Blockchain in 2016 - Advanced Distributed Ledger Technologies

Copyright © 2016
Howard Smith
v26, November 2016
Blockchain 2016
Distributed Ledger Technologies
Towards a scalable real time
Internet of Value (IoV) and
Certainty-as-a-Service (CaaS)

2November 4, 2016Copyright © 2016
“So I thought I knew about the blockchain”
On traditional server architectures, every application has to set up its own servers that
run their own code in isolated silos, making sharing of data hard. If a single app is
compromised or goes offline, many users and other apps are affected. On a blockchain,
anyone can set up a node that replicates the necessary data for all nodes to reach an
agreement and be compensated by users and app developers. This, coupled to
appropriate cryptographic options, allows user data to remain private (when required) but
most importantly for apps to be decentralized. The blockchain is therefore a distributed
database that maintains a continuously growing list of data records that are hardened
against tampering and revision, even by operators of the data store's nodes.

Encountered / studied during my learning
• 21 Inc
• Adjoint.io
• AlignCommerce
• AlphaPoint
• AppliedBlockchain
• Ascribe.io
• AssemblyMade
• Augur.net
• Axoni
• Balanc3.net
• BigChainDB
• Bitcore.io
• BitFury
• BitHealth.io
• BitNation.io
• BitWage
• BlockApps
• Blockchain.com
• BlockChainLab
• Blockchain-X
• Blockcypher
• BlockFreight
• Blockstack.org
• Blockstream
• BlockVerify.io
• Bloq
• Boardroom.io
• Chain
• ChainThat
• ChromaWay
• Circle
• Clearmatics
• Coinbase
• CoinFabrik
• Coinfirm.io
• CoinsBank
• Colu
• Consensys
• CounterParty.io
• Dash.org
• DCG.co
• DigitalAsset
• Draglet
• E-Estonia
• Epiphyte
• Ethereum (Solidity)
• EverLedger
• Factum
• Farmshare.us
• Filament
• Funderbeam
• GenesisMining
• Gnosis.pm
• Guardtime
• HyperLedger.org
• HyprCorp
• IBM Adept
• ICONOMI.net
• ICOO.io
• Identify
• IncentLoyalty
• IPFS
• Jaak.io
• Jaccoo
• Kraken
• KrypC
• La’zooz
• Libra.tech
• Lightning.Network
• Lisk.io
• Monax.io (Eris)
• MultiChain
• Nxt.org
• OpenChain
• OneName
• Peernova
• ProofOfYou
• Provenance.org
• Purse.io
• R3cev
• RiddleAndCode
• Ripple
• Rubix (Deloitte)
• SericaTrading
• SkuChain
• Slock.it
• SmartLedger.io
• Stampery
• Symbiont.io
• Synereo (Rholang)
• TallySticks.io
• Tendermint
• Telehash.org
• Tezos
• Tierion
• Tramonex
• TransActiveGrid.net
• Ursium
• Velocity.technology
• WavesPlatform
• xapo

Sample of recent blockchain industry news (last 10 days)
• The launch of a new cryptocurrency, Z.Cash, whose ‘genesis
block’ was minted on October 28, generating a price frenzy,
pushing its value over that of BTC (Bitcoin)
• MasterCard opens APIs to its blockchain
development/innovation lab to stimulate new applications in
P2C, P2P and B2B payments & supply chain
• A group of banks in South Africa are following those in USA and
Europe to establish collaborative trials of Ethereum blockchain
solutions for asset swaps and syndicated loans
• Disney became a blockchain advocate, releasing a platform
called Dragonchain, highlighting Disney tokens/coins,
streamlining distributed operations to ride queue optimisation
strategies
• Japan Bank Consortium formed (42 member banks) to trial
Ripple blockchain services for payments and settlement, moving
to 24-hour settlement and real time remittances
• Chain has decided to release an open source version of its
blockchain platform, attracting more attention from Visa (similar
move by RS CEV for its Corda oss via the HyperLedger Project)
• Capital One is to test blockchain for healthcare claims and
analytics, in partnership with Gem and healthcare API platform
PokitDok
• Commonwealth Bank and Wells Fargo announce they are
testing blockchain to support trade finance and a digitized fraud
resistant supply chain, initially focussed on the global cotton
market, working with Skuchain
• Mediachain Labs has released an oss blockchain based
image/media attribution engine that includes IPFS
(Interplanetary File System)
• Bank of Chain and HSBC are aiming to launch a blockchain
based property survey database, with integration to the bank’s
mortgage systems
• Five of Europe’s biggest insurers have joined forces to create
B3i (The Blockchain Insurance Industry Initiative), includes
Allianz, Swiss Re and Zurich and uses cover the gamut of the
entire insurance value chain
• Swift is spearheading a new Global Payments Initiative, led by
leading banks, that approximates how the blockchain works
• ABN AMRO and Delft University of Technology have partnered
to develop oss for complex blockchain applications
• Euler Hermes (insurance) has partnered with Fluent.Network to
build insurance applications on the blockchain
• HyperLedger, the Linux foundation oss effort to advance
standardisation of blockchain technology has added over 10
new members, including Huawei, Nokia and the National Stock
Exchange of India
• South Korea is planning a national digital currency using a
blockchain as part of a consorted effect in Fintech investments
• Estonia is expanding its leading e-Estonia digital citizen and e-
residency services, by partnering with BitNation
• AT&T is seeking a patent for a blockchain server, describing
subscriber home server consistent with Bitcoin

Scope
• Blockchain(s)
– The technology
– The applications
– The platforms
• Inspire ideas for applying blockchain
architecture
– In different industries / use cases
– In domains other than digital
currency
– Public, private and consortium-based
– Distributed trusted transactions
• Simple, complex, two party, escrow, multi-
party
From digital currency to smart contracts to smart property (IoT) to distributed autonomous
organisations (DAOs)

Blockchain is more than bitcoins and altcoins
“We should think of blockchain as another class of thing like the Internet – a comprehensive information
technology with tiered technical levels and multiple classes of applications for any form of asset registry,
inventory, and exchange, including every area of finance, economics, and money; hard assets (physical
property, homes cares); and intangible assets (votes, ideas, reputation, intention, health data, information
etc.) But the block concept is even more; it is a new organizing paradigm for the discovery, valuation, and
transfer of all quanta (discrete units) of anything, and potentially for the coordination of all human activity at
a much larger scale than has been possible before … The economic, political, humanitarian, and legal
system benefits of blockchain start to make it clear that this is potentially an extremely disruptive
technology that could have the capacity for reconfiguring all aspects of society and its operations”. -
Melanie Swan 2015
• Blockchain 1.0
– Digital currency: the deployment of cryptocurrencies in applications related to cash
transfers, remittances and payment systems
• Blockchain 2.0
– Digital contracts (shared P2P business logic): the entire panoply of economic, market and
financial applications using the blockchain and that are more extensive (complex multi-
party) than simple currency transfers: i.e. stocks, bonds, futures, loans, mortgages, titles,
smart property (IoT + blockchain), and smart contracts
• Blockchain 3.0
– Digital applications beyond Fintech (currency, finance, markets): Areas such as
government, health (records), science, literacy, culture, art.

