WTF for businesses for Blockchain
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This document provides an overview of blockchain and cryptocurrency. It discusses: - The history of digital currencies including eGold, WebMoney, and other early centralized cryptocurrencies. - How Bitcoin solved the problems of double-spend and need for trust through the use of distributed blockchain technology. - Different types of blockchain including public and private blockchains. - Key features of blockchain like immutability, smart contracts, asset transferability, and higher security. - Potential business uses cases for blockchain including private equity exchanges, payment integration, and using blockchain for verifying diamond transactions or detecting insurance fraud.
WTF for businesses for Blockchain
- 1. WTF for Business with Blockhain SLASSCOM TECH TALK “BLOCKCHAIN” 31st January 2017 (what’s the future)
- 2. Statement of Disclosure The content, opinion and view points that I share with this presentation is my own personal opinion unless otherwise specifically quoted or referred in the materials or presentation. Articulations are based on the knowledge and the believes I have as a professional in the industry. Therefore ideas and the opinions shared does not reflect any view of the organisation I work (LOLC Group and/or its subsidiaries) nor it reflect any thing that I carry out in my role in the organisation.
- 4. Cryptocurrency As the name says It is a digital or virtual coin created using Chain of Digital Signatures or public key infrastructure (cryptography) for security and anti-counterfeit measures .
- 5. History Digital Currency • eGold – Digital Currency Backed By Gold Reserves – 1996 - 2009 • Founded by Douglas Jackson and attorney Barry Downey • Had over 5million accounts and at the peak it had portfolio of $2 billion • Centrally Controlled and Founders defrauded and arrested • Some on private circulation and used only for specific use cases like micro payments, vouhers, domestic fund transfers and payments • WebMoney – Centralise Digital Currency -1998 • NetCheque – Electronic Payment System • Peppercoin – Cryptographic System for Payments • Payworld - Electronic Voucher Distribution System • Centralised Digital Currency – 2006 -2013 • Had over 1 Million Users when shut down in 2013 by USA under patriot act
- 6. There were two Fundamental Problems of Early Digital/Cryptocurrencies •Risk of Double Spend •Need for Trust on the issuer (centralized authority)
- 7. Bitcoin
- 8. Mangocoinz Altcoins Some use same Sha256 hashing while others use ScryptPBKDF (password based key derivation function) Algorithm founded by Dr Colin Percival in 2012 or Hybrid.
- 10. Blockchain Distributed Database Ledger • Distributed or shared database that can record transactions, eliminates trust and central control • Data stored in a fixed structures called blocks • Block has the header and previous block Hash Value making it possible to access all previous blocks • Distributed Blockchain is what prevent double spend on Bitcoin • Bitcoin Blockchain is near irreversible
- 11. Types of Blockchain Public Blockchains (Permission- Less) • Anyone can be part of the network have copy of the ledger • Everyone can participate • No single person owns or controls Private Blockchains (Permissioned) • Held or Distributed only with Trusted Participants • Network may have owner/owners who has permissioned to commit
- 17. Key Features of Blockchain Immutability Programmable Asset – Smart Contract Asset Transferability Transaction Traceability Higher Security Trust Elimination Faster Settlement
- 18. Blockchain Business Use Cases
- 19. Private Equity Exchange Payment Integrator
- 20. Design using Hyperledger Ledger for Diamond Transaction Verification Fraud detection system for insurer and law enforcement
- 23. Thank You
Editor's Notes
- #4: Before going any further I like to make a statement with regards to the content and the opinion that I may try to form with regards to the topic
- #5: Cryptocurrency as the name says it is electronic coin that is created using public key infrastructure or chain of digital signatures
- #6: Cryptocurrency as the name says it is electronic coin that is created using public key infrastructure or chain of digital signatures
- #7: No records of exact starting date Many forms of Digital Currencies that has come and gone There is a history of digital currency implementation in the world ranging from gold standard or pegged cryptocurrency systems such as eGold to centralised digital currencies like Liberty Reserve, but all these had two fundamental problems
- #8: a) Risk of Double Spend – Meaning that the currency you have can be used to pay more than one person b) Trust on the issuer of the cryptocurrency. – Authority who was running the currency system
- #9: Bitcoin is the first most successful implementation so far which eliminates both these problems and it achieve this through distributed ledger or blockchain.
- #10: There are various other cryptocurrencies introduce after bitcoin with some variations using the same blockchain principles which are popularly known as altcoins.
- #11: When I did my first and the second talks on Cryptocurrency and Bitcoin, I said that I am not a strong believer of Bitcoin as a currency, but underlining technology “Blockchain” is an amazing technology that organisations need to explore. I still standby that statement I made but I must validate the same by saying that in a public blockchains like Bitcoin and to some extent in private blockchains to incentivise transactions you need to have some form of reward system embedded to the blockchain which could be form of a cryptocurrency, rewards points, tokens that can be converted value or even a fiat currency. However private blockchains can be designed or exist to achieve a common goal without a currency attached to it.
