BEGIN BLOCKCHAIN - Module 2_feedback implemented (real final).pptx

Co-funded by the
Erasmus+ Programme
of the European Union
How can blockchain serve
entrepreneurs and SMEs?
Module 2

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In this module, we will discuss basic
features of blockchain. These
include the difference between
permissioned and permissionless
blockchain, as well as public,
private, consortium, and hybrid
blockchains.
Finally the module presents use
cases of blockchain application,
combined with an example of an
ecosystem enabling blockchain for
SMEs.
Introduction

This programme has been funded with support from the European Commission. The author is solely
responsible for this publication (communication) and the Commission accepts no responsibility for any
use that may be made of the information contained therein
Learning
Objectives
By the end of this module, you
will be able to:
Understand the differences and key
characteristics of permission v.
permissionless blockchain.
Explain the differences between private,
public, consortium and hybrid
blockchain.
Learn about blockchain use in different
industries.
Learn about the Italian ecosystem
enabling blockchain.
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e n a b l i n g n e w g r o w t h f o r s m e ’ s
Content
2.1 – What are the Types of Blockchain?
2.2 – What are the Different Types of Blockchain
2.3 – Blockchain Applications
2.4 – Case Study – Italy’s Political Background
2.5 – Test Your Knowledge

Permissionless
blockchains
Permissioned
blockchains
1. Blockchain basics: what are the types of blockchain?

What are they?
Permissionless blockchains, also
known as trustless or public
blockchains, are open networks
available to everyone to participate
in the consensus process that
blockchains use to validate
transactions and data. They are
fully decentralised across unknown
parties.
Permissionless
blockchains
• Full transparency of transactions
• Open-source development
• Anonymity, with some exceptions
• Lack of a central authority
• Heavy use of tokens and other
digital assets as incentives to
participate.
Permissionless blockchains
key characteristics

What are they?
Permissioned blockchains – also known
as private blockchains or permissioned
sandboxes – are closed networks in
which previously designated parties,
sometimes members of a consortium,
interact and participate in consensus
and data validation. They are partially
decentralized in the sense of being
distributed across known participants
rather than unknown participants, as
in permissionless blockchains. Tokens
and digital assets are possible but less
common than in permissionless
Permissioned
blockchains
• Controlled transparency based on the goals
of participating organisations
• Development by private entities
• Lack of anonymity
• Lack of a central authority, but a private
group authorises decisions.
Permissioned blockchains
key characteristics:

Public blockchain Private blockchain Consortium
blockchain
Hybrid blockchain
2. Types of blockchain: what are the types?

What are they?
Public blockchains are permissionless
in nature, allow anyone to join, and
are completely decentralised.
Public blockchains allow all nodes of
the blockchain to have equal rights
to access the blockchain, create
new blocks of data, and validate
blocks of data.
Public blockchains
To date, public blockchains are primarily used for
exchanging and mining cryptocurrency. You may
have heard of popular public blockchains such as
Bitcoin, Ethereum, and Litecoin.
On these public blockchains, the nodes “mine” for
cryptocurrency by creating blocks for the
transactions requested on the network by solving
cryptographic equations.
In return for this hard work, the miner nodes earn a
small amount of cryptocurrency. The miners
essentially act as new era bank tellers that
formulate a transaction and receive (or “mine”) a
fee for their efforts.
Examples of public
blockchains

What are they?
Private blockchains, which may also be
referred to as managed blockchains, are
permissioned blockchains controlled by a
single organisation.
In a private blockchain, the central authority
determines who can be a node. The
central authority also does not necessarily
grant each node with equal rights to
perform functions.
Private blockchains are only partially
decentralised because public access to
these blockchains is restricted.
Private blockchains Examples of private
blockchains
To date, major providers of digital platforms based
on their own version of blockchain technologies,
including Ripple, R3’s Corda and Hyperledger
Fabric. These are permissioned systems which
restrict access to transaction data to the parties
involved in that transaction.
For example, De Beers has launched a ‘secure and
immutable trail’ using a private blockchain called
Tracr, to verify the authenticity and provenance of
diamonds and ensure they are not “blood
diamonds” from conflict zones.
Comcast has partnered with other industry leaders
to launch Blockgraph, a blockchain-based system
which allows advertisers to target viewers with
specific adverts while maintaining viewers’
privacy.