Definitions of blockchain point in the same direction
“The Blockchain combines cryptography & distributed
computing to deliver secure, direct, peer to peer transactions
without the need for a central party. At its heart is the
Distributed Ledger. This is a tamper proof, public [or private],
network-hosted, record of all consensus verified transactions.
Initially realised via Bitcoin and similar ‘cryptocurrencies’,
focus & investment is now shifting to the potential of
Blockchain technology to revolutionise the infrastructure and
processes of established Financial Institutions & other
enterprises.” – First Partner
“Blockchain basics: A network of nodes
puts transactions into blocks and blocks
into a single chain that represents the
"truth" of what has happened. If two
competing transactions happen at
about the same time, the network
resolves this conflict by choosing one
and rejecting the other, so all nodes
have the exact same copy of the
distributed ledger.” – Coindesk
“A blockchain is a distributed computing architecture where every network node executes and
records the same transactions, which are grouped into blocks. Only one block can be added at
a time, and every block contains a mathematical proof that verifies that it follows in sequence
from the previous block. In this way, the blockchain’s “distributed database” is kept in
consensus across the whole network. Individual user interactions with the ledger
(transactions) are secured by strong cryptography. Nodes that maintain and verify the network
are incentivized by mathematically enforced economic incentives coded into the protocol.” –
Ethereum Github ReadMe

Blockchain compared to traditional architectures
Source: Magister Advisors

Blockchain flavours
Source: Magister Advisors

How blockchain works, many visualizations via Google images

The community is finding ways to describe blockchain
• Blockchain timestamps
– Decentralized - no one entity controls the
database of timestamps, and everyone in the
network confirms that timestamp has
happened
– Immutable - once a timestamp has been
verified and recorded, you can’t un-do it
– Public - all of the timestamps are publicly
visible, though some aspects of the data are
encrypted
– Programmable - you can write code against
the blockchain: for example, triggering some
sort of action based on the details of a “smart
contract” embedded in a timestamp.
“The blockchain is a database of verified public timestamps, we’ve never had that before”
“One way I’ve described this is similar to the way
people used to use postmarked envelopes to verify
that something had happened at a certain time. For
example, signing a will and putting it in an
envelope, and mailing it to yourself — the post
office’s postmark on the envelope, which has the date
of the stamp, proves that whatever was put in the
envelope was done so before the date of the stamp.”
“Previously, every app kept its own notion of time. So if
I post something on Facebook, Facebook saves that
post and timestamps it. We have to trust them to get
that right, and not to change it ever in the future. This
is fine for cat photos, but less fine for financial
transactions, or deeds to a house.”
“We're going from state-based datastores
(databases) to time-based datastores
(blockchains). The rationale is that state is space:
locality determines truth. If record X has a value of K in
the the "master" database, then that's its actual value.
In the blockchain, the value of X is not determined by
where you read it but by the transaction log.”
https://www.ouvre-boite.com/space-to-time/http://www.nickgrossman.is/2015/06/the-blockchain-as-time/

Blockchain viewed as an important new technology platform

Support existing or create new business models, public or private
Source: twitter.com/wmougayar
author of:
Where will blockchain find its applications?

Potential applications
Financial
Currency
Private equities
Public equities
Bonds
Derivatives (futures, forwards,
swaps, options and more
complex variations)
Voting rights associated with
any of the above
Commodities
Spending records
Trading records
Mortgage / loan records
Servicing records
Crowd-funding
Micro-finance
Micro-charity
Record keeping
Land titles
Vehicle registries
Business license
Business incorporation /
dissolution records
Business ownership records
Regulatory records
Criminal records
Passports
Birth certificates
Death certificates
Voter IDs
Voting Health / Safety
Inspections
Building permits
Gun permits
Forensic evidence
Court records
Voting records
Non-profit records
Government/non-profit
accounting/transparency
Personal / public
Contracts
Signatures
Wills
Trusts
Escrows
GPS trails (personal)
Degree qualifications
Certifications
Learning
Outcomes
Grades
HR records (salary,
performance reviews,
accomplishment)
Medical records
Accounting records
Business transaction records
Genome data
GPS trails (institutional)
Delivery records
Arbitration

Potential applications cont.
Physical assets
Home / apartment keys
Vacation home / timeshare keys
Hotel room keys
Car keys
Rental car keys
Leased cars keys
Locker keys
Safety deposit box keys
Package delivery (split key
between delivery firm and
receiver)
Betting records
Fantasy sports records (!)
Intangibles
Coupons
Vouchers
Reservations (restaurants,
hotels, queues, etc.)
Movie tickets
Patents
Copyrights
Trademarks
Software licenses
Videogame licenses
Music/movie/book
licenses (DRM)
Domain names
Online identities
Proof of authorship / Proof
of prior art
And more …
Documentary records (photos,
audio, video)
Data records (sports scores,
temperature, etc.)
Sim Cards
GPS network identity
Gun unlock codes
Weapons unlock codes
Nuclear launch codes (!)
Spam control (micro-payments for
posting)

Recent news of enterprise efforts to leverage blockchains
Activity and news
• Beyond pure-play startups, industry and
public sector are experimenting with
blockchains
– Understanding scalability, interoperability,
security and stability
– Establishing working groups, temporarily putting
any concerns on hold
• Pilots / trials / demonstrations / plans
– Deloitte and ConsenSys (an Ethereum
developer/integrator) announced plans in 2016
to create and demonstrate a digital bank
– An R3 CEV mock trading project connected 11
banks to a distributed ledger using a private
Ethereum blockchain running on Microsoft
Azure cloud
– Citibank is developing, testing and working on
its own crypto-currency called CitiCoin and
supporting blockchains
Cont.
– Estonia government services (e-Estonia) are
securing healthcare records using blockchain
– Microsoft VS (Visual Studio) is making the
Ethereum Solidity programming language
available to a wider set of developers
– Innovate UK (government open innovation) is
funding Tramonex to develop a cross border
payments demonstration using Ethereum
– JP Morgan Chase is developing a blockchain on
Ethereum to support private/public derivatives
and payments in a way that would satisfy
regulators while protecting privacy
– The Isle of Man Government is trailing
blockchain based government services including
identity
– The Royal Bank of Scotland claims to have built
a Clearing and Settlement process based on
Ethereum smart contracts, with promising
performance for real world use

We could go on and on …
Cont.
– 40 R3 CEV members (banks) have trialled
trading fixed income products over 5 separate
blockchains, involving technology from Chain,
Ethereum and Eris Industries (now known as
Monax)
– The Bank of Russia has developed and tested
an Ethereum-based blockchain prototype called
‘Masterchain’ for financial messaging, to be
used by banks in Russia
– The Australian Securities Exchange is building a
blockchain replacement for its current systems
and strengthen its role in the markets
– IBM and Credit Mutual are working on customer
identity services for verification and support in
blockchain applications
– Visa and Mastercard have live pilots in the
domain of cross border payments and exploring
how to extend financial services to adjunct
business, e.g. car leasing
Cont.
– Phillips is building a blockchain based
application for medical records management
– Siemens existing IoT activities has been
extended to encompass blockchain with a view
to developing the nascent area of Ledger of
Things
– Deloitte is working with several blockchain start
ups, including BlockCypher, Bloq and
Consensys, working on a range of banking,
insurance and payments processes. Deloitte
has a division on this called RUBIX.
– Blockchain ‘smart contract’ equity swaps
demonstrated with Barclays, Citi, Credit Suisse
and JP Morgan (Next slide)
– IBM in China building a blockchain application to
track the food supply chain, e.g. Pork, food
health

Recommended books / papers
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/492972/gs-16-1-distributed-ledger-technology.pdf
UK Government:

Keeping up to date
• Coindesk.com
– Leader in digital currency and blockchain news
– Consensus 2016 conference drew 1500+ attendees
– Publish the “State of Blockchain” report
• http://www.coindesk.com/state-of-blockchain-q1-2016/
• The-blockchain.com
– A blockchain portal and education site
– Good selection of videos
• Lots of other Web resources, as you can imagine