- #12: Blockchain some times referred to as distributed ledger is only one type of a distributed ledger, meaning, a system that store or record data in blocks in a linear chain with reference relationship to the previous block in the chain and uses distributed consensus theory of computing and cryptography to make it theoretically unchangeable once written to a block. In simple blackchain is a decentralised database technology.
- #13: There are mainly two types of blockchain implementations so far Permission-less ledger or Public Blockchain which is the more popular one with Bitcoin Public Blockchain or Unpermissioned / permission-less ledgers is one that anyone can contribute data to the ledger and all participants have an identical copy of the ledger. However, no single person has the control or own the ledger. In the Bitcoin network it uses concept of “proof of work” known as mining to achieve the consensus. Permissioned ledger or Private blockchain which is used by ripple, monax (eris) and so in. Private blockchain or permissioned ledgers is one that held or distributed with a group of participants with limited amount of trusted participants. Network may have owner or owners who has the permission to commit to the ledger. Some of the Private blockchains use concept of prof of work to achieve decentralisation and some are switching to “proof of stake”. ERIS is one such private blockchain that use proof of stake. Ripple is another private blockchain that uses different voting style algorithm to achieve consensus.
- #15: Bitcoin Bitcoin is the first public blockchain that was launched and successful as platform for exchanging value or digital currency. From its introduction Bitcoin network also has evolved and many changes and enhancement are done to the 2009 Bitcoin platform. The newest is addition of litning network to enable micro payments.
- #16: Ethereum Ethereum is a founded by Vitalik Buterin 19year old colllege dropout a Bitcoin enthusiast, programmer and writer. Inspired by Bitcoin designed to overcome some limitations of applicability of Bitcoin, hence ethereum not a rivalry to Bitcoin. Bitcoin is posiion as a store of value blockchain system where as etherume is means of exchange. Etherume uses ethereal the crypto asset, high programmable capability of etherumemakes flexible to use for and with more powerful business
- #17: Hyperledger Hyperledger, is one such blockchain platform which is an open project by the Linux Foundation and supported by many technology giants like IBM, Intel and so on. This project is to create a fabric or blockchain operating system or a common standard for distributed ledger /database specially to integrate and work with other blockchain technologies and most are still incubator stage and some with pilot use cases.
- #18: Ripple Ripple platform is technology platform from RippleLabs that is trying to replace SWIFT network bringing virtually instant update ledgers of the sender and recipient banks without involvement of a corresponding bank. While the ripple solutions require direct link between the two banks or the financial institute ripple believes in a market maker to bridge the gap in the net settlement or use SWIFT and/or nostro and vostro account arrangements.
- #19: Immutability This is the key feature of the blockchain, this means no one person can change the data once it is written to the block and if someone wants to change a block they need to have theoretically 51% of the computing power of the network plus ability to work faster than 49% with the current transactions as they have to rework all the subsequent blocks. Having said that in a private blockchain this could be done as participants have the control to some extent still the consensus of the same 51% applies. Further with Accenture invention of editable blockchain challenges immutability feature of private blockchain, however still need the control of the distributed ledger andnedited scar will remain to notify that the particular block was edited. Asset- Crypto Asset and Programmability of Asset Bitcoin and specially Bitcoin variants like Ethereum has built platform that the assets behaviour can be programmed and executed based on set of instruction. This is how the smart contracts have been built in the ethereum network. Ability to transfer of asset and ownership Before the invention of blockchain we were able to send a copy of the digital asset using internet but with blockchain you can transfer the asset to another party which makes the possibility of transferring ownership without prejudice. Traceability Transactions can be traced using the local database which makes it faster and Anonymity/Psdonymity As the blockchain platform uses public key cryptography to identify the transacting party it hides than actual identity of an individual and and individual can have multiple accounts which brings some anonymity or some say Psdonymity. Trust elimination Requirement of a middleman, trusted third party or even trusted transacting party is completely eliminated with a public Blockchain like bitcoin. However, in a private blockchain certain element of trust is required as it s either controlled or permissioned to one or more participants to achieve concensus. Higher Security With the Distributed ledger has higher availability and is no single point of failure. Network has higher security as it is difficult for a hacker takedown the entire network of computers as they need to need to take a control of all the nodes at the same time. Faster Settlement Since the digital asset can be transferred and transaction can be confirmed and concluded with in a blockchain systems the settlement process is faster than a traditional physical process. Especially if you take an international fund transfers or if property asset deed is digitally stored the process can be completed minutes compared to days in a traditional process.
- #29: Accenture editable blockchain Accenture one of the largest consulting firm has introduced and patented editable blockchain where a one or more super authorities can edit the blockchain and reverse or wipe a committed record without effecting the integrity and blacking the chain. However, this can be done only in a private blockchain as you can control the nodes. I am not sure why you want to do that as we have been having relational databases that can be edited and replication technology for ages. This raise a question in me for viability private blockchain and again pose the issue trust
- #31: Blockchain is a n horiz