BLOCKCHAINKnowing the Buzz word

Coverage around :

• What is BLOCKCHAIN?

• History and Evolution of Blockchain

• Basics of Blockchain

• Benefits and Risks

• Uses of Blockchain

• Example industries using Blockchain

• Impact on Financial Sector

• Fascinating Blockchain Statistics

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What is BLOCKCHAIN ?

What is Blockchain?

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A Blockchain is a time-stamped series of immutable records of data that is managed by cluster of

computers not owned by any single entity. Each of these blocks of data (i.e. block) are secured and bound

to each other using cryptographic principles (i.e. chain).

Blockchain is a technology. Blockchain is not a company, nor is it an app, but rather an entirely new way

of documenting data on the internet.

The technology can be used to develop Blockchain applications, such as social networks, messengers,

games, exchanges, storage platforms, voting systems, prediction markets, online shops and much

more.

What is Blockchain?

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• Blockchain is a new model for recording transactions.

• A Blockchain is a shared ledger where transactions are permanently recorded by adding blocks. The

Blockchain serves as a historical record of all transactions that ever occurred, from the first (genesis)

block to the latest block, hence the name Blockchain.

• Blockchains use cryptography to allow each participant on any given network to manage the ledger in a

secure way without the need for a central authority to enforce the rules.

• Removal of a central authority from the database structure is one of the most important and powerful

aspects of Blockchains.

• When data (also called a “transaction” or an “entry”) is recorded in a blockchain, it is extremely difficult to

change or remove it as a majority of the extensive Blockchain community would need to agree to, and

facilitate, the change.

• Blockchains create permanent records and histories of transactions because of the permanence of the

network.

Read more about Cryptography here https://www.pcmag.com/encyclopedia/term/40522/cryptography

History and Evolution of

BLOCKCHAIN ?

History and Evolution of Blockchain

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Blockchain is one of the biggest innovations of the 21st Century which has a ripple effect into many sectors

and spheres of the world communities.

Blockchain roots can be traced back to the early 1990s, Stuart Haber and W. Scott Stornetta envisioned

what many people have come to know it as Blockchain, in 1991. Their first work involved working on a

cryptographically secured chain of blocks whereby no one could tamper with timestamps of documents.

Reference - https://101blockchains.com/history-of-blockchain-timeline/

History and Evolution of Blockchain

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Blockchain is an undeniably ingenious invention – which

really landed in 2008, the brainchild of a person or group

of people known by the pseudonym, Satoshi Nakamoto.

Originally the technology was devised for the digital

currency, Bitcoin.

Just to highlight, Bitcoin is not Blockchain, in the same

sense google is not the internet. Bitcoin is based upon

Blockchain technology.

Bitcoin was the first cryptocurrency that allowed users to

transact without the need for intermediary like a bank.

In 2013, companies evolved the Blockchain by exploring

ways of allowing computer code to execute on the

Blockchain, effectively turning some implementations

into global computers. In his talk, Conor described how

Ethereum does this through its 'smart contracts'

functionality, and is now known informally as the 'world

computer'.

In 2015, an explosion of start-ups and fintechs appeared, and the number continues to grow with a larger

focus on Blockchain start-ups in different sectors, from finance and enterprise to consulting.

Beyond 2017, the technology is growing and expanding itself to various industries and sectors.

Basics of BLOCKCHAIN ?

Blockchain basics

• It is essentially a digital ledger

• The term is merged from block (of information) and chain – forming a continuously growing list of records/blocks

• Removes the need for intermediaries and is a consensus based system

• Blocks are then linked using cryptography

• Each block contains a cryptographic hash of the previous block, a timestamp and transaction data

• By design, a blockchain is resistant to modification of the data

Traditional Database Blockchain Database

• All data is stored centrally

• Changes to ledger possible

• Control of database remains with a designated

authority – Data can be altered/deleted

• Limited access due to centralised nature – can

cause bottle necks

• Requires a middle man.

• All data is interconnected and is decentralised

• Cannot change entries on the ledger as info

stored across multiple nodes

• Each node participates in administration – the

consensus mechanism makes it difficult to

tamper with.