Deeper learning resources
• Bitcoin and Decentralized Technology
• https://www.pluralsight.com/courses/bitcoin-decentralized-technology
• By the same author
– Understanding the bitcoin blockchain in 5 minutes and in 24 minutes
• https://www.youtube.com/watch?v=l9jOJk30eQs
• https://www.youtube.com/watch?v=Lx9zgZCMqXE
• Coursera
• https://www.coursera.org/learn/cryptocurrency
imponderablethings.com coursera.org

Copyright © 2016
Technology details &
Standardisation efforts

Segmenting the technology
• All blockchains are not the same
• Public / private
– Unpermissioned (~ Web 3.0)
– Permissioned (Enterprise)
• Orientation
– Transactions
• Cryptocurrencies
• Digital Assets
– Logic
• Distributed Applications (dApps)
• a.k.a. Smart Contracts
• And other dimensions
– e.g. Anonymity, Pseudonymous
(indirectly discoverable identity)
– Consensus Protocols
Source: Eris Industries, now Monax.io

Blockchain technologies differ
• Differences will pan out over time, leading a more standardised platform,
similar to the evolution of databases and traditional app server stacks
– Cryptographic keys supported
– Data structures supported
– Consensus protocol employed
– Sophistication of sharding – data partitioning
– Permissioning layer details
– Role of ‘coins’ and ‘tokens’ in the architecture
– Concurrency model supported
– Block confirmation time / performance / throughput
– Fixed or dynamic block sizes
– Limits on size of a ‘transaction’ or ‘smart contract’ on the blockchain
– Contract expressiveness, run time system and language
– Interfaces with clients and other ecosystem components
– Open source or proprietary

Blockchains utilise distributed “consensus” protocols
• The Byzantine General Problem analogy
– From systems fault tolerance to consistent
database transactions & beyond to blockchain
• Proof of work
– Repeatedly run hashing algorithms or other
mathematical puzzles to validate transactions
– In the Bitcoin blockchain, for example,
significant energy/electricity costs are incurred
by ‘miners’, some of which operate large scale
data centres for the purpose
• Proof of stake
– Asks users to prove ownership of a certain
amount of their cryptocurrency or crypto-tokens
(their ‘stake’)
– Proof of stake currencies can be orders of
magnitude more computing efficient than proof
of work mining
• Proof of space, proof of bandwidth
– Similar to proof of work, but focussed on
providing a dedicated amount of memory, disk
space or bandwidth instead of CPU time
• Proof of ownership
– Algorithms that focus on the consensual
provable ownership of a digital asset
• Proof of authority
– For private chains, authorised notes are able to
collaborate to create / validate new secured blocks on
the chain
Each protocol type has variations, for example to
define the next valid block in the chain

Standardisation
…. the Hyperledger Project
• A Linux Foundation project, a collaborative effort created to
– Advance blockchain technology by identifying and addressing important features for a
cross-industry open standard for distributed ledgers
– Not dependent on ‘mining’ for ‘proof of work’ (as in Bitcoin), consensus based on the
Practical Byzantine Fault Tolerance Algorithm (PBFT)
– Transform the way business transactions are conducted globally
– An operating system for trusted, accountable and transparent interactions
• Actively involved include Accenture, IBM, Intel, JPMorgan, R, financial institutions
www.hyperledger.org
http://www.coindesk.com/stellar-ripple-hyperledger-rivals-bitcoin-proof-work/

Chain
• The team at Chain has built products at Google,
Salesforce, Visa, Microsoft, Square, and Heroku
• Chain partners with leading organizations to
build blockchain networks that transform markets
– Chain is a collaboration between financial firms and a team
of SV engineers, cryptographers and data scientists
• The Chain Open Standard optimizes for security,
privacy, and scalability in highly regulated
environments
– Real use cases across payments industry, banking
and capital markets
• Comprehensive framework covering protocols and
medium including:
chain.com
Chain approach to
standards development
Issuance
Payments
Bilateral trade
Order book
Loans
Auctions
Assets
Smart contracts
Privacy
Metadata
Data model
Consensus

Chain Open Standard chain.com/os

Chain Core, OS and Sandbox
• Enterprise blockchain software for production deployment
• The software implementation of the Chain Open Standard
• Designed to run in or with enterprise IT environments
• Enables institutions to initiate, operate, or connect to a blockchain network
• More than a blockchain node - enterprise-grade distributed system to build
secure, scalable, highly available blockchain networks
chain.com/core
chain.com/showcase

Coinbase
• A Bitcoin wallet and platform for merchants and customers
– Aiming to be the trusted brand in the Bitcoin marketplace
– Integrate Bitcoin into many product and service categories
• $106m funding including Andreessen Horowitz, NYSE, IDG Ventures, Y-
Combinator
• 5.6M wallets deployed, 43,000 merchants, $3.5B in Bitcoin exchanged,
3.8M customers served, 8000 API developers
– Mobile wallet
– Bitcoin insurance protection
– Instant Bitcoin exchange to local currency
– Secure off line storage
– Full user control of private keys
• Multi-signature vault
– Support for recurring buys / subscription economy
www.coinbase.com

Circle
• A social payments app
– Send money as easily as sending an email, a txt message or a Facebook like
– e.g. “Txt your flatmate half the electric bill”
• Aiming to use open Internet standards, and blockchain, to make
“payments” easier to use, safer and more convenient
• Embedding innovative approaches to risk, including machine learning
• Partnership with Barclays, granted an e-money license by the UK
Financial Conduct Authority
• $76M VC funding including Goldman Sacks
www.circle.com

Kraken
• A prominent trusted bitcoin exchange (bitcoin,
Ethereum, others)
• Used by professional bitcoin traders – long or
short positions
• Provides bitcoin liquidity – bitcoin dark pool
• Leveraged trading possible up to 5x, shorting
allowed
• Stop loss order controls, automated
• Trading in and out of bitcoin from USD, Canadian
dollars, British pounds and Japanese yen
• First bitcoin exchange to have trading price and
volume displayed on a Bloomberg Terminal
• First to pass a cryptographically verifiable proof-
of-reserves audit
• Acquiring other otherwise non-viable exchanges
www.kraken.com

EverLedger
• A blockchain based fraud detection system, overlaying big data from
closed sources such as insurers and law enforcement
• Permanent, immutable, a ledger for diamond certification &
transaction history
• Verifiable by insurance companies, owners, claimants and the police
• Extensible technology to track any asset that carries a unique identifier
and which is difficult to destroy or replicate
• API provides access to certificates, policy and claims information
– REST, JSON, resource-oriented URLs, standard HTTP verbs
– Client requests require signed HMAC-SHA512 signatures
• API key and Secret key
www.everledger.io

Supply chain commerce
SKUChain
• Blockchain solutions for B2B Trade
and Supply Chain Finance
• Frictionless collaborative commerce
– Direct relationships
• Pos, invoices, Inventory, forward
payment obligations, loans
– Deep tier financing
• Real time views, linked to ‘Oracles’
BlockFreight
• Blockchain solutions for global freight
– Connecting banks, insurers, freight
forwarders, shipping carriers, port
operators and regulators
• Built on Ethereum
– Smart contracts to encode bill of lading
process, payment terms and cargo
– Tradeable token for transaction fees
– Storage of freight information sets (bill of
lading, supporting documentation) using
the Interplanetary File System (IPFS)
www.skuchain.com
www.blockfreight.com

R3
• R3 is a financial innovation firm that leads a consortium
partnership with over 40 of the world's leading banks
• Design and deliver advanced distributed ledger
technologies to global financial markets
• Collaborates with partner banks on research,
experimentation, design and engineering
– Pillar 1: Base layer reference architecture to underpin
financial grade Blockchain ledgers
– Pillar 2: Secure, multi-institution collaborative lab to
test and benchmark blockchain based technologies
and services
– Pillar 3: Run use cases to identify and design “up the
stack” commercial blockchain applications
• Activities:
– Crypto 2.0: Intelligent application of cryptographic
technology and distributed ledger-based protocols
within global financial markets
– Exchanges: New execution solutions which redefine
the trading experience for existing and evolving asset
classes
– Ventures: Targeted early stage investments in
forward thinking companies that seek to shape the
next generation of financial services
r3cev.com