What are they?
Consortium blockchains are permissioned
blockchains governed by a group of
organisations, rather than one entity, as in
the case of the private blockchain.
Consortium blockchains, therefore, enjoy
more decentralisation than private
blockchains, resulting in higher levels of
security.
Consortium
blockchains
Examples of
consortium blockchains
A popular set of consortium blockchain solutions for
the financial services industry and beyond has
been developed by the enterprise software firm
R3.
In the supply chain sector, CargoSmart has
developed the Global Shipping Business Network
Consortium, a not-for-profit blockchain
consortium which aims to digitalise the shipping
industry and allow maritime industry operators to
work more collaboratively.

What are they?
A hybrid blockchain is a unique type of
blockchain technology that amalgamates
components of both public and private
blockchain or tries to utilise the ideal part
of both public and private blockchain
solutions.
Transactions and records in a hybrid
blockchain are made private but can be
verified when entailed, such as by
enabling access through a smart contract.
Private information is kept inside the
network but is still verifiable.
Hybrid blockchains Examples of hybrid
blockchains
To date, hybrid blockchain is used in the following
fields:
• Hybrid IoT
• Global finance and trade
• Banking
• Supply chain
• Governments
• Enterprise services

Blockchain can be used in different sectors and industries:
3.1. Case studies: blockchain applications
Content
distribution
Real estate Travel Advertising Healthcare
Energy
Supply Chain Recycling

Industry problem:
Most of the plastic that ends up in rivers,
oceans and landfill sites can be recycled.
Yet, it requires an effort on the
consumers’ side, when it comes to
collection and sorting. Empower was
driven by the questions: how can we
encourage people to take plastic to
collection centers? and how can we
reward them, especially in those countries
where the majority the population is
unbanked?
EMPOWER How is blockchain
being used?
Blockchain allows for seamless tracking and
monetisation of plastic - even in third world
countries. By tracking every aspect of the
journey - from on-the-ground plastic pickup
operations to eventual reuse in other products,
allows a high level of transparency. This
increases the value of waste plastic - and
makes collection a viable, revenue-generating
activity for the world’s underprivileged
populations.
Empower has created a global plastic deposit
system where plastic is collected and
segregated at the source. For every
kilogramme of plastic waste collected, users a
rewarded with EMoneyPower (EMP) Tokens
that have a value of roughly USD 1 each.

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As of today, Empower has collected and
tracked more than 1500 tons of plastic
waste and it is operating in more than 20
countries.
Through Blockchain, Empower has the
potential to outcompete some of the least
digitised industries that are skeptical
towards modernisation, making the world
more sustainable and closing the loop of
the economy.
The technology opens new value
propositions that enable Empower to
target several industries and niche sectors
with the same solution, in a way that
would not be viable nor cost-efficient
without this kind of infrastructure.
Impact
Key success factors:
• Having previous entrepreneurial
experience
• Being part of a blockchain network
• Having ambassadors within public and
private organisations who understand
the technology and can help overcome
the scepticism around blockchain

Industry problem:
‘Global supply chains are complex and
nontransparent leading to harmful effects
on the environment, affecting the
wellbeing of people and creating untold
pollution.’
Today most product recycling relies on
manual sorting and guesswork. Whilst
most brands are willing to source raw
materials from sustainable suppliers, they
have to blindly trust the data that the
same suppliers are willing to share. This
leaves a lot of room to errors and fraud.
Circularise How is blockchain
being used?
Circularise helps manufacturers, brands and
suppliers to trace raw materials from source to
end product, increasing traceability and
accountability. By digitising data about raw
materials such as plastic, Circularise can create
a digital thread through the whole supply
chain, enabling material traceability, tracking
the CO2 footprint and other sustainability
metrics like water savings. Additionally,
Circularise enables law compliance, mitigates
risks across the supply chain and enables its
consumers to improve brand perception while
increasing revenue.

