Blockchain Design is Academic Work?

Blockchain design is academic work and shouldn't just be decided by banks, suggests Dr Gideon Greenspan, who is the founder of Coin Sciences and MultiChain.  Dr Greenspan believes that the fundamentals of blockchain design constitutes "academic work" and is probably not something that should just be decided by banks alone. 

He continues; "...rather, I think this is work that should be done by experienced computer scientists and system architects, wherever they might happen to be."

Read the full article here

Blockchain in an Investment Bank

What does blockchain technology mean for an investment bank?

"Blockchain is a disruptive technology platform that uses cryptography and a distributed messaging protocol to create a shared ledger between trading counterparties. The idea is to allow for a simple transfer of asset ownership or more complex transactions using “smart contracts" 

Blockchain technology was originally leveraged by cryptocurrencies (Bitcoin being the first and most successful) whose popularity gave
rise to the idea of Blockchains as a means of building consensus. To that end, there are many functions within capital markets and other industries which can be simplified and enhanced by the order and validation in a distributed ledger via Blockchains."

Source: Read full article from Accenture here

Distributed Ledgers

Distributed ledgers

The Blockchain is just one type of public, permissionless, proof-of-work, peer-to-peer distributed ledger. Distributed ledgers are probably the future of financial services. 

Consider this statement from the Bank of England (2014 Quarterly Bulletin Q3): “Although the monetary aspects of digital currencies have attracted considerable attention, the distributed ledger underlying their payment systems is a significant innovation. The potential impact of the distributed ledger may be much broader than on payment systems alone. The majority of financial assets — such as loans, bonds, stocks and derivatives — now exist only in electronic form, meaning that the financial system itself is already simply a set of digital records.”

Concepts of trust arise in many philosophical puzzles. Mutual distributed ledgers look like becoming the system of trust in shared economies. If mutual distributed ledgers displace trusted third parties, they will change the systems outside them, most notably today’s financial services.

Read the full article by Professor Michael Mainelli: Unblock the Shared Economy

Blockchains Without Tokens

Is there any value in a Blockchain without a cryptocurrency (token)? 
And can these “tokenless shared ledgers” be called blockchains at all?

Dr Gideon Greenspan, of Coinspark - Coin Sciences Ltd, explains and debates the issue:
https://www.linkedin.com/pulse/ending-bitcoin-vs-blockchain-debate-gideon-greenspan

What are Colored Coins?

Colored Coins: 

Due to the nature of the Bitcoin blockchain, bitcoins are not inherently fungible: every single coin mined can be uniquely identified and its entire history tracked. The smallest identifiable, indivisible, unit is known as a “satoshi.” A single “bitcoin” is a collection of 100,000,000 satoshis; thus the price of a satoshi is very low: about $0.0000026 at current market rates.

This lack of fungibility, though potentially problematic, opens the door to the implementation of ledgers on top of the Bitcoin ledger. If several parties agree to attach meaning to a particular satoshi and to recognize its control as representative of the ownership of some other asset — potentially existing outside of the blockchain — then they can use the decentralized consensus offered by the Bitcoin blockchain to track ownership of the asset and permit secure transactions. The antecedent is crucial. The asset can only be tracked on the blockchain insofar as its physical custodians, or the relevant authorities, agree to recognize the legitimacy of the colored coin. The mere technological ability to track an asset, from common stocks to parcels of land, does not magically translate into the ability to form an authoritative record of ownership. All too often is that obvious fact sacrificed upon the altar of hype.

Assuming such an agreement is in place, these tiny, identifiable, pieces of bitcoin can be used to represent and track assets. Such a coin is known as a “colored coin.” In addition to the ownership tracking abilities inherited from the Bitcoin blockchain, small amounts of data can be embedded in the blockchain, allowing for potentially more complex mechanisms.

Read the full article by ArthurB:
"Making Sense of Colored Coins"

Blockchain Technology Will Transform the Practice of Law

The blockchain will not replace the need for lawyers. It will, however, change how lawyers approach contract drafting, administration and enforcement among other aspects of the practice.

In the future, transactional lawyers may draft contracts that resemble how developers code software applications. In fact, future lawyers will likely need basic-to-intermediate training in coding in order to implement smart contracts based on the blockchain — a phenomenon that is already taking hold in the general population. In addition, lawyers will need to understand the intricacies of how these systems work in order to counsel clients on potential pitfalls and best practices in utilizing these systems for their business. Countries, like Honduras, have already committed to replacing their existing real estate records with blockchain technology — which one day could allow for its citizens to sell or buy a house via an iPhone app.

This (blockchain technology) has significant implications for lawyers and the business of law. Ultimately, however, this technology offers a great opportunity for those firms who can innovate. Those firms that are willing to adapt and embrace this technology will be able to provide more effective and efficient services, which will lead to a competitive advantage over those firms who do not evolve.

By Joe Dewey, Partner, and Shawn Amuial, Associate, Attorneys at Holland & Knight

Read the full article here

Banks and Exchanges Turn to Blockchain

The Blockchain — the technology that underpins bitcoin — has been called “the future for financial services infrastructure”. Now banks, clearing houses and exchanges are becoming increasingly excited at the prospect of blockchain fundamentally transforming their business models.

Banks and exchanges see a ledger updated in minutes as saving millions in collateral and settlement costs to third parties.

“Blockchain technology continues to redefine not only how the exchange sector operates, but the global financial economy as a whole,” says Bob Greifeld, chief executive of Nasdaq.

Read the full article published by the FT here:

http://tinyurl.com/BlockchainBanks

Comment:
The Blockchain and its derivative technologies are one of the biggest opportunities in the last 30 years to re-engineer banks and financial services. The key 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 a "Blockchain Banking" technological future with significantly lower costs, less friction and faster settlement and clearing times. 

FT Explainer: 

At present, when one bank sends money to another, no physical currency changes hands. Banks and settlement systems use central electronic ledgers to track assets. But they can be slow and inefficient, often relying on faxes or manual input. That not only wastes time but racks up fees. The system is also open to hacking and fraud.

Proponents say a ledger updated in minutes could savemillions in collateral and settlement costs, while also automating banks’ creaky and expensive back office systems. Collateral could also be moved around the system faster, to meet new rules on derivatives markets implemented after the financial crisis.

Full article here:

The blockchain and financial markets 

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Interview with Gideon Greenspan
"Crucially, banks want permissioned ledgers so they can say who can connect to the network, who can send, who can receive and who can confirm transactions."

"While the bitcoin network expends vast amounts of collected computation power to prevent a 51% attack, private blockchains can employ simple but effective security enhancing techniques such as forced rotation mining patterns.

Greenspan explained: "If there are ten permitted miners (Ed: ie. validators) we could insist that at least eight of them mine in rotation."

Full article from IB Times:

What do banks want from blockchains?