Ripple
• A blockchain based Global Settlement
Network
• Cryptographically secure end-to-end
payment flow with transaction immutability
and information redundancy
– 10 of the top 50 banks work with Ripple
– CGI and Accenture acting as Integrators
– Distributed financial technology allows for
banks around the world to directly transact
with each other without the need for a central
counterparty or correspondent
– Compress operational costs and offer new
services for cross-border payments
• Instant, certain, low-cost international
payments
– Cross currency settlement
– FX market making
ripple.com

Ripple architecture ripple.com/technology
The Ripple network contains the Ripple
Consensus Ledger (RCL), a secure distributed
ledger that uses the consensus process to settle
transactions. Because of its distributed nature, it
does not require a central operator, and offers
transaction immutability and information
redundancy. RCL holds the order book with
bid/ask offers from payment initiators and market
makers. Its path-finding algorithm enables it to find
the lowest foreign exchange rate across all order
books and currency pairs.
Ripple Stream is an interface for market
makers to submit bid/ask offers to the Ripple
network. It uses FIX and .NET APIs to plug
into the market makers’ existing systems,
allowing for an easy interface with their
trading clients. Ripple Stream can be used by
FX trading desks within your bank for an
internal market making use case. For
corridors that your bank does not have an
internal FX trading capability, you can allow
external market makers to provide liquidity for
your cross-border payment customers.
Ripple Connect is a plug-and-play module that processes international payments for banks. It connects to the receiving bank’s
Ripple Connect to exchange KYC and risk information, fees, payment details and expected time of funds delivery. It communicates
with the Ripple network to get the lowest currency quotes. It packages this information and presents the entire cost structure to the
sending bank, providing unprecedented visibility into the total costs of the transaction. Once the sender approves the transaction, it
interfaces with RCL to settle the trade and notifies all parties of the transaction confirmation.

Ripple implements the XRP cryptocurrency
• Banks perceive cryptocurrencies as
tokens representing digital assets
• Ripple in conjunction with a consortium
of banks have demonstrated the
viability of XRP (Ripple’s native asset)
– Reduce the cost of liquidity operations
– Enhance liquidity
• Demonstrates the possibility of
removing the need for local currency
– So called nostro accounts
• Participating banks included Barclays,
CIBC, Intesa Sanpaolo, the Royal Bank
of Canada and Santander
– Control of their own wallets and
transactions
• The trial adhered to local (national)
regulations
http://www.coindesk.com/global-banks-test-ripples-digital-currency-new-blockchain-trial/

Align Commerce
• Venture funded by KPCB and other prestigious investors
– “Rethinking B2B wire transfers”
• Blockchain powered wire transfers, no intermediary banks involved
– Just like a FedEx package, track your funds transfer with a great Web UX
– 60 countries now served, 1 to 3 days transfers, account to account, zero fees
• Many small and medium business struggle with cross border payments
– Most banks cannot send funds transfers directly as transactions
– The blockchain under the AlignCommerce hood is invisible to the UX
– Blockchain protocol with end points as bank accounts, API coming
http://www.kpcb.com/blog/the-real-reason-why-blockchain-technology-is-worth-investing-in
www.aligncommerce.com

Axoni
• Axoni develop blockchain infrastructure for Capital Markets
• Blockchain ‘smart contract’ equity swaps demonstrated with
Barclays, Citi, Credit Suisse and JP Morgan (October 2016)
– Automated lifecycle management and synchronisation of single
stock, index, and portfolio swaps
– A diverse set of 133 structured test cases to assess the
functional and non-functional capabilities of the blockchain
technology, 100% success rate
– Million active trade contracts onto the network, 100s of
thousands of new trades and updates in a matter of minutes
– Ability to query that data on a system-wide view in real time
– More than 50 tests of the underlying Axoni Core infrastructure,
adding and removing permissions for participants, and the
ability to update the protocol in a simulated live environment.
– Reduction in reconciliation costs reduced risk of a payment not
being made on time because of disputes over what it's meant to
be
– A standardised framework for firms to connect into - even if the
swaps remain custom
• Historically a gold record for any OTC trade has required a
trusted third party like the DTCC or a clearing house
– Integrated market data feeds from Thomson Reuters blockchain
to facilitate automated, synchronized life cycle calculations like
accruals and margin payments related to changes in prices and
corporate actions
• "The proof of concept has shown that blockchain technology
lends itself well to solving for the operational complexity and
volumes of Equity Swaps lifecycle processing.“ – Credit Suisse
• “Banks now looking for opportunities to apply smart contracts
and shared ledgers to drive process simplification including
increasing both standardization and the degree of straight-
through-processing” - Barclays
• “Swaps are generally customised by dealers for the individual
clients. Not only is it costly to maintain these systems, but you
also frequently have what's known as a payment break; one
party thinks they are supposed to receive X, but their
counterparty believes they owe Y. Reconciliation on this is some
of the most complex, difficult and costly in the industry.“ -- Axoni
http://www.ibtimes.co.uk/axoni-delivers-blockchain-equity-swaps-barclays-citi-credit-suisse-jp-morgan-1586964
axoni.com

Symbiont
• Enterprise ready Issuance and Trading
platform, helping Wall Street get on
board the blockchain ecosystem
• Symbiont Assembly, a distributed
ledger component
• Easily model complex financial
instruments and contracts and digitize
to a blockchain
• Corporate required actions are stored
in the distributed ledger
• Allows for manual or automatic/self
executing terms and conditions
• Crytographically authorised custom
workflows for any multi-party process –
sufficient to support the entire lifecycle
of a financial instrument
• Share the current state of an
instrument with the market in a tamper
proof and controlled manner
symbiont.io

Factom
• A scalable data layer for the blockchain
• Using the technology behind Bitcoin to change how businesses manage data and keep
records
– Audit systems, medical records, supply chain management, voting systems, property titles, legal
applications, and financial systems
• Factom maintains a permanent, time-stamped record of your data in the Blockchain
– Reduce the cost and complexity of conducting audits, managing records, and complying with
government regulations.
1. Proof of existence: Document existed in this form at a certain time
2. Proof of process: Document is linked to this new updated document
3. Proof of audit: Verifying the changes in the updated document
factom.org
Factom white paper

MasterCard announce blockchain public API/lab
• MasterCard have
opened up APIs into
their blockchain
development lab
• Draw in developers /
SMEs around the
implications of
blockchain that
MasterCard view as
relevant to their
business, including
– P2M payments
– P2P payments
– B2B payments
– Trade Finance chains
– Supply chain
commerce https://developer.mastercard.com/product/mastercard-blockchain

Blockchain in defence industry
Use case 1
• Secured messaging system / apps via a
‘permissioned’ blockchain
• Decentralised ledgers for military applications,
including battlefield processes
– Map business logic of DoD ecosystem onto network of
known entities
– Smart contract send/receive reducing exposure to active
hackers, with prosaic objectives of simplifying and
speeding otherwise complex communications, including
back office
• Interesting features including repudiation,
deniability, perfect forward and backward secrecy,
time to live/self deleting messages, one time view
messages
Use case 2
• Secure sensitive information to enhance
“information integrity”
– Track when a system, device or piece of data
has been viewed or modified
– Know who is inside the castle and what they are
doing
– Critical oversight of sensitive databases, e.g.
nuclear systems command and control
DARPA. DoD and NATO have put out requests for military applications of the blockchain
Galois formal mathematical verification
of the Guardtime blockchain

