The document provides an introduction to blockchain and distributed ledger technology. It discusses the hype around blockchain, provides a primer on key concepts like cryptography, distributed ledgers, blockchains and smart contracts. It outlines some general use cases and opportunities for blockchain including financial transactions, asset registration, provenance tracking, identity management, voting systems and decentralized markets. The presentation notes both opportunities and threats from the removal of trusted third parties and creation of new technology expertise.

1. BCS Business Information Systems Specialist Group
01 November 2016
1 © Distlytics Ltd 2016
An Introduction to Blockchain
& Distributed Ledger Technology
Gary Nuttall
Managing Director

2. Agenda
1. Introductions
2. Hype ?
3. Blockchain Primer
4. General Use Cases
5. Opportunities (& Threats)
6. Q & A

3. Agenda
1. Introductions
2. Hype ?
3. Blockchain Primer
4. General Use Cases
5. Opportunities (& Threats)
6. Q & A

4. 1 - Introduction: Me

5. 1 - Introduction: You
What do you know about Blockchain ?
Are you a Developer, Designer, Manager,
Techie, “Business/User” ?
What do you hope to learn ?

6. 1 - Introduction: This Presentation
This is an Introduction
We will not cover Merkle Trees, Nonces, Mining, Proof of Work, Byzantine
Fault Tolerence, SHA-256, Sharding, etc.
It assumes no prior knowledge
By the end of the session you will have a better understanding of
Distributed Ledger Technology, Blockchain and the potential applications

7. This presentation reflects my personal views and is not
intended to reflect the views of past, current and
prospective employers, clients or other agents.
"Prediction is very difficult, especially if it's
about the future."
Nils Bohr, Nobel laureate in Physics
Caveat: Please read the small print…

8. 1 – Introduction - Blockchain
(October 31, 2008 at 2:14 PM, EST) A few hundred members of an obscure cryptography
group received an email from somebody calling himself Satoshi Nakamoto.
"I've been working on a new electronic cash system that's fully peer-to-peer, with no
trusted third party," he bluntly stated. The email directed the readers to a nine page
whitepaper hosted on Nakamoto's brand new domain, bitcoin.org. BITCOIN and a global
financial revolution was born

9. 1 – Introduction - Blockchain
Protocol Commonly used
for
Enables
TCP/IP (1980’s) Internet Data sharing
HTTP (1990’s) World Wide Web Displaying
information
Blockchain (2008) Distributed Ledger Transfer of value

10. 1 – Introduction - Blockchain
Five important things to know:
1. Bitcoin was first protocol, published in 2008 but it’s not the only one
2. Blockchain(s) aren’t just about cryptocurrencies
3. There are lots of “blockchains” – public, private, hybrid
4. There are lots of protocols: Bitcoin, Etherium, Eris, Ripple, etc. Like MS-
Excel, Lotus 1-2-3, Google Sheets
5. To date, all known “hacks” have been against applications not the underlying
blockchain(s)

11. Agenda
1. Introductions
2. Hype ?
3. Blockchain Primer
4. General Use Cases
5. Opportunities (& Threats)
6. Q & A

12. 2 – Hype ? - Gartner

13. 2 – Hype ? - Consultants

14. 2 – Hype ? - Investments

15. 2 – Hype ? - Consortia

16. 2 – Hype ? - Startups

17. 2 – Hype ? – Investment Summary

18. Agenda
1. Introductions
2. Hype ?
3. Blockchain Primer
4. General Use Cases
5. Opportunities (& Threats)
6. Q & A

19. 3 – Blockchain Primer

20. 3 – Blockchain Primer
• Cryptography & Hashing
• Distributed Ledger(s)
• Blockchain(s)
• Smart Contracts
• Benefits

21. 3 – Blockchain Primer – Cryptography & Hashing
Mathematics to keep things secure & secret Mathematics to provide a unique signature

22. 3 – Blockchain Primer – Distributed Ledger(s)
Barclays HSBC

23. Transferring value
Barclays HSBC
£500

24. A Ledger is simply a journal of transactions
JOURNAL
-ID DATESTAMP FROM TO CURRENCY AMOUNT
1 01/01/2016 08:35 BARCLAYS HSBC GBP 500.00
Barclays HSBC
£500

