3. What are we talking about?
Blockchain Overview ‐ IRACIS Consulting 6
• There are 2 topics that get intermingled:
1. Cryptocurrency: the idea that networks can securely transfer value without
central points of control and “financialized” into tradable assets
2. Blockchain: the idea that networks can collectively reach consensus about
information across trust boundaries.
• In this presentation, we will briefly cover cryptocurrency and focus on
the concepts of blockchain
4. What is cryptocurrency?
Blockchain Overview ‐ IRACIS Consulting 7
• Best known cryptocurrency is Bitcoin (over 2000 cryptocurrencies today)
• Decentralization of trust
‐ Traditionally, trust meant depending on partners, institutions, or intermediaries.
These centralized trust architectures underpin our civilization.
‐ The legend of Bitcoin is that it was developed by Satoshi Nakamotoa in response to
the financial crises and devaluations of the early 2000’s.
• Bitcoin promises that money could be trusted without anyone in particular
to verify transactions. If it works, this could transform society.
• There are downsides (as usual).
‐ Bitcoin consumes huge amounts of network bandwidth and massive amounts of
computing power/electricity
‐ Each transaction enriches the supporting the community of miners – the new
intermediaries.
‐ There are minimal uses of Bitcoin today outside of speculation and avoiding law
enforcement
‐ True revolutions don’t happen often. And when they do, there tends to be heavy
collateral damage.
5. What is blockchain?
Blockchain Overview ‐ IRACIS Consulting 8
• Blockchain is a technology – analogous to an operating system. Bitcoin and
other entities are analogous to apps.
• Blockchain produces a reliable, difficult‐to‐hack record of transactions and
ownership
• Blockchain is based on distributed ledger technology, which securely
records information across a trusted peer‐to‐peer network. Each node has
a copy of the ledger.
• Blockchain is based upon mass collaboration between trusted nodes rather
than through a controlling institution that does the authentication and the
settlement.
• Changes to the ledger are made through consensus among the
participants. Approved data is entered into the ledger as a collection of
“blocks” and stored in a chronological “chain” that cannot be altered.
• Smart contracts equivalent to self executable apps, add business logic to
transacting on a blockchain
• Blockchain relies on state‐of‐the‐art cryptography Node
Node
Node
NodeNode
Node
7. Blockchain example
Car Ownership – Blockchain environment
Blockchain Overview ‐ IRACIS Consulting 10
Regulator
Agencies
SMART
CONTR
ACT
SHARED
LEDGER
Step 1
Manufacturer
Step 2
Dealer
Step 3
Leasing Co
Step 4
Lessee
Step 5
Dealer
SMART
CONTR
ACT
SHARED
LEDGER SMART
CONTR
ACT
SHARED
LEDGER SMART
CONTR
ACT
SHARED
LEDGER
SMART
CONTR
ACT
SHARED
LEDGER
SMART
CONTR
ACT
SHARED
LEDGER SMART
CONTR
ACT
SHARED
LEDGER
Conditions for asset
transfer
Records of asset transfer
8. Types of blockchains?
Blockchain Overview ‐ IRACIS Consulting 11
Public (permissionless/de‐centralized) ‐ Anyone can read a
public blockchain, send transactions to it, or participate in the
consensus process. Transactions are public and users can
remain anonymous. (Bitcoin and Ethereum)
Consortium blockchains (permissioned/partially centralized) ‐
The consensus process is controlled by a pre‐selected group of
organizations. The right to read the blockchain and submit
transactions to it may be public or restricted to participants.
Private blockchains (permissioned/partially centralized) –
Similar to a consortium but run by a single organization that
grants access to any user who satisfies pre‐established criteria.
10. Distributed ledger
Blockchain Overview ‐ IRACIS Consulting 13
• A distributed ledger is a database of transactions that is shared and
synchronized across multiple computers and locations – without
centralized control. Each party owns an identical copy of the record,
which is automatically updated as soon as any additions are made.
13. Example of a peer to peer network
Blockchain Overview ‐ IRACIS Consulting 16
• A blockchain records data across a peer‐to‐peer network. Every participant can see the data
and verify or reject it using consensus algorithms. Approved data is entered into the ledger
as a collection of “blocks” and stored in a chronological “chain” that cannot be altered.
Example – maintaining a copy of a ledger across nodes
18. Potential applications
Transparency
• Visible, undisputed data from end to end.
• Open to all participants on the supply chain.
• Real‐time status update and confirmation.
Integrity
• Identity is verified and safeguarded.
• Proof of work/stake consensus mechanism
creates honest participants.
Efficiency
• Quicker process time through a single
platform.
• Reduced administrative process work.
• Cheaper transactions by removing
intermediaries.
Security
• Data is protected through encryption.
• Personal information can only be shared with
owner’s permission.
Supply Chain Use
Case
Property Rights Use
Case
Financial Services
Use Case
Retail Use Case
IOT
21. Opinion – challenges and predictions
Blockchain Overview ‐ IRACIS Consulting 26
• 1980’s kicked off the decentralization revolution
• Most revolutions tend to become evolutions
• Centralizing organizations are working to “co‐opt” the cryptocurrencies
• Impossible to predict the future of public blockchains – huge resource
requirement (computing power/electricity/storage).
• Permissioned blockchains will evolve within business communities
‐ Robust business processes must be established
‐ All players (nodes) must actively participate
‐ With many moving parts – must be resilient