Guardtime
• An industrial blockchain platform
powering digital transformation
• 100 cryptographers, developers
and security architects
• Defending networks from nation-
state attack
– Telecommunications, A&D, financial
markets, insurance, eGovernment
• Black Lantern network security
appliance
– KSI blockchain service (Keyless
Signature Infrastructure)
– State of all instrumented digital
assets registered on blockchain
– Mathematically verifiable baseline
image of network or software defined
network
– Verification of network remaining in a
clean state, detect changes and act
when compromise detected
• Firmware, operating systems, routing
tables, switch and router configurations,
event logs, data stores, memory
www.guardtime.com

Blockchain APIs in the cloud? Yes.
• BlockCypher is an infrastructure fabric for blockchain applications
– Developers and businesses
• Partners include Deloitte, CapGemini, EY and pwc
• Multiple data centers, REST APIs, robust hosted blockchains / nodes,
24/7 support
www.blockcypher.com

21 Inc.
• Vision to build software and devices to enable blockchain / bitcoin
applications on any device
– Building a global network of machines (Internet of Things) that are
“financially” connected to each other via Bitcoin
– A micropayments marketplace, a new system resource for the machine
economy
• $116M investment (as of March 10, 2015) including Andreesen Horowitz,
Khosla Ventures, eBay and PayPal founders
• Andreessen Horowitz compared the ambitions of 21 Inc to the
development of 56-kilobit Internet modems and wireless Internet towers
• Working with the community to foster bitcoin programming design patterns
and applications
– The 21 Bitcoin Computer is “the fastest way for developers to learn
Bitcoin. It has everything you need to build your first app in a weekend: a
micropayments server, a full copy of the Blockchain, and a command
line interface for programmatically mining, buying, and selling digital
goods for bitcoin.”
– BETA download for putting Bitcoin on any device
– Ping21 for experimenting with the bitcoin enabled IoT
• 21 Inc. is developing the sort of structure that could eventually power
decentralised versions of many cloud-based computing services
– “decentralized Bitcoin-incentivized grid computing that are qualitatively different from
-- and complementary to -- what you can get from centralized cloud computing”
21.co
https://21.co/learn/

Copyright © 2016
Moving onto Smart
Contracts, Ethereum
et al

Introducing the terminology of “Smart Contracts”
Technology
• Programmable currency
– Cryptographic tokens with programmatic
behaviours
• Smart contracts(*)
– Self-executing contractual (consistent) states,
a.k.a. distributed business logic
– Abstracting distributing programming to
represent meaningful social or commercial
contracts (beyond simple coin exchange
between two parties)
– Trusted, shared execution
• Smart property
– Digital Assets that understand their ownership
and can be exchanged P2P
– Physical Assets, a Ledger of Things, linking
smart contracts to IoT
• Dapps – decentralised applications
– Same code + same data = same result
– Implemented smart contracts and smart
property as trusted tamper proof code on a
blockchain
Higher level concepts
• DAO – decentralised autonomous
organisation
– Implemented as a set of Dapps
• DAC – decentralised autonomous
corporation
– Well formed DAO that can operate as a
business: for profit or non-profit
– Examples: Uber without Uber, eBay without
eBay, Facebook without Facebook
– Includes automatic markets, trade nets …
• DAS – decentralised automatous society
– Community without Community Makers
– Governance without Government
* The word “contract” does not imply a
commercial contract at the business level, but
blockchain based solutions may lead to this

Monax (was Eris Industries)
• Described as ‘process automation
for enterprise ecosystems’
– B2B processes/Web
services/microservices without
central authority or system
• Software and ‘legal engineers’
build a ‘smart contract’ library to
– Reduce time to market for new
processes
– Increase certainty in transactions and
processes
• Customers include Swift, Deloitte,
Accenture, R3 CEV, EY, Microsoft,
AWS
• Targeting ecosystem processes in
claims management, supply chain
management and B2B certification
• A platform for building, testing and
operating ecosystem applications
with a blockchain back end –
easing the way to smart contracts
– Glue for 2B blockchain applications
monax.io

Monax
• Verifiable execution
– Transaction engine
– Consensus engine
monax.io/platform
https://monax.io/2016/03/02/eris-and-tendermint

Ethereum
• “A worldwide decentralised computer with theoretically unlimited power
and few barriers to entry”
www.ethereum.org

Blockchain 2.0 as described by Ethereum.org
• A decentralised platform that runs smart contracts
– Applications that run exactly as programmed without any possibility of downtime,
censorship, fraud or third party interference
– Unstoppable applications, running a distributed virtual machine able to execute and
integrate with an all–purpose (Turing complete) programming language
– Run on a custom built blockchain globally shared infrastructure that can move value
around and represent the ownership of property
• Ethereum developers can
– Develop many different kinds of applications
– Create markets
– Store registries of debts or promises
– Move funds in accordance with instructions given long in the past (similar to the role of a
will or futures contract)
– All without a middle man or counter party risk
• In a traditional architecture, every application has to set up its own servers in
isolated silos, making sharing of data hard
– And if a single app is compromised or goes offline, many users and other apps are
affected

Ethereum concepts
A simple smart
contract might be
a bet between two
parties about
tomorrow’s
temperature at
midday. The
contract could be
automatically
completed by a
software program
checking the
official
temperature
reading from
weather.com, with
the result of a
transfer of bitcoin
held in escrow
from the loser to
the winner’s
account.
Adapted from page 23,
The Blockchain, Blueprint
for a New Economy,
O’Reilly

Solidity and Dapps
• A blockchain app platform for ‘unstoppable’ applications, including DAOs
– Distributed Autonomous Organizations
– Smart Contract execution (distributed peer-to-peer)
• Create tradeable digital tokens
– Use as a currency, a representation of an asset, a virtual share, a proof of membership or anything at
all
• Smart contracts run exactly as programmed without any possibility of downtime,
censorship, fraud or third party interference
– Developers can create markets, store registries of debts or promises, move funds in accordance with
instructions given long in the past (like a will or a futures contract) and many other things that have not
been invented yet, all without a middle man or counterparty risk
• Solidity, a new programming language for smart contracts and DAOs
– MIX an IDE for the Blockchain era, create:
– Tradeable token networks with fixed supply
– Central “banks” that can issue money
– Puzzle-based crypto currency or surrogate applications
– Autonomic crowd funding and auction models
– Virtual organizations where members vote on issues
– Transparent associations based on shareholder voting
– Delegative democratic systems, unchangeable constitutions
dapps.ethercasts.com

DAOs and The DAO
• DAO, a Distributed Autonomous Organization
– Digital democratization of business
• The DAO, a DAO curated by the Ethereum Project
– Comparable to an autonomic cooperative, bank, VC, hedge fund
– Bylaws hard-coded into a set of blockchain protocols
– Executable smart contract engine
– Cloud based “financial” code
• Proposals for new smart contracts including:
– Blockchain + IoT for a new decentralised “sharing” economy
– P2P car rental, fully autonomous self-renting vehicles
daohub.org

Synereo
• Began life as a life to build a truly distributed
social network with ‘attention’ economics as
opposed to centralised models (Facebook et
al)
• Scalable functional block stack, with a strong
and provable distributed processing model
– Sharded and composable
– All subprocesses run in parallel, leading to potential
infinite scalability
– A proof of stake (not mining) consensus protocol
• Rholang smart contract language
– Based on process calculi (specifically a variant of
the pi calculus)
– Predictable reliable and provable programs
– Allows for the scalable (composable) development
of very complex Dapps
– More than a scripting language
Technology vision and blueprint
https://docs.google.com/document/d/1xmRvAjJEQ72-sR9luS34TG0BOpPn_6ztZjYBFCByKxo
synereo.com