• Disintermediation

Building Blocks of a Blockchain?

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Blockchains are made up of three parts:

• A Block: This is a timestamped list of transactions recorded into a ledger over a given period.

• Chain: This is created via the unique id (called a “hash”) that links one block to another, ‘chaining’ them

together. The hash for any particular block is created from the data that was in the previous block.

Accordingly, the hash forms a digital fingerprint of this data and locks blocks in order and time within the

blockchain, essentially ‘gluing’ them together and creating the mathematical ‘trust’ needed for the

blockchain to function.

• Network: The network is composed of “nodes”. Think of them as computers, located all over the world

and operated by anyone, that are running an algorithm that is securing the network. Each node contains a

record of the entire blockchain, including the complete record of all the transactions that were ever recorded

in that blockchain.

Blockchain

Block

NetworkChain

Elements of Blockchain

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Replicated or Distributed Ledger:

Ledgers are not new; they are used in double-

entry bookkeeping since the 13th century. What

is new is the concept of a shared, distributed

ledger – an immutable record of all transactions

on the network, a record that all network

participants can access.

Cryptography:

This is the medium or language to make the

transactions secure. Blockchains can be

permissioned or permission-less. In a

permissioned Blockchain, each participant has

a unique identity which supports to constrain

network participation and access to transaction

details.

Consensus:

Consensus or Agreement is the method to validate transactions on the Blockchain. The Miners validate new

transactions and record them on the global ledger (Blockchain). Validation from all is important or else the

transaction is declined.

Business Logic:

It is the embedded logic or the set of rules on the Blockchain ledger. It is executed automatically when the

parameters defined are met.

Participants on Blockchain

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Various participants on a Blockchain network play role in its operation. Following are descriptions of each of

the participants:

Blockchain user: A participant (typically a business user) with permissions to join the Blockchain network,

and conducts transactions with other network participants. There are, typically, multiple users on any one

business network.

Regulator: A Blockchain user with special permissions to oversee the transactions happening within the

network. Regulators may be prohibited from conducting transactions.

Blockchain developer: Programmers who create the applications and smart contracts that enable

Blockchain users to conduct transactions on the Blockchain network. Applications serve as a conduit

between users and the Blockchain.

Blockchain network operator: Individuals who have special permissions and authority to define, create,

manage, and monitor the Blockchain network. Each business on a Blockchain network has a Blockchain

network operator.

Certificate authority: An individual who issues and manages the different types of certificates required to

run a permissioned Blockchain. For example, certificates may be required to be issued to Blockchain users

or to individual transactions.

How Does Blockchain Work?

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Benefits and Risks of

BLOCKCHAIN ?

Benefits of Blockchain

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Blockchain can bring greater transparency, security, and efficiency in our current business processes

eliminating inefficiencies. It can enable new business models based on distributed marketplaces and

technology

• Eliminates Intermediaries - Allows industries to redefine or create new business models.1

• Reduces Fraud related to data integrity - Highly secure and transparent, making it nearly impossible to change historical records.2

• Increases Efficiency and Speed - For transactions involving multiple parties in a trustless environment it enables T+Zero settlement time.3

• Reduce counterparty risk - Smart contracts enable “trustless” transactions between multiple parties4

• Increases Revenue and Savings - Potential savings and new revenue opportunities through more efficient processes and reduced costs.5

Risks of Adopting Blockchain

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Blockchain is a promising breakthrough technology using radical innovations. As it happens with adoption

with radical innovations, there are significant risks of adoption.

• Behaviour Change - Blockchain will require customers to get used to the fact that their electronic transactions are safe, secured and complete.1

• Scaling - Scaling of the current nascent services based on Blockchain will have a cost and technological challenge.2

• Bootstrapping - Moving the existing contracts or business documents to the new platform presents a significant set of migration issues.3

• Government Regulations - Government may slow down the adoption by introducing new laws to monitor and regulate the industry for compliance.4

• Fraudulent Activities – Potential instances of misuse for fraudulent activities like, money trafficking.5

• Quantum Computing - The advent of Quantum Computers (in future), may make cryptographic keys easy to crack through sheer brute force.6

Blockchain is still evolving and changing as the technology develops further. There are some important

aspects like – Cost Benefit, Feasibility and Adaptability, Governance, Regulatory, etc. that definitely need to

be thoroughly considered before the adoption.