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As of today, the company has grown from 6
to 15 employees in only two years.
The company is the winner of numerous
awards including the Get in the Ring
Impact competition 2020, the EIC Investor
Day on the EU Green Deal 2020, the
Odyssey Blockchain Hackathon 2020, as
well as the 2020 finalist of the Alliance to
End Plastic Waste Innovation Platform.
Through its work Circularise supports
manufacturers and brands to address the
UN Sustainable Development Goals and
meet EU requirements.
Impact
Key success factors:
• Recent international interest in the
economic potential of circular economy
• The increasingly stringent regulatory
framework at the EU level
• Increased consumer demand for
transparency
• Funding opportunities from European
and national institutions

Industry problem:
Traditionally in the content distribution
industry, profits and control lie largely in
the hands of content hosting companies
rather than content creators themselves.
Content distribution services like YouTube
profit from the content of creators in
return for the hosting and distribution of
content on their reliable and secure
platform. Part of the profit from the
content is therefore diverted away from
creators.
Blockchain in the Content
Distribution Industry
Blockchain-assisted content hosting platforms
disrupt this imbalanced status-quo and seek to
put power back in the hands of content
creators and consumers themselves.
By allowing the blockchain to use their computer
to support the network, costs that platforms
such as YouTube take on from hosting content
are distributed evenly between users.
Consumers pay a small price for content that is
relevant to them and creators are given fair
remuneration.
Furthermore, blockchain-based solutions do not
suffer from security concerns; as the nodes or
data points exist in a network, hackers can only
reach a single node, not affecting the
functionality of the whole network.
How is blockchain
being used?

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Fixxo is a decentralised content
distribution platform that allows
creators to offer their content to
specialised audiences who fund their
content by paying with cryptocurrency.
To share their content and earn tokens,
users simply make videos on their
computer available to the network.
Due to the decentralised peer-to-peer
nature of the service, the costs of
running it are distributed between the
users. In this way viewers pay directly
for the content they want at a small
price.
Example: Fixxo The future:
In the future viewers will give their
money directly to content creators,
foregoing platform subscriptions.
Creators will therefore receive a
larger share of the profits, and
consumers receive relevant
content for a very affordable price.

Industry problem:
Today’s real estate market is comprised of
many siloed and independent networks.
For this reason, there is opacity and
transactional friction between operating
systems.
Furthermore, real estate has long been
considered as an ‘illiquid’ asset. The
‘tokenization’ of real estate through
blockchain means that real estate can be
easily traded as sellers don’t have to wait
for buyers who can afford the whole
property, but rather investors who can buy
smaller bits.
Blockchain in the Real
Estate Industry
Real estate assets can be ‘tokenized’ using ‘smart
contracts’. Here assets are divided into smaller
pieces and made accessible to a wider pool of
investors. This fractional ownership lowers the
minimum investment and the barriers to real
estate investing.
In addition, tokenization reduces the costs and
increases the speed of creating, issuing, and
exchanging assets. It also increases efficiency
for background industry operations such as
issuance, trading and lifecycle management, as
well as saving money through automation.
Furthermore assets and transactions remain
fully traceable.
How is blockchain
being used?

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Republic uses blockchain to give everyday
people the opportunity to invest in
projects that they believe in, from Start-
ups and video games to real estate, and
reap the financial benefits later down the
line.
Through tokenization, Republic allows
assets, such as real estate, to be bought
and sold in small chunks allowing
entrepreneurs to seek funding from a
wider base of diverse investors. And
lowering the threshold to investing in
physical assets.
Example: Republic
The future:
Blockchain makes it a lot easier to find
alternative financing for assets such as
real estate. It significantly brings down the
financial barriers to invest in real estate
and simplifies the process of managing
multiple small investments for investment
managers, whilst increasing investment
transparency and providing continuous
ROI tracking.