Copyright © 2016
Dark, Anonymity and
Social Directions

From the dark web, to dark coins and dark orgs
https://letstalkbitcoin.com/blog/post/darkcoin-anonymity-is-now-fully-functional-and-open-source-instant-transactions-on-the-way

Nxt.org is trying to anonymise and decentralize the future
• Open Source (GPL v2), decentralised crypto platform and API
• Nxt builds on and improves the basic functionality of pioneering cryptocurrencies such as
Bitcoin
• “Cryptocurrency and financial systems are the first widely used applications of blockchain
technology, but the blockchain and its associated technology can be used for so much
more.”
• Build new applications directly on the blockchain itself
– Nxt gives users complete freedom to create their own applications, e.g. Russia
experimenting with a Nxt based e-proxy voting system, central securities depository
– Create your own asset exchange for secure peer to peer trading
– Launch your own digital currency or token system for any purpose, including exchange,
trading, hedging, voting, contract processes
– The Nxt blockchain provides data storage, publication and verification
– Create decentralised autonomous organizations using multi-signature blind accounts
• Alias System, one piece of text to be substituted for another, so that keywords or
keyphrases can be used to represent other things

Going ‘dark’ may not be such a bad thing
• The Darkcoin open source foundation was re-branded
“Dash” (Digital Cash) in March 2015
– Disassociation from the Darkweb
– Bitcoin does not guarantee anonymity, unlike physical cash
• The Dash mission remains the same however, to be the
world’s first privacy centric crypto-currency
– Private, instant, secure, peer to peer, global
– Dash founders believe privacy is a universal human need,
and not a haven for criminals
– Many people have apprehensions about privacy vs
accountability – Dash may be able to address both?
www.darkcoinfoundation.org
www.dashfoundation.io
www.dash.org
https://cointelegraph.com/news/darkcoin-is-now-dash-and-not-a-moment-too-soon
“Recently it became apparent that our branding was getting in the way of our
mission, so we started investigating rebranding. We believe Dash, which
stands for digital cash, is a great representation of what we want to become.”
“Dash is what Bitcoin would be if Bitcoin had a transaction mixer
(tumbler) built into its protocol, and if its confirmation times were
instant.”

Z.Cash
• First open, permissionless financial system employing zero-knowledge
security
• ‘Genesis block’ was minted on October 28, generating a price frenzy,
pushing its value over that of BTC (Bitcoin)
– Effective anonymity of transactions, hiding sender, recipient and value
– View keys under user/participant control, without central authority
– Employs a zero-knowledge proof construction called a zk-SNARK
• Dash responds:
1. Governance
2. Trajectory of infrastructure
3. Independence of development
4. Privacy for user
5. Double spend protection in real time
6. User friendliness at the protocol level
https://z.cash/
“If Bitcoin is like http for money, Zcash is https”
https://www.youtube.com/watch?v=591J9KcKgHM

Identity for the digital era? The blockchain passport concept

A new global citizenship?
• From e-Estonia to BITNATION
– Digital nations without borders?
– Or nations providing “e-Residency” access to
Government services?
– e-Estonia using blockchain to secure
healthcare records (Guardtime)
• BITNATION “provides the same services
traditional governments provides, from dispute
resolution and insurance to security and much
more – but in a geographically unbound,
decentralized, and voluntary way”
– Bitcoin 2.0 – a cryptographically secured public
ledger distributed amongst all of its users
– Global Citizenship IS, Public Notaries,
Embassies, Consulates, Refugee Emergency,
Education Network, Bitcoin Services Etc.
https://e-estonia.com/
https://bitnation.co
e-Estonia and BITNATION now collaborating,
but that’s another story for another time!

Trend
Society
• Nations are becoming e-Nations
– e-Estonia led the way
• Borders will become e-Borders
– e-Residency has value
• e-Nations will compete with e-
Services for:
– Citizens, Businesses
– e-Residents, e-Businesses
– Valuable Migrant Skills, Labour
– Refugee services
– Global citizen fluidity
• Reciprocal relationships between
Nations and e-Nations
– Spreading governance best practices
Technology
• Blockchains as
– The shared systems of record,
identity and ownership
– The modernisation technology for
previous generation ‘digital
government’
• Initially adjunct to existing integration
architectures, SOA, Web services
• Smart contracts as
– The shared data/code of rules of
governance and interaction
• Blockchain based DAOs as
– A new organising principle for
governance and value-added e-
Government services
Additional slide deck available

Copyright © 2016
How fast are things
moving?

Examples of blockchain activity in the IT Services industry
Projects
• Accenture launches blockchain practice
– Capital markets, investment banks
– Proposes ‘editable’ blockchain, filing a new patent
• Chameleon hash
• Capgemini publishes position papers
– Incubating solutions with selected technology partners
– Claims to be building 100 person strong team of
blockchain specialists
• CGI implements a Ripple Validator node
– Launches blockchain lab for trade finance
– Blockchain enables payment solutions
• Cognizant talking about the blockchain disruption
– Banking, finance, smart contracts
– Defining solution propositions
• IBM
– Establishes Blockchain technology group and research,
puts blockchain on Z series
– Incubating solutions around specific business issues,
e.g. Loyalty points, IoT products, Finance
– Private Blockchain via Bluemix PaaS for developer
experiments (Monax / Eris technology)
– Collaborating with Digital Currency Group (DCG)
Services
• AWS
– Blockchain-as-a-Service (BaaS)
– Monax / Eris technology
– https://aws.amazon.com/marketplace/pp/B01BTB1EP8
• IBM
– Bluemix blockchain services/API
– HyperLedger technology
– http://www.ibm.com/blockchain/bluemix.html
• Intel
– Sawtooth Lake (IntelLedger)
– https://intelledger.github.io/
• Microsoft
– Azure Blockchain-as-a-Service (BaaS)
– Monax / Eris technology
– https://azure.microsoft.com/en-gb/solutions/blockchain/

Ernst & Young blockchain start up challenge
• Mentors from the accounting firm to
build products focused on digital rights
management and energy trading
• Aimed at ensuring intellectual property
rights can be more easily managed and
to make it easier for new business
models to evolve in the energy trading
space
• Selected startups include
– Adjoint, BitFury, BlockVerify, BTL Group
LTD, JAAK and Tallysticks

IBM Adept and the IoT Blockchain
• An IoT research project led by IBM
– Machine-to-machine commerce
– Cost, monetisation, interoperability,
discoverability, authentication, scale
– To support long term service
commitments/customer experiences
• Smart connected products transacting on
the blockchain and participating in smart
contracts
– Autonomous devices, inter-device commerce
– Decentralisation of ownership and
control/interaction
– Inter device / stakeholder agreements,
payments and services
• Related efforts
– Filament, 21 Inc
IBM Institute of Business Value

Funding and funding bubbles
• In 2015, Bitcoin and Blockchain-related startups raised over $1B in total
investment
• 21 Inc. raised $116M and Coinbase raised $75M, dwarfing the
investment in start ups that drove the early days of the Internet
• Financial institutions (banks, insurers, market makers) are investing
millions in blockchain related projects
• VCs are betting on more than the financial sector, investing in promising
non-financial applications, for example, smart contracts
– e.g. the Ethereum blockchain

Peak of hype: Where are we with blockchain according to Gartner?

