Download - Blockchain technology a primer
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Blockchain Technology – Decentralized Disruption
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Famous Quote
The blockchain is one of the most important innovations in the history of finance. Removing the middleman will transform how we transact, finance projects and distribute capital.
‘ ’ Brian Kelly
Investor and Author of The Bitcoin Big Bang
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2100 years
65 years
42 years
Traditional Financial Services Systems
Centralized and slow process
Intermediaries creating insecure practices
Processing and
transaction delays
High processing
costsMinimal transparency
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Why Blockchain ?
Blockchain technology enables
bilateral settlement by
eliminating midpoint failures,
delays, collateral costs, and
minimizes credit risks and
exchange spreads.
No central authority
Real-time settlement
Elimination of intermediaries
Drastic reduction in operational
costsHigh levels of Transparency
BLOCKCHAIN
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Blockchain is a transaction database shared by all nodes participating in a
system. In essence, it is a distributed method of tracking and transferring
assets online without need for a trusted party.
What is Blockchain?
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Imagine there are a group of
lockers in a public place.
Each locker is:
• Free of charge
• Use of “wallets” to keep
track of all owned lockers
• Money is inaccessible if
key is lost
• Has a window
Windows to see
Slot to put money
Identifying number
Requires a key
Blockchain Analogy
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Presume Alice and Bob get into a contract...
• No banks or third party
involvement
• No processing delays
• No additional fees
• The transaction cannot be
reverted
• Only Alice can take ownership
of transferred amount
• The transaction is transparent
Other Locker
Holders
#548 #274
BobAlice
Decentralized Money Analogy
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• The bitcoin network and blockchain system works very similar to the decentralized money management approach
• The bitcoin network consists of thousands of computers (nodes), each of which maintains its own ledger. These computers communicate
with each other by sending messages over the Internet.
• For example, if A was transferring 10 bitcoins to B, A would click initiate the transaction on the bitcoin wallet, and it would broadcast this
transaction to all other bitcoin users.
The Concept of Blockchain
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• Anyone can join the bitcoin network by
installing the bitcoin software.
• The software automatically downloads
the global ledger – Blockchain, onto the
computer.
• This distributed ledger allows bitcoin
users to see every transaction that has
ever happened in bitcoin’s history! Users
can even browse through them online on
sites.
Distributed Ledger
Distributed Ledger
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How a bitcoin transaction takes place
X holds 1 BTC in virtual wallet with associated public and private key
Y sends his bitcoin wallet address and public key to X
X wants to send BTC to Y who also has a wallet
X creates transaction message with Y’s address and transaction amount
X signs transaction with his private key and announces his public key for signature
verification
X broadcasts the transaction on bitcoin network for all to see
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Fully Distributed System
No centralized authority.
Transparency All transactions are publically recorded and available for scrutiny.
Security The ledger is distributed across thousands of computers, meaning a practical hack is near-impossible.
Risk No single authority has control, which means if there is a fault, the rest of the network continues.
Privacy The user, or bitcoin owner, is anonymous and doesn’t need to provide ID credentials.
Dependency Use of the blockchain eliminates dependency on the base layer service for functionality.
High Network Effects
There can be substantial benefits from very large groups of people (or even everyone) using the same service.
Benefits of Blockchain
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Currency & Exchange
Remittance
P2P Transfers
Data Usage
Gaming
Trading Platforms
Applications Companies Engaged
Blockchain Technology - Financial Use Cases
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Digital Identity
Smart Contracts
Network Infrastructure
and API
Blockchain in IoT
Digital Content/Documents, Storage &
Delivery
Applications Companies Engaged
Chimera IoT
Mastercoin
Blockchain Technology - Non-Financial Use Cases
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Reviews and Endorsements
Gold & Silver
Authentication and
Authorisation
Real Estate
Diamond
Applications Companies Engaged
Blockchain Technology Non-Financial Use Cases …cont.
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Banking giants around the world like Goldman Sachs, Barclays, UBS and others are embracing
bitcoin and Blockchain technology.
Having recognized the potential and advantages of the lightning-fast, decentralized transaction
verification system as having broad applications for transactions involving everything from stock
trades to money and property transfers, banks have been warming to Blockchain technology,
using it to innovate traditional banking processes.
Banks and Blockchain Technology
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Blockchain is a really disruptive development,
and banks have a lot of fear concerning this
technology because in the pure theory of
blockchain, a lot of processes within a traditional
bank would be obsolete.
‘ ’
– Thomas F Dapp, Research Analyst, Deutsche
Bank