Blockchain in FinTech

Editor's Notes

• #6: Bitcoin is a form of digital money that was created in 2009 by an unknown person. As a decentralised virtual currency, the system is peer-to-peer and transactions take place between users directly, without the need for banks or transaction fees.* These payments are verified by network nodes and recorded in a public distributed ledger called the "block chain", which uses bitcoin as its unit of account. Although these records are public, the names of buyers and sellers are completely anonymous; only their wallet IDs are revealed. International payments are easy and cheap, since bitcoins are not tied to any specific country and are mostly unregulated. New bitcoins are created as a reward for payment processing work in which users offer their computer processing power to verify and record payments into the public ledger. This activity is known as "mining" and miners are rewarded with transaction fees and newly created bitcoins. Besides being obtained by mining, bitcoins can be exchanged for other currencies, products, and services. Bitcoin became the first cryptocurrency – and by far the most well-known – but various others were introduced in subsequent years. These were frequently referred to as altcoins; a blend of bitcoin alternative. The underlying block chain technology of these virtual currencies grew in popularity. Money was just one of their many possible applications. They could be programmed to represent units of energy, shares in a company, election votes, digital certificates of ownership, or whatever properties its users wished to assign. The open, transparent and flexible nature of cryptocurrencies helped to reduce bureaucracy, made administrative processes faster and more efficient and enabled the automation of many systems.
• #7: A blockchain can be described as a share, secure ledger of records, that are arranged in batches called blocks. These blocks exist as a continuously-growing list, and cannot be altered. Each block references and identifies the previous block, thus creating an unbroken chain. In simple terms, think of a database that automatically updates itself whenever a change is made. And this database is distributed over a network of individual systems called nodes. Each node maintains a copy of the block. Hence in case of updating, retrieving or validating any data, all of its past records could be obtained easily.
• #8: In 2015, the number of merchants accepting bitcoin for products and services passed 100,000. Block chain was described as "one of the most powerful innovations in finance in 500 years" by the Wall Street Journal, with many banks predicting it could revolutionise their operations.* A tipping point for government use of the technology occurs by 2023, with large-scale adoption by businesses and the public by 2027.* Around 10% of the world's gross domestic product (GDP) is stored on a block chain by this time, compared to just 0.025% in 2015. The supply growth is 25 bitcoins per block in 2016 (approximately every ten minutes), then afterwards 12.5 bitcoins per block for four years until the next halving. This halving continues until 2110–40, when 21 million bitcoins have been issued.*
• #11: The growth in the number of projects has been matched by the rapid growth of content produced to develop these blockchain technologies. In analyzing blockchain repositories and their content, we noticed that increasingly more organizations appear to be getting involved. In 2010, organizations developed less than 1 percent of all projects. By 2017, their blockchain projects accounted for 11 percent (organizations currently account for 7 percent of total—not just blockchain—software development on GitHub). Recent data about the rate at which commercial organizations can find success with blockchain initiatives through open source seems promising; some high-profile, large commercial entities are already doing so. When a project is copied, all of the content becomes available to the account that copied the project, thus working as a de facto knowledge-transfer mechanism. This process is commonly referred to as a citation network where projects that are most often copied occupy a more central role in the network of projects, which we refer to as project centrality. Under this rubric, some of the most central projects have been developed and maintained by organizations: Bitcoin core, the C++ and Go implementation of Ethereum, Python clients for Ethereum, and the Bitcoin Improvements Proposal. Initial projects of Ethereum and Bitcoin are maintained by organizations (foundations), and that a vast amount of blockchain projects and applications in GitHub are actually built on top of these two projects. In short, organization-led projects are the backbone code for thousands of other projects. Out of the 20 most central projects in the blockchain space measured by popularity, citation, and collaboration,18 were created and maintained by organizations.
• #12: 1. While sharing software code in a public forum can be traced to the 1950s, open-source platforms have only become hubs for software development within the last 30 years 2. The Internet was a great enabler for scaling: Earlier, open-source activity had been mainly the realm of academia, but the Internet made it accessible to aficionados and experts of all stripes, amateur and professional, individual and commercial 3. That said, there was a dip in relevance of software development on open source for a period when commercial entities that secured licenses and patents placed high fences around software code. 4. However, disruptive innovation has fostered an ever-increasing sharing economy, which has shifted important software development back to open-source platforms 5. Open source could be the ideal petri dish for attracting a critical mass of blockchain coding efforts, talent, and overlapping objectives that accelerate an ecosystem with common standards. 6. It may also mitigate the cost that firms would pay to dedicate resources to a still largely experimental technology. Developing proofs of concept in an “intranet” blockchain learning platform does not seem as efficient as learning how to develop business solutions on an “Internet” blockchain. 7. At the current evolutionary stage of blockchain technology, it is likely to be in a developer’s best interest to develop, or watch the development of, blockchain solutions on open source. Blockchain appears to have a better chance to more quickly achieve rigorous protocols and standardization through open-source collaboration, which could make developing permissioned blockchains easier and better.