The ‘Let’s Talk Payments’ Blockchain Momentum infographic 2016
• Use cases of blockchain in the financial and non-
financial sector (2015)
• Study of sectors in which blockchain activity is
growing or lagging (2016)
– Companies (startups, unicorns) operating in each
sector
– Deals and partnerships struck
– Funding raised by these companies
https://letstalkpayments.com/ltp-blockchain-momentum-2016-infographic/
Also see:
https://angel.co/blockchains

Expect bumps in the road
• In June 2016, The DAO, a platform for the autonomous governance of investment
capital built on a public Ethereum blockchain, was found to contain an unexpected
code path allowing one sophisticated user to withdraw funds (Ether
cryptocurrency) from the chain, at the time valued at $50m USD
– Ether transferred to a clone of the DAO chain (“childDAO”) under control of the user
– With no central authority, community consensus decided a course of action
• Close The DAO
• Hard fork the Ethereum-based blockchain, with no possibility to reverse the fork (no backward
compatibility)
• Partial return of funds, with some controversy
– Cast a shadow over the immutability of blockchains
At approximately 14:30 UTC July 20 2016, China-based
Ethereum miner BW.com mined the Ethereum blockchain's
192,000th block. Seconds later the mining pool also mined the
first block on the new blockchain, which returned funds lost in
the collapse of The DAO to an account available to its original
investors.
http://www.coindesk.com/ethereum-executes-blockchain-hard-fork-return-dao-investor-funds/
http://www.coindesk.com/understanding-dao-hack-journalists/

Are concerns about the vision real?
Questions
• Are we really on the cusp of solving long
standing theoretical problems in distributed
computing?
– Claims that blockchains and smart contracts
work at small scale but, by design, break at
large scale
– Trying to reconcile two conflicting directions – 1)
put more data in the chain and 2) reduce the
time for the chain to be globally consistent
– Can we run untrusted code with 100%
guarantee that it won’t crash other applications?
– Are we putting complexity in the network, which
is the enemy of security?
– Verifying the blockchain from the beginning
would require running every single computation
that every user even run, from the genesis code
forward
– Will this design choice limit end to end
scalability?
Directions
• Not to solve these problems would
effectively stop the chain from making
forward progress
– Is Ethereum Turing complete?
– Are Ethereum smart contracts verifiable?
– Do we need to solve these problems at a
fundamental level?
• Languages
– Ethereum Solidity
– Synereo Rholang
• Reflexive higher order processes (pi-calculus
formalism)
– What about Tezos’ direction?

Accenture proposed an editable (redactable) blockchain
• Accenture files patent that allows an authorised
third party to edit or delete information stored in a
permissioned blockchain, governed by agreed
upon rules/policy
– Proposal and prototypes aims to make blockchain more
practical for use in real world financial applications
• The Accenture proposed method utilizes a “chameleon
hash” to allow authorized administrators to edit a single
“block” while not compromising the integrity of the entire
chain
– Financial services providers need a means to quickly
correct errors on the blockchain, since in the real world
there are non-technological reasons why revisions may
be required
– The Accenture proposal is controversial because
blockchain was conceived by design to be an
immutable, tamper proof ledger, eliminating the need for
such central authorities
– Accenture claim immutability is not needed in permissioned blockchains because everything is overseen by a
central authority, many of which are Accenture clients
– Blockchain purists point out that Accenture’s proposal for a mutable blockchain loses it ability to act as a non-
refutable record for legal purposes and that the mechanism could be exploited by hackers
– Accenture believe that allowing for forks in the chain, without having to disrupt the ongoing operations in the
overall chain, is needed for practical applications
– Blockchain technologists propose that the edit feature is unnecessary in any case, since multi-party smart
contracts could be implemented on an immutable chain allowing for whatever ‘corrective’ actions to be
implemented as robust processes, themselves immutable and tamper proof

Challenges ahead for blockchain
• Throughout
– Bitcoin processing 7 tps (2015), VISA 2,000 tps,
10,000 peak, Twitter, 10,000tps
• Latency
– 10 minutes to clear, with longer wait
recommended for large transactions, VISA
takes seconds at most
• Size and bandwidth
– The bitcoin blockchain grew by 14GB in 2014 to
45GB in 2016, 1 to 2 days to download. At VISA
transaction rates it will grow by 1.42PB/year. At
global currency exchange rates by
>200PB/year.
• Security
– Architecture leads to centralisation of mining,
51% mining control attacks, double-spend
attacks, extreme user spoofing, core Elliptic
Cryptography cracked by new techniques
• Wasted resources
– Electricity, energy used by data centre scale
bitcoin mining (“proof of work”) operations –
push for alternate consensus protocols
• Usability
– Wallets, applications, APIs, identities
• Versioning, forks and multiple chains
– Proliferation of competing blockchains,
availability of clouds, potential to bring >51%
compute resources to bear from multiple chains
to a smaller target chain/application or side
chain of interest to a criminal
• Ecosystem
– Applications may not be accepted or viable until
there is a full ecosystem of interoperable
solutions or alternative solutions – especially
complex for crypto-infostructures
– Blockchain fabric analogy to the development of
viable IaaS cloud solutions: messaging,
transport, protocols, address management,
administration, operations
• Privacy
– Pervasive use of blockchain applications in
society may lead to identity theft to the degree
that you no longer have your identity at all!

Lightning Network
• Addressing scalability of blockchain
using persistent bitcoin-based
micropayment channels
• Lightning-fast blockchain payments
without worrying about block confirmation
times
– Security is enforced by blockchain smart-
contracts without creating a on-blockchain
transaction for individual payments
– Payment speed measured in milliseconds to
seconds
– Capable of millions to billions of transactions
per second across the network
– Attaching payment per action/click is now
possible without custodians
– By transacting and settling off-blockchain,
allows for exceptionally low fees
– Which allows for emerging use cases such as
instant micropayments, ‘streaming money’
– Cross-chain atomic swaps can occur off-chain
instantly with heterogeneous blockchain
consensus rules
lightning.network/lightning-network-paper.pdf
Scalability

Thunder Network
• Lightening.Network moves from the theoretical to the practical
• Alpha version of the Thunder Network
– Off chain Bitcoin payments that settle back to the main Bitcoin blockchain
– Instant Payments that are irrevocable the moment you use them
– Scale: Tests indicate 11K TPS, better than Visa with only a few 1000 nodes
– Extremely low payment overheads
https://blog.blockchain.com/2016/05/16/announcing-the-thunder-network-alpha-release/
https://blog.blockchain.com/2016/05/16/transaction-0/
www.blockchain.com/thunder/index.html

Tezos
• A self-amending (evolving) blockchain
– Decentralised technology governance
– Preventing unnecessary forks or side chains
– Allow for innovation to occur
• Consensus governs more than state (as
with BTC and ETH)
– Base (seed) protocol determines how the
protocol and the nodes should adapt and
upgrade
– Deliberately conservative initial rules
• A layered cryptographic ledger
– Network layer
– Consensus layer
– Transaction layer
• Decoupling allows the protocol to evolve in
a decentralised fashion
https://tezos.com/
Think of this as using a
blockchain to govern the
evolution of another blockchain
https://www.youtube.com/watch?v=3mgaDpuMSc0

But won’t Apple Pay (and its ilk) be enough?
Evolution
• A mobile payment and digital wallet from
Apple on iPhones and Watches
• Can work with existing contactless payment
terminals
• Based on EMV Payment Tokenisation
Specification
• 1 million credit cards registered on Apple
Pay in the first 3 days of its availability,
220,000 vendors launched
• Interoperability between payment
instruments may be the name of the game,
including cryptocurrencies as and when
they are more accepted as legal tender
Revolution
• Is Bitcoin, Dash or ZCash actually needed?
Will they be trusted?
• Bitcoin today is not a currency (backed by
capital, insurances with options to intervene
in markets in order to improve the health of
an economy)
• Bitcoin and other altcoins are more like
convertible commodities, such as gold or
diamonds, in which one can speculate and
trade
– Thus subject to the applicable laws
• Blockchain is more than any payment
system, and more important than bitcoin
• Apple Pay is not a platform for distributed
computing/ smart contracts
https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country