Industry problem:
The present travel industry is highly
fragmentated; hotel, flights, insurance etc.
often must be booked separately.
Consequently, booking travel can be a
time-consuming and stressful process.
Furthermore, there is little accountability
in the sector when things go wrong.
Priceline Group and Expedia, control 95% of
the Online Travel Agency market in the US.
These industry giants gatekeep customer
data and add a hefty expense on to
travelling for both smaller providers and
customers, possible due to their largely
unchallenged status.
Blockchain in the Travel
Industry
Blockchain technologies can ease the hurdles
that customers and service providers face in
the industry. Rather than buying and selling
travel products through online booking hubs
such as Expedia, decentralised platforms that
utilise blockchain cut out the middle-man
allowing for a more equitable market place
with reduced costs for providers and
customers.
Blockchain also has the potential to bring safety
and transparency to the industry. Blockchain
reduces the layers between providers and
customers and ‘Immutable ledgers’ reduce the
likelihood or mistaken or lost bookings.
How is blockchain
being used?

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Winding Tree is a decentralised travel marketplace
that uses an Ethereum blockchain that directly
connects customers and providers in a peer-to-
peer platform. Their solution is fully automated
and integrates directly with the reservation
system of travel suppliers. Winding Tree aim to
use blockchain to allow an unprecedented surge
of permissionless innovation in the travel industry.
By cutting out the middle man, there service
provides reduced transaction costs while enabling
greater customer knowledge and intimacy.
Winding Tree charges zero distribution fees to
providers and will only charge a minute
transaction fee to incentivize miners to give
computational power to the network.
Winding Tree also gives customers and providers
more packaging flexibility; any two providers on
the platform can easily form a relationship to
allow for bundled bookings.
Example: Winding Tree The future:
With the help of blockchain the
future of the travel industry will be
decentralised, transparent, fair and
efficient. Travel providers will sell
directly to customers, cutting out
industry middle-men and saving
money for both sides.

Industry problem:
Internet users have little control over how
their data is used and often voluntarily
surrender their most personal information
for little reward. Furthermore, they are
constantly bombarded with irrelevant ads
that prove to be unhelpful from both the
customer and the advertiser's point of
view.
In addition to this, advertisers do not have
equal access to customer data, hampering
the effectiveness of their ad targeting
campaigns.
Blockchain in the
Advertising Industry
There are endless uses of blockchain in the
advertising industry. Blockchain can help
advertisers target customers better, increase
the safety and privacy of internet users and
democratise the data that the industry relies
on.
At present, customer data is locked away on
secure company servers and sold to bidders
with vested interests, Blockchain can
distributes customer data to the entire
network. This data pooling makes ad targeting
more accurate and less expensive.
Instead of paying up front for expensive ad space,
SMEs can choose to use a blockchain
advertising company to target those who have
already expressed interest (with their data
sharing preferences) in their products.
How is blockchain
being used?

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The Lucidity blockchain platform uses smart
contracts to give marketing professionals
real-time insight into their campaigns,
track payments to ad publishes and
prevents fraud by flagging fake bot views.
When using Lucidity’s platform, auto giant
Toyota saw a 21% lift in ad campaign
performance. Using their blockchain
capabilities, Lucidity blacklisted sites and
apps that were determined to have high
levels of discrepancy. Through these
services, Toyota was able to shift its
budget to higher performing sites and
eliminate wasteful ad spending.
Example: Lucidity
The future:
In the future the advertising industry will use
blockchain to utilise more accurate
customer data in order to only show
consumers ads that are relevant to them.
SME’s advertising campaigns will become
more cost effective and users will only be
targeted with information that is relevant
to them.

Industry problem:
The emergence of Distributed Energy Grids
(DERs) or independent renewable energy
sources (e.g. solar panels) that connect to
the grid have revolutionised the energy
industry, turning energy consumers into
producers who can sell excess energy back
to the grid.
However, this is still a centralised market
where the task of buying and selling exists
under the control of energy companies.
The introduction of blockchain into the
industry promises to speed up innovation
in the industry and radically transform its
processes and markets.
Blockchain in the
Energy Industry
How is blockchain
being used?
The decentralised network that Bitcoin provides
could disrupt this industry stronghold and
facilitate the decentralisation of this peer-to-
peer energy trading model, allowing customers
to buy and sell excess energy from each other
in a given area. Several start-ups around the
world have developed pilots or are considering
it. Even large energy firms are trialling the idea.
Another use for blockchain in the energy industry
is the use of cryptocurrencies for monetary
payments.

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Grid+ is an energy company that uses
blockchain to implement wholesale
electricity distribution that focusses on
connecting end-users with the grid.
Grid+ identified energy retailers as the main
source of inefficiency in the consumer
electricity market. Retailers own very little
grid infrastructure for themselves, and
rather only manage services such as billing
and metering that blockchain technology
could replace. Using a blockchain-based
platform as a substitute for these retailers
has the potential to reduce consumer
energy bills by around 40%. Through
Ethereum, Grid+ connects users directly to
the grid, creating a more equitable and
stable energy market with lower electricity
costs.
Example: Grid+ The future:
The future of the blockchain-facilitated
energy industry is peer-to-peer. These
markets are shared networks of
individuals who buy and sell excess energy
from others on the network. This type of
marketplace benefits the masses as it
reduces control from central authorities
and distributes it more equally.

Industry problem:
Across the world, healthcare systems are
failing to meet the needs of citizens. The
industry is incredibly expensive, not least
due to inefficiency and constant data
breaches. Furthermore, technologies and
practices used in the industry are glaringly
outdated. Unsupported operating systems
leave organisations vulnerable to cyber
attacks, increasing costs and putting
patients at risk.
Whilst the industry cannot be fixed with
technology alone, it does have an
undisputed role to play in increasing
health care efficiency in small but
important ways.
Blockchain in the
Health Care Industry
How is blockchain
being used?
Blockchain is already used in the healthcare
industry, from securely encrypting patient data
to managing the outbreak of harmful diseases.
The use of blockchain significantly reduces
costs and creates new ways for patients to
access healthcare.
In traditional systems, patient data is often
scattered across different facilities, and difficult
to access at crucial times. With blockchain,
healthcare systems could store medical records
accessibly and confidentially, updating patient
data across multiple facilities and locations in
real time with a high level of security. This
diverts valuable time and resources away from
administrative practices towards patient care
and industry innovation.

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MedRec is a blockchain-focused app in the
health care sector. MedRec operates via a
transparent peer-to-peer ledger that
allows providers to track patient files and
information seamlessly, whilst also
improving medical professionals direct
communication with patients. Clinicians,
facilities and patients are connected on a
single platform, allowing for the most
efficient transmission of information that
is possible.
Also using MedRec, patients can log, review
and analyse their health data. The app
encourages patients to record their
symptoms in order to better diagnose and
treat illnesses as soon as the appear.
Example: MedRec
The future:
Through secure patient data that is
accessible to all relevant parties, precious
time and resources can be channelled
entirely towards patient care and
innovation in the health care industry,
creating a more patient centred industry
with better security, privacy and
accessibility.

Throughout the years, Italy has developed a strong blockchain policy targted at SMEs,
which entails:
3.2. Case studies: Italy’s policy background
Workshop
and training
In-depth
research for
Blockchain for
SMEs
Ad-hoc
blockchain
policy

The Italian Ministry of Economic
Development (MiSE) has
commissioned an OECD study on
blockchain for SMEs and
entrepreneurs in Italy.
More specifically, the report analyses
characteristics and trends of SMEs
introducing blockchain-based services
in the Italian market, opportunities
and challenges