• #33: Ethereum’s technology is still in a nascent stage and will have to overcome several roadblocks – technical and regulatory – before it becomes fully functional for business dealings. Alliances such as the Enterprise Ethereum Alliance are important groupings of industry players that will help smooth ethereum’s road to widespread adoption. Experts have come together to learn and build upon the Ethereum protocol to define enterprise grade software, utilizing Blockchain technology. Given the maturity and multi-purpose design of Ethereum, the alliance is on a mission to bring privacy, scalability,security, and performance improvements to build the Ethereum Blockchain as the primary solution for Enterprise adoption on a mass scale. The Enterprise Ethereum Alliance will only get stronger as more enterprises follow suit, and ultimately improve on the current deficiencies of the Ethereum platform. For those that experience Fear, Uncertainty, and Doubt (FUD) in Blockchain technology, The Alliance should reaffirm your stance that Ethereum is the true creme de la creme as a platform for Enterprise use.
• #34: The EEA, which was launched in February 2017, was established to bring privacy, scalability and security to the development of Ether and the whole Ethereum Blockchain. Since February, the alliance has grown to 200 members, making it the largest open-source Blockchain initiative. Its member list includes founding members JPMorgan and Santander, newer members like Mastercard, Intel and Microsoft, and a number of Ether investors and Blockchain startups. Despite the obvious utility of ethereum’s blockchain to multiple sectors, industry adoption has been slow. In a recent CNBC interview, ethereum co-founder Joseph Lubin said the attitude of businesses to blockchains was similar to their response to the Internet during the mid-1990s.  The Enterprise Ethereum Alliance (EEA) has appointed Ron Resnick, the former president and chairman of the Airfuel Alliance, as the first executive director, according to a Jan. 17 press release.Resnick also served as the President and Chairman of the WiMAX Forum, working with Intel’s Broadband Wireless Business on the launch of one of the first 4G broadband modems. To be sure, ethereum already has a non-profit foundation responsible for further development on its platform. According to its website, the Ethereum Foundation will build a more “globally accessible, more free and more trustworthy Internet.” That is an admirable goal. But accessibility and trust requires the presence of a diverse ecosystem of consumer businesses and data formats on the new Internet. The Ethereum Enterprise Alliance is headlined by stalwart companies from the finance and technology industries. In an earlier interview, Chris Larsen, co-founder of Ripple – another cryptocurrency that targets the finance industry – said the rails on which the financial industry was built are not broken, but needed to be upgraded for an era of hyper-connectivity. To that end, the alliance is focused on collaborating and changing those rails. 
• #39: Source: https://www2.deloitte.com/nl/nl/pages/financial-services/articles/5-blockchain-use-cases-in-financial-services.html https://www.finyear.com/The-five-major-use-cases-for-financial-blockchains_a35655.html https://blockchainapac.fintecnet.com/uploads/2/4/3/8/24384857/fintech_blockchain_report_v3.pdf https://www.ft.com/content/615b3bd8-97a9-11e7-a652-cde3f882dd7b https://www.accenture.com/hu-en/insight-blockchain-technology-how-banks-building-real-time Different news items relating to the use cases shown above: https://feedzai.com/blog/nasdaq-uses-blockchain-based-technology-to-reduce-risk-and-prevent-fraud/ https://www.coindesk.com/hands-on-with-linq-nasdaqs-private-markets-blockchain-project/ https://cointelegraph.com/news/blockchain-digital-identification-in-canada-coming-in-2018 https://www.nasdaq.com/article/how-blockchain-is-being-used-to-solve-crossborder-payments-problems-cm864095 https://www.theinvestorspodcast.com/blog/cross-border-payments-blockchain-ripplenet-adopted-major-banks/ https://www2.deloitte.com/uk/en/pages/financial-services/articles/investing-in-blockchain-technology-with-SETL.html https://bankex.com/en/ https://nem.io/technology/ https://www.loyalgarden.co/en/index.html https://cryptovest.com/news/bitrewards-takes-a-new-approach-to-loyalty-programs-using-blockchain-technology/ https://www2.deloitte.com/us/en/pages/financial-services/articles/making-blockchain-real-customer-loyalty-rewards-programs.html https://inc42.com/features/watchlist-indian-blockchain-startups/ https://www.investopedia.com/news/top-blockchain-startups-watch-2018/
• #40: Source: https://hbr.org/2017/01/the-truth-about-blockchain https://bankinnovation.net/2017/05/4-challenges-to-blockchain-adoption-from-fidelity-ceo/ https://www.nasdaq.com/article/five-challenges-blockchain-technology-must-overcome-before-mainstream-adoption-cm899472 https://cointelegraph.com/news/major-challenges-to-blockchain-mainstream-adoption-industry-view