ... ).
• Many exchanges are within regulatory governance in geographies in which they do business.
• But lack of regulation that is consistent across various jurisdictions complicates matters!

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Stablecoins ... Then (Early 2022) and Now (Oct 2025)

28

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

GENUS ACT (signed into law July 18, 2025) - U.S. law that creates rules for stablecoins.

• Requirement to hold sufficient reserves (cash and Treasury bonds) / Establishes licensing requirements, and creates protections.
• Strengthens regulatory oversight (Treasury, Federal Reserve, and FDIC).
• Anti-money laundering (AML) and anti-terrorism initiatives as well as know-your-customer (KYC) rules.
• Prohibition for exchanges to offer interest/yield on stablecoin. ← Issuers can’t be bank equivalents!
• Focus on speed, low cost, 24/7/365 settlement – Africa and Latin America have fast stablecoin adoption!
• IRONY: Many stablecoins are tokenized on un-regulated Layer 1 blockchains! CLARITY ACT (in-progress) addresses this.

29

Why Stake Your Crypto?

Proof-of-Stake (PoS) crypto staking generalizations:

• Chance that validator being chosen is proportional to the amount�of the crypto is “staked” at its validator. Thus a strategy for the�validator is to attract as much crypto as it can.
• The entities providing the staked crypto promise to lock it at the validator (i.e., “stake it”) for a�pre-determined amount of time (the lockup period).
• In return, the validator (or validator pool or staking platform for a given crypto) pays interest�(in the native crypto) to the entity providing the staked crypto.
• There are significant potential downsides:
• Attacks on the crypto blockchain can impact your stake.
• If the value of the crypto goes down during the lockup period, the real return could be negative!
• No or limited liquidity during the lockup period. Gain/Loss tax accounting on every interest event.
• Slashing. If your validator misbehaves – your stake is at risk to be partially confiscated.
• Ways to stake crypto:
• Hard: Run your own validator (e.g., Ethereum validators require a min of 32 ETH*).
• Easy: Choose to stake your crypto in a pool at a crypto exchange of your choosing (Binance, Coinbase, Kraken, Crypto.com, etc.).

​

Pure Proof of Stake (PPoS): Algorand

* - Ethereum supply today is ~120M ETH.

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

30

Miscellany: What are CBDCs and Cryptocurrency Treasure Companies?

• Central bank digital currencies (CBDCs) are government-backed digital currencies that use blockchain technology. They are digital forms of a country's fiat currency issued and regulated by its central bank, and are fixed in value by the government.
• They use PERMISSIONED blockchains and are not typically viewable by public.
• It is a completely traceable form of the equivalent fiat (paper currency is a bearer instrument).
• Out of scope for this talk.

• Cryptocurrency Treasure Companies are large companies managing cryptocurrency holdings on their balance sheets for various reasons. Examples include:
• Strategy (MSTR, formerly MicroStrategy): The largest corporate holder of Bitcoin, having hundreds of thousands of coins since 2020 as its primary treasury reserve asset (Michael Sailor, founder).
• BitMine (BMNR): An American firm that transitioned from Bitcoin mining to an Ethereum treasury strategy (Tom Lee, Chairman).
• “The Ether Machine” (ETHM): Activate Ethereum’s full potential by delivering secure, transparent, and yield-generating exposure to ETH at institutional scale. Business plan is to return “staking returns”�(Andrew Keys & David Merlin, Founders).

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

There are other crypto investment opportunities besides just owning crypto itself.

31

Bitcoin, Ethereum and DeFi - Closing Summary

Bitcoin:

• The original crypto that solved a medium-of-exchange (money) problem.
• No fraudulent transaction has persisted on the Bitcoin blockchain.
• An amazing conglomeration of cryptographic technology, timestamp-servers, and transaction pooling. Proof of Work consensus mechanism is genius - allowing for Public, Permissionless Blockchain!
• Bitcoin becoming Ossified: From “a form of money” to “a store of value” (like gold).

Ethereum/DeFi:

• Built upon Bitcoin’s Foundation – and successfully transitioned to energy-efficient Proof of Stake.
• Added EVMs, smart contracts, tokenization standards (ERC-20) and enabled Layer 2 execution and improved scaling.
• Together with Layer 2 Blockchains – becoming the major ”workhorse blockchains” enabling DeFi.
• Note: Solana (and other Layer 1) crypto is also vying to become a major DeFi blockchain.
• Factoid: Many Stablecoins are instantiated on the Ethereum blockchain.
• Transaction fees & Staking rewards help enable true “blockchain value-based” businesses.

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

YOU MADE IT ...

• History of Blockchain and Cryptocurrency Basics
• What are blockchains, distributed ledgers, what problem do they solve.
• Bitcoin High-Level Technical Overview and Proof-of-Work Consensus.
• Ethereum: Solves Bitcoin’s power issue via Proof-of-Stake Consensus.
• Partially solves scalability, adds virtual machines and application state�to enable smart contracts (DeFi) and tokenization.
• Software/Cryptographic advances that enabled Cryptocurrency
• Hash Functions, Digital Ledger Technology, Consensus Algorithms, and Digital Encryption, Cryptographic Random Number Generators, and Virtual Machines.
• Decentralized Finance Basics
• Smart Contracts/Solidity. Layer 2 Blockchains improve scaling. Smart contract execution.
• Answers to Common Crypto Questions
• Ways to “Own Crypto”, Stablecoins, CBDCs, Blockchain Governance, Crypto Legislation, Staking Crypto, Crypto Treasury Companies ...

32

© 2025 FWCS IEEE SP/COMM. All rights reserved.

33

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Bitcoin Crypto Supply: The Math

34

Original Bitcoin Money Supply Design (it has not changed!)

​

1. 50 BTC Block Award for every block during first 4 years (recall, blocks produced every 10 min).
2. Then after 4 years – reduce award by half (i.e., 25 BTC per each new block).
3. Continue to half block award similarly every 4 years.

• 210,240 Bitcoin blocks are produced every 4 years (4*365*24*6).
• Bitcoin’s “Reward Epoch” is 210,000 blocks (only approximately every 4 years).
• Thus, reward for first Bitcoin Reward Epoch is 10,500,000 BTC (50*210,000).

= 1

Total BTC Limit = 21,000,000 BTC

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Blockchain Block Explorers: Bitcoin Example (https://www.blockchain.com/explorer/blocks/btc/918349)

35

Coinbase Transaction

Miner Name

0x00000000000000000000b41746bf85c75721dadb8fd9cb9758edc46836bbf57b

Block Award

Total Transaction Fees

Individual Transactions

0x3f0dd381d012af8bff5570d554fe528860219093222d340ea4289837b34c742a

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Ethereum “Merge” from PoW to PoS – Quick Look at Block Components

36

Ethereum�Pre-Merge�(similar to Bitcoin components)

Fundamentally Straightforward��A lot of testing to ensure�the merge went smoothly

Ethereum PROVED that�(energy-wasting) PoW�blockchains can�transition to PoS!

​

[ ... by changing�consensus algorithm]

Additional “post-merge” fields (mostly) due to ”virtual machine” state required by smart contract functionality�(next slide).

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi, and Prognostications

37

Bitcoin/Ethereum: Public Permissionless Blockchains, DeFi and Prognostications

Michael A. Ramalho, Ph.D.�IEEE Florida West Coast Section Blockchain Local Group Founding Chair�mar42@cornell.edu

Sponsored by FWCS Blockchain Local Group and�University of Maryland Global Campus

October 24, 2025