Beware the hype but understand the potential
• Disintermediating central authorities from industry processes is not so easy, and will take
time, because customers would need to join the new ‘chains
• Central authorities provide valuable services in a market or ecosystem, which may not be
so simple to programmatically magic away using a ‘smart contract’ on a blockchain
– Financial experts report
• Many central mechanisms mutualise risk and this is an not an inherent feature of a
technology, but may be programmed at some higher level
• Complex markets involve many kinds of value-added participants, some processes can be
unbundled from central players, but this may not mean they go away or the value they bring
is irrelevant
– There may be markets and processes that depend on the role of intermediaries for entirely valid
reasons accepted by those who join the party
• Programmatic self executing and enforcing software (smart contracts) can be rigid in the
way rules are applied, as anyone knows who has programmed a rules engine, and can lead
to unexpected behaviours via tight coupling and feedback loops
– Analogy of automated trading on the financial markets
• Human actors in a process will still be necessary in many instances, despite the
technologists natural desire to push to machine learning on the blockchain!
It is perfectly reasonable, therefore, to use blockchain technology as an improved (lower cost,
less mutable) substitute for existing processes without the need to overturn decades of learning

Finally, let’s not forget
• Bitcoin (and all other tokens/
currencies) is not the same as the
blockchain
• Blockchains can be public, private or
hybrid
• There will be several blockchain
implementations / distributions
– Open source, claiming open source and
deliberately commercial
– Advancing the technology, increasing
scalability, adding features, layers
• Blockchains, like databases before
them, are places to build applications
– Smart contracts, distributed applications
(dApps), distributed organisations (DAOs)
– Remember: real world solutions take a
long time to mature
• Expect all the usual ecosystem players
around blockchain technologies
– Originators / communities
– Developers / integrators
– Consultants / support partners
– Solution providers / specialists
– Blockchain infrastructure (as a service)
providers, API providers
– Blockchain-powered SaaS applications
etc.
• Development of the public blockchains
will continue in parallel with maturing
blockchain-based enterprise
applications
– Regulation in each vertical sector will no
doubt put a brake on some commercial
applications, at least initially

More and more applications are envisaged
• App development: Proof of ownership of modules in app development
• Company incorporations: Digitizing company incorporations, transfer of
equity/ownership and governance
• Decentralized storage: Decentralized storage using a network of
computers on blockchain
• Decentralized Internet and computing resources: Decentralized Internet
and computing resources to cover every home and business
• Digital content: Proof of ownership for digital content storage and delivery
• Digital identity: Provides digital identity that protects consumer privacy
• Digital security trading: Ownership and transfer
• Digitizing assets: Improves anti-counterfeit measures
• Digitization of documents/contracts: Digitization of documents/contracts
and proof of ownership for transfers
• Enables authenticity of a review: Enables authenticity of a review through
trustworthy endorsements for employee peer reviews
• Escrow/custodian service: Escrow/custodian service for the
gaming industry; loan servicing and e-commerce
• Home automation: Platform to link the home network and
electrical devices to the cloud
• IT portal: A smart contract IT portal executing order
fulfilment in ecommerce/manufacturing
• Marketplace for sales and purchases of digital assets: Proof
of ownership and a marketplace for sales and purchases of
digital assets
• Patient records: Decentralized patient records management
• Prediction platform: Decentralized prediction platform for
the share markets, elections, etc.
• Reputation management: Helps users engage, share
reputation and collect feedback
• Ride-sharing: Points-based value transfer for ride-sharing
Source: William Mougayer

In more and more sectors
Crucial Blockchain Properties
• Cryptoledger
• Decentralized network
• Trustless
counterparties
• Independent
consensus-confirmed
transactions
• Permanent record
• Public records
repository
• Notarization time-
stamping hashes
• Universal format
• Accessibility
Government
& Legal
• Transnational orgs
• Personalized
governance services
• Voting, propositions
• P2P bonds, land titles
• Tele-attorney services
• IP registration and
exchange
• Tax receipts
• Notary service and
document registry
Markets
• Currency
• Payments &
Remittance
• Banking & Finance
• Clearing &
Settlement
• Insurance
• FinTech
• Trading & Derivatives
• QA & Internal Audit
• Crowdfunding
IOT
• Agricultural & drone
sensor networks
• Smarthome networks
• Integrated smartcity,
connected car,
smarthome sensors
• Self-driving car
• Personalized robots,
robotic companions
• Personalized drones
• Digital assistants
• Communication
(messaging)
• Large-scale
coordination
• Entity ingress/egress
• Transaction security
• Universal format
• Large-scale multi-
data-stream
integration
• Privacy and security
Real-time
accessibility
Health
• Universal EMR
• Health databanks
• QS Data Commons
• Big health data
stream analytics
• Digital health wallet
• Smart property
• HealthToken
• Personal
development
contracts
• Large-scale
infrastructural
element for
coordination
• Checks-and-
balances system
for ‘good-player’
access
• Community
supercomputing
• Crowd analysis
• P2P resourcenets
• Film, dataviz
• AI: blockchain
advocates, friendly
AI, blockchain
learners, digital
mindfile services
Science,
Art, AI
Source: Melanie Swan

Financial and Public Records Applications
• Financial instruments
1. Currency
2. Private equities
3. Public equities
4. Bonds
5. Derivatives Commodities
6. Spending records
7. Trading records
8. Mortgage/loan records
9. Servicing records
10. Crowdfunding
11. Microfinance
• Public Records
1. Land titles
2. Vehicle registries
3. Business incorporations
4. Criminal records
5. Passports
6. Birth certificates
7. Death certificates
8. Voter Registration
9. Voting Records
10. Health/safety inspections
11. Building permits
12. Court records
90
http://forum.ethereum.org/discussion/1402/how-to-get-started-your-first-dapp-under-one-hour
Source: Melanie Swan

Ethereum
• A (complex) blockchain based distributed
computing platform
– “Smart contract” functionality
– Robust tamper proof decentralised applications
• A decentralised virtual machine (EVM)
– Computationally “Turing” complete, unlike simple
Bitcoin VM (share data not behaviour)
– Ability to run any coin, protocol or blockchain
– Executes peer to peer “contracts” using a crypto
token called an ether
• Solidity, a JavaScript-like programming
language, compiled to EVM bytecode
– Possibility to translate other languages to Solidity,
e.g. VB, C# to Solidity
• Truffle, IDE
– Development environment, testing framework and
asset pipeline for Ethereum
• Ethereum platform + Solidity applications =
– Decentralised Autonomous Organisations (DAOs)
defined via smart contracts

A Solidity cheat sheet

Operation of smart contracts
• Smart contracts track performance in real time and can take immediate
action based on their predefined conditions; replacing costly human error
and fraud prone processes
• They need access to external data that won’t necessarily be available on
the blockchain in a practical sense
www.smartcontract.com

Oracles in Smart Contract architecture
• “Oracles” sit between a smart contract and the external world, providing
the data needed by the smart contract to prove performance, while
sending its commands to external systems
– Inbound oracles provide smart contracts with data from external data feeds so
they can make a determination about events outside the smart contract network
in which they are required to run e.g., Ethereum, Bitcoin, etc.
– Outbound oracles allow smart contracts to send commands to your internal
systems and traditional payment methods that release payment to a recipient in
their preferred local currency
Source: about.smartcontract.com

Blockchain in 2016 - Advanced Distributed Ledger Technologies

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