The Blockchain in 13 Minutes

Editor's Notes

• #6: A ledger is record of transactions If more than one organisation is involved, whose ledger? We used to have to trust someone to maintain a ledger Or we could federate and each maintain our own part of the ledgers Now, thanks to Moore’s Law, everyone can now have a copy of the entire ledger
• #7: A ledger is record of transactions If more than one organisation is involved, whose ledger? We used to have to trust someone to maintain a ledger Or we could federate and each maintain our own part of the ledgers Now, thanks to Moore’s Law, everyone can now have a copy of the entire ledger
• #17: The second is transparency. As I mentioned in the discussion about the "glass bank", transparency may be the defining characteristic of the new financial order and I expect this to be a focus of our clients' attention in the near future. I advance the theory here that the next generation of financial applications will focus on transparency as the key to the new way of doing things: the robustness and the innovation are great, but it is in area of transparency that new cryptographic techniques make it possible to create a new kind of ledger. I'll write more about this in the future, but I will exploring the idea that transparency may be the lasting legacy of the financial crisis in my keynote at Next Bank Barcelona on
• #18: Transparency increases confidence and trust, helping markets to develop. A story from the August 1931 edition of Popular Mechanics illustrated this point. It concerns the relationship between transparency and behaviour in the specific case of depression-era extra-judicial unlicensed wealth redistribution (Glass banks will foil hold-ups 1931) and says that banks hold-ups may become things of the past if banks are constructed with glass walls, so that a clear view of everything that is happening inside the bank will be afforded from all angles at all times. (I urge you search the article, by the way, to see the lovely drawing that goes with it.) The chap behind the idea was a New York architect called Francis Keally (1889-1978), the man responsible for (amongst other things) the Berlin Public Library and the Oregon State Capitol. He reasoned that transparency would be a fundamental defence against crime. No walls, no Bernie Madoff. In our world of 21st century finance we no longer care about the glass bank as a physical construct, we see it as a virtual one. While toughened glass and other architectural advances might have been the key to building Keally’s glass bank, the crucial technology to build the glass institutions that will revolutionise financial services today is the shared ledger. The idea of glass institutions may seem odd but with the advances in technology and our evolving understanding of how replicated shared ledgers might transform a variety of different kinds of systems, I think we can begin to explore their impact, which is disruptive change. I can show this by giving a couple of obvious examples: what if a company chose from a group of regulator-certified auditing applications instead of from a competing group of auditors? Auditing banks’ books would become a continual process and you might even have multiple different applications constantly auditing the same bank on behalf of regulators, shareholders, customers, pressure groups and even rival banks. Anti-money-laundering processes would shift from expensive and rather useless gatekeeping combined with floods of suspicious transaction monitoring to being a variety of different anti-money-laundering applications combing through the shared ledger entries to find transactions indicative of misbehaviour (at which point, law enforcement agencies could apply for warranted access to the unencrypted ledger entry or relevant meta data).
• #19: Transparency increases confidence and trust, helping markets to develop. A story from the August 1931 edition of Popular Mechanics illustrated this point. It concerns the relationship between transparency and behaviour in the specific case of depression-era extra-judicial unlicensed wealth redistribution (Glass banks will foil hold-ups 1931) and says that banks hold-ups may become things of the past if banks are constructed with glass walls, so that a clear view of everything that is happening inside the bank will be afforded from all angles at all times. (I urge you search the article, by the way, to see the lovely drawing that goes with it.) The chap behind the idea was a New York architect called Francis Keally (1889-1978), the man responsible for (amongst other things) the Berlin Public Library and the Oregon State Capitol. He reasoned that transparency would be a fundamental defence against crime. No walls, no Bernie Madoff. In our world of 21st century finance we no longer care about the glass bank as a physical construct, we see it as a virtual one. While toughened glass and other architectural advances might have been the key to building Keally’s glass bank, the crucial technology to build the glass institutions that will revolutionise financial services today is the shared ledger. The idea of glass institutions may seem odd but with the advances in technology and our evolving understanding of how replicated shared ledgers might transform a variety of different kinds of systems, I think we can begin to explore their impact, which is disruptive change. I can show this by giving a couple of obvious examples: what if a company chose from a group of regulator-certified auditing applications instead of from a competing group of auditors? Auditing banks’ books would become a continual process and you might even have multiple different applications constantly auditing the same bank on behalf of regulators, shareholders, customers, pressure groups and even rival banks. Anti-money-laundering processes would shift from expensive and rather useless gatekeeping combined with floods of suspicious transaction monitoring to being a variety of different anti-money-laundering applications combing through the shared ledger entries to find transactions indicative of misbehaviour (at which point, law enforcement agencies could apply for warranted access to the unencrypted ledger entry or relevant meta data).