Uses of BLOCKCHAIN ?

Uses of Blockchain

Blockchain Technology is currently in infancy but

its usage growth is exponential.

Smart Contracts Rules/Conditions can

programmed in the Blockchain and linked to

specific events. Self-executing contracts with the

terms of the agreement between buyer and seller

being directly written into lines of code.

Blockchain-based compliance to save and

reduce costs for the bank. For example;

Centralized network-defined registry can make

the entire process simpler, faster and cheaper.

Trade Finance Blockchain has the potential to

revolutionize the trade finance industry,

characterized by a complex network of players

and several manual, paper-intensive processes.

Assets Ownership and history, on Blockchain

technology we can store a detailed accurate

record of history that is available to everyone.

Health database: Global heath history

Blockchain database shared among all hospitals

where everyone’s medical history is available to

every hospital/doctor in the world.

Blockchain

Clearing and settlement

Markets

Inter-organizational

data management

Regulatory compliance

Smart contracting

Digital Identity

Example Industries using

BLOCKCHAIN ?

Blockchain has the opportunity to disrupt almost all the different industries out

there

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Supply Chain Management Higher Education for Students

Real Time Documentation: Blockchains allow a

product to be documented in real time as it moves

from its original provenance and all it’s touch

points.

Enhances Transparency: Blockchain technology

helps enhance transparency into an otherwise

opaque network, helps stop counterfeits and

thefts,

Irons out Logistic issues: improves regulatory

compliance, reduces paperwork and lessens

costs significantly.

A quick video

Test ScoresApplication

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Financial Aid

College Transcripts

College Evaluations

Using Blockchain, all of the above information can be

transferred very quickly – saving time, efforts,

unnecessary documentation and other hassles

Industry examples

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Blockchain has started to be used across various sectors of the industry.

Impact on Financial Sector by

BLOCKCHAIN ?

Blockchain Impact on Financial Sector

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Blockchain has started to impact the Financial Sector is a broad and positive way. There are many

organisations that have implemented and adopted the technology in varied ways.

Covered below are the top implications the technology will have in the future of the sector:

• It has potential to drive simplicity and efficiency by establishing new financial services infrastructure and processes.1

• Digital Identity to broaden applications; Digital Fiat (legal tender), along with other emerging capabilities, has the ability to amplify benefits.2

• It will ensure more secure and better way to trade, trade settlements will be completed much faster and have reduced transaction costs.3

• The Blockchain will completely change the way insurance is procured and settle claims.4

• The technology will bring in speed and accessibility within the financial sector. The processing would be faster and secure.5

• Smart Contracting is one of the innovations which as been successfully adopted in the financial sector.6

• Start ups have been implemented using the technology. The banking sector uses it for KYC, payments, validation, etc.7

Fascinating Blockchain

Statistics

Fascinating Statistics

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1. Blockchain potential for reducing bank infrastructure costs – 30%

2. Annual savings potential for banks using Blockchain technology – $8-12 billion

3. Amount the global Blockchain market is expected to be worth in 2024 – $20 billion

4. Average investment in Blockchain projects in 2017 – $1 million

5. Amount that IBM is investing in Blockchain-powered IOT – $200 million

6. Number of employees IBM is dedicating to Blockchain powered IOT projects – 1,000 employees

7. Percentage of major North American and European banks that are exploring Blockchain – 90%

8. 9 out of 10 agree that Blockchain is a banking disrupter

9. Percentage of world population using Blockchain Technology – 0.5%

10. Financial sector spend on Blockchain in 2018 - $ 552 Million

11. Telangana proposes to set up India’s first “Blockchain District” in Hyderabad.

Read more stats here https://techjury.net/stats-about/blockchain/

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