25. …usually lots of transactions
BARCLAYS JOURNAL
JOURNAL-ID DATESTAMP FROM TO CURRENCY AMOUNT
1 01/01/2016 08:35 BARCLAYS HSBC GBP 500.00
2 01/01/2016 09:45 BARCLAYS SANTANDER GBP 4,250.00
3 01/01/2016 11:35 SANTANDER BARCLAYS GBP 2,215.00
Barclays HSBC
Santander
£500

26. BARCLAYS JOURNAL
JOURNAL-ID DATESTAMP FROM TO CURRENCY AMOUNT
1
01/01/2016
08:35 BARCLAYS HSBC GBP 500.00
2 01/01/2016 09:45 BARCLAYS SANTANDER GBP 4,250.00
3 01/01/2016 11:35 SANTANDER BARCLAYS GBP 2,215.00
HSBC JOURNAL
JOURNAL-ID DATESTAMP FROM TO CURRENCY AMOUNT
1
01/01/2016
08:35 BARCLAYS HSBC GBP 500.00
4 01/01/2016 13:35 HSBC SANTANDER GBP 105.00
SANTANDER JOURNAL
JOURNAL-ID DATESTAMP FROM TO CURRENCY AMOUNT
2 01/01/2016 09:45 BARCLAYS SANTANDER GBP 4,250.00
3 01/01/2016 11:35 SANTANDER BARCLAYS GBP 2,215.00
Everyone has a copy of their own ledger

27. PROBLEMS!
RECONCILIATION – Need to check that every record of every transaction has been copied to each
other’s systems correctly.
AUDIT – Need to prove that the system works consistently

28. PROBLEMS!
COSTS
• Processing overhead (needs computing power)
• Reconciliation systems need to be designed, developed, tested & supported
• Excel addicts writing macros, functions & stuff that goes wrong
• Auditing overhead – cost of auditors, audits, etc.
• Data Quality issues – End up “working around” problems
TIME
• Need to wait for reconciliations to be executed and verified
• Audits are after the event and aren’t preventative
RECONCILIATION – Need to check that every record of every transaction has been copied to each
other’s systems correctly.
AUDIT – Need to prove that the system works consistently

29. Merge all the Ledgers into one…
BARCLAYS JOURNAL
JOURNAL-ID DATESTAMP FROM TO CURRENCY AMOUNT
1 01/01/2016 08:35 BARCLAYS HSBC GBP 500.00
2 01/01/2016 09:45 BARCLAYS SANTANDER GBP 4,250.00
3 01/01/2016 11:35 SANTANDER BARCLAYS GBP 2,215.00
HSBC JOURNAL
JOURNAL-ID DATESTAMP FROM TO CURRENCY AMOUNT
1 01/01/2016 08:35 BARCLAYS HSBC GBP 500.00
4 01/01/2016 13:35 HSBC SANTANDER GBP 105.00
SANTANDER JOURNAL
JOURNAL-ID DATESTAMP FROM TO CURRENCY AMOUNT
2 01/01/2016 09:45 BARCLAYS SANTANDER GBP 4,250.00
3 01/01/2016 11:35 SANTANDER BARCLAYS GBP 2,215.00
A Mutual Ledger…Less reconciliation
JOURNAL-ID DATESTAMP FROM TO CURRENCY AMOUNT
1 01/01/2016 08:35 BARCLAYS HSBC GBP 500.00
2 01/01/2016 09:45 BARCLAYS SANTANDER GBP 4,250.00
3 01/01/2016 11:35 SANTANDER BARCLAYS GBP 2,215.00
4 01/01/2016 13:35 HSBC SANTANDER GBP 105.00
SOLUTION!

30. Barclays
HSBC
SantanderCo-Op
First
Direct
Block
1
Block
2
Block
3
Block
1
Block
2
Block
3
Block
1
Block
2
Block
3
Block
1
Block
2
Block
3
Block
1
Block
2
Block
3
…And you have a Mutual Distributed Ledger
Distribute a copy of the ledger to everyone

31. JOURNAL-ID DATESTAMP FROM TO CURRENCY AMOUNT HASH BLOCK BLOCK HASH START BLOCK START HASH
1 01/01/2016 08:35 BARCLAYS HSBC GBP 500.00 1111 0 110111
2 01/01/2016 09:45 BARCLAYS SANTANDER GBP 4,250.00 101
3 01/01/2016 11:35 SANTANDER BARCLAYS GBP 2,215.00 100011
4 01/01/2016 13:35 HSBC SANTANDER GBP 105.00 101101 1 1111000
IF FROM = %USER%
OR TO = %USER%
THEN DISPLAY LINE
JOURNAL-ID DATESTAMP FROM TO CURRENCY AMOUNT
1 01/01/2016 08:35 BARCLAYS HSBC GBP 500.00
2 01/01/2016 09:45 BARCLAYS SANTANDER GBP 4,250.00
3 01/01/2016 11:35 SANTANDER BARCLAYS GBP 2,215.00
Barclays HSBC
JOURNAL-ID DATESTAMP FROM TO CURRENCY AMOUNT
1 01/01/2016 08:35 BARCLAYS HSBC GBP 500.00
4 01/01/2016 13:35 HSBC SANTANDER GBP 105.00
…now users can only access their own data
Which decreases Security Auditing overhead
Put crypto-security onto the Ledger

32. 3 – Blockchain Primer –Blockchain(s)`
Why is it called a Blockchain ?

33. 3 – Blockchain Primer –Blockchain(s)`
Imagine a physical ledger, with pages in it

34. 3 – Blockchain Primer –Blockchain(s)`
Imagine a physical ledger, with pages in it
At the bottom of the page you enter the
hash for that page

35. 3 – Blockchain Primer –Blockchain(s)`
Imagine a physical ledger, with pages in it
At the bottom of the page you enter the
hash for that page
At the top of the next page, you start
with the hash from the previous page.
This means that when you hash the page
it includes the hash from the previous
page.

36. 3 – Blockchain Primer –Blockchain(s)`
Imagine a physical ledger, with pages in it
At the bottom of the page you enter the
hash for that page
At the top of the next page, you start
with the hash from the previous page
So, the data is held in BLOCKS which are
CHAINed together

37. 3 – Blockchain Primer –Blockchain(s)`
Imagine a physical ledger, with pages in it
At the bottom of the page you enter the
hash for that page
At the top of the next page, you start
with the hash from the previous page
So, the data is held in BLOCKS which are
CHAINed together

38. 3 – Blockchain Primer –Blockchain(s)`
Imagine a physical ledger, with pages in it
At the bottom of the page you enter the
hash for that page
At the top of the next page, you start
with the hash from the previous page
So, the data is held in BLOCKS which are
CHAINed together
Now VERY difficult to change an earlier
entry as all of the hashes on all pages
would need to be recalculated

39. …Giving a Private, Permissioned Ledger
Metro
Bank
You can restrict access only to members…

40. …Giving a Public, Unpermissioned Ledger
You can provide open access to everybody…

41. Other things could go onto a ledger…such as assets
MRS JENKINS BARRATT’S
£455,123.00
21 ACACIA AVENUE
Journal
ID Datestamp FROM TO UNIT IDENTIFIER
1 01/01/2016 11:45:00 MRS JENKINS BARRATT'S GBP 455,123.00
2 01/01/2016 11:45:01 BARRATT'S MRS JENKINS HOUSE 21 ACACIA AVENUE
3 02/01/2016 10:35:00 MR SMITH BMW DEALER GBP 35,455.00
4 02/01/2016 10:35:01 BMW DEALER MR SMITH CAR BMW X3 (LS16 ABC)
BMW
DEALER
£35,455
BMW X3 (LS16 ABC)
MR SMITH

42. Links to other things….such as documents
Counterparty Underwriter
Journal
ID Datestamp TYPE REFERENCE CLASS IDENTIFIER
1 01/01/2016 11:45:00 KYC PASSPORT PDF ABC123
2 01/01/2016 11:45:01 KYC DIR CHECK PDF ABC124
3 02/01/2016 10:35:00 CLAIM FNOL EMAIL DEF124
4 02/01/2016 10:35:01 CLAIM ASSESS WORD DOC121

43. It’s a write-only database
That everyone has an identical copy of
With all entries timestamped
And the data is cryptographically secured
So, back to the definition….
Which means:
• A complete history of all transactions - great audit trail
• Everyone has a copy of the same thing - No need for
reconciliation
• It’s highly distributed – Makes it cyber-resistant
• Data is cryptographically secured – overcomes security issues

44. Journal
ID Datestamp FROM TO UNIT IDENTIFIER
1 01/01/2016 11:45:00 ATRIUM LUFTHANSA EUR POLICY123
2 01/01/2016 11:45:01 BEAZLEY FARMER MCGREGOR GBP POLICY234
POLICY12
3
IF (POLICY_IS_ACTIVE AND
PREMIUM_PAID AND
CLAIM_CONDITION_MET
THEN PAY_CLAIM
POLICY234 IF (POLICY_IS_ACTIVE AND
PREMIUM_PAID AND
CLAIM_CONDITION_MET
THEN PAY_CLAIM
Connect with data sources, providing unquivocable evidence of…
Weather conditions (Temperature, precipitation)
Flight Delays
Decentralised Autonomous Organisations
WARNING: Smart Contracts are neither Smart nor Contracts!
3 – Blockchain Primer – Smart Contracts

45. Immutable – complete, timestamped, audit trail
Cyber resilient – still functional if nodes removed
Reconciliation significantly reduced
Cyber protected – can’t be easily hacked or ransomed
Smart Contracts can be created
3 – Blockchain Primer – Benefits

46. Agenda
1. Introductions
2. Hype ?
3. Blockchain Primer
4. General Use Cases
5. Opportunities (& Threats)
6. Q & A

47. 4 – General Use Cases - Themes
Emerging themes Example
Financial Transactions Bitcoin, BTL, Cashaa
Asset Register Honduran Land Register
Provenance Everledger,
Provenance.org
Identity Management Estonia eRegister
Public Services UK Benefits
Smart Contracts TheDAO
Voting System Follow My Vote
Decentralized Markets Open Bazaar, slock.it

48. 4 – General Use Cases - Examples

49. 4 – General Use Cases - Examples
A few more….

50. 4 – General Use Cases - Sectors

51. 4 – General Use Cases - Sectors

52. 4 – General Use Cases - Startups

53. Value transfer
• Payments & Settlements
Asset Management
• Land Registry
• Diamonds
Removal of Trusted Third Party
• Conveyancing
• Banking (payments)
• Escrow
Accreditation
• KYC
• AML
• Professional Membership
Document Management
• Contracts
• Policies
• Electronic Signatures
Government Services
• UK GDS
• Local Government
Media
• Music
• Digital Images
Supply Chain
• Ethical Sourcing
• Consignment Tracking
5 – Opportunities (& threats)

54. OUT
The removal of Trusted Third Parties:
• Conveyancing
• Banking
• Escrow
Trusted Registers:
• Land registry
• Asset ownership
• Title Deeds
Value Transfer:
• Payments
• Foreign Exchange
• Trade Finance
IN
• New technology expertise needed
• “Legal programmers”
• Advisory – Patents/IP/Copyright
• New insurance products
• Challenger Banks
• Decentralised Autonomous Organisations
• Government Services
• Digital Copyright
5 – Opportunities (& threats)

55. About the future
Quote from Mayor of Cambridge, MA after having the telephone demonstrated in 1876:
I can see the time that every City will have one!
"This 'telephone' has too many shortcomings to be
seriously considered as a means of communication.
The device is inherently of no value to us.“
Western Union telegraph company memo, 1877

56. Caveat Emptor?

57. Q & A
57 © Distlytics Ltd 2016
Thank you!
Gary Nuttall contact details:
eMail: gnuttall@distlytics.com
Twitter: @GPN01
LinkedIn:uk.linkedin.com/in/garynuttall
Web: www.Distlytics.com
www.linkedin.com/in/garynuttall
www.linkedin.com/in/garynuttall
www.linkedin.com/in/garynuttall