Blockchains: The great chain of being sure about things

The (Blockchain) technology behind bitcoin lets people who do not know or trust each other build a dependable ledger. This has implications far beyond the bitcoin cryptocurrency.
"The blockchain began life in the mind of Satoshi Nakamoto, the brilliant, pseudonymous and so far unidentified creator of bitcoin—a “purely peer-to-peer version of electronic cash”, as he put it in a paper published in 2008. To work as cash, bitcoin had to be able to change hands without being diverted into the wrong account and to be incapable of being spent twice by the same person. To fulfil Mr Nakamoto’s dream of a decentralised system the avoidance of such abuses had to be achieved without recourse to any trusted third party, such as the banks which stand behind conventional payment systems.

It is the blockchain that replaces this trusted third party. A database that contains the payment history of every bitcoin in circulation, the blockchain provides proof of who owns what at any given juncture. This distributed ledger is replicated on thousands of computers—bitcoin’s “nodes”—around the world and is publicly available. But for all its openness it is also trustworthy and secure. This is guaranteed by the mixture of mathematical subtlety and computational brute force built into its “consensus mechanism”—the process by which the nodes agree on how to update the blockchain in the light of bitcoin transfers from one person to another."

"...a world with record-keeping mathematically immune to manipulation would have many benefits. If blockchains have a fundamental paradox, it is this: by offering a way of setting the past and present in cryptographic stone, they could make the future a very different place."

Read the full article in the Economist here
Leader article: The promise of the blockchain -The trust machine

A Brief Introduction to Smart Contracts

A Brief Introduction to Smart Contracts
By Charles Hoskinson
YouTube video presentation here

Why and How Banks should embrace Blockchain Tech

"A recent flurry of media reports and surveys have touted that some banking and financial services sector players are undertaking interesting projects with blockchains and decentralized ledgers in particular. But this burst of activity is hardly enough to prematurely claim victory on behalf of the few banks who have publicized such initiatives.

It is naive to assume that the blockchain will make the most impact where it is to be adopted early. Rather, it will make the most impact where change is hardest to achieve, and that might take a little longer, realistically.

The blockchain and its derivative technologies are one of the biggest opportunities for reengineering financial services. It’s a looming tsunami, and the big question is whether the banks will fail to reinvent themselves as they did with the Internet, or if they will dare to induce a self-inflicted shake-up and embrace the future."

"The blockchain is not perfect, but it is that perfect catalyst for business process changes, and this type of opportunity doesn’t present itself that often. The last time it came was with the Internet. Let’s hope the banks see this as a big opportunity for change, not just a small one."

Read the 3 full articles by William Mougayar:
1.  Bitcoin: Another Banking Headache
2.  Dear Big Bank CEO, Re: Blockchains: Obliterate don't Automate
     (Also: Coindesk edited version) 
3.  The 8 Steps to becoming a Bitcoin-Savvy Bank

Blockchain in the Banking Industry - Bloomberg Markets Most Influential Summit 2015 London

Here is a video of the panel speaking on:
"The Future of Finance: Blockchain in the Banking Industry"
at Bloomberg Markets, Most Influential Summit 2015, London. 

The panel of speakers were:
Jon Matonis (Bitcoin Foundation), Richard Brown (R3 CEV), Oliver Bussmann. UBS), and Daniel Marovitz (Earthport); the moderator was Ed Robinson who is a senior writer with Bloomberg Markets.

The panel discussed the opportunities and challenges of the blockchain – the code behind bitcoin – and it's potential impact on the banking and financial services industry.

After 32 mins, listen to a key Blockchain/blockchain question posited by Michael Parsons @BlockchainABC @BitcoinByte and expertly answered by @jonmatonis
Video here:
Future of Finance: Blockchain in the Banking Industry- Bloomberg Business

Private blockchains are not “just” shared databases

To state that a private blockchain is just a shared database is like saying that HTML and HTTP are “just” distributed hypertext. It’s wrong in two ways. First, the semantic one: private blockchains are a technology that enables shared databases, like pens enable writing and HTML/HTTP enable distributed hypertext. The bitcoin blockchain and its primary application cannot be meaningfully separated, because one could not exist without the other. But this equivalence does not apply to private blockchains at all.

Yes, private blockchains are just a way to share a database. But they enable a new type of shared database, with huge implications for the financial world and beyond.

Read the full article by Dr Gideon Greenspan to find out exactly why

Blockchains and Banks

There’s a conundrum concerning blockchains: Bitcoin bundled together various existing technologies in a unique fashion to create something genuinely new — an almost unhackable, replicated database with no master server, via updates which are based on quickly verifiable effort rather than permission. Blockchains (permissioned chains) remove the genuinely new bit, but they are the current focus of activity in the Financial Services sector. Why?

Bitcoin created an awareness of a mechanism that could conceivably disrupt both banks and existing banking infrastructure providers via a financial network without either middle men or trusted entities. This created the incentive for strategic investment to look into blockchain applications. These replace banking infrastructure providers with software that doesn’t need to be run by a separate entity (e.g. SWIFT), and lower internal costs but still keep the requirement for trusted entities (banks themselves).

What blockchains achieve could have been done before, albeit in a less elegant way, but there wasn’t the alignment of incentives to produce the applications that will create a de facto reality.
Even without the advantages of the Bitcoin (Blockchain) approach, this will stimulate the creation of Internet era banking infrastructure. With them, we could see the web of money and, more generally, any kind of contract.

Now, internet era Banking Technology has found its best ‘Ecosystem fit’ in the form of blockchains.

Read the full article By David Galbraith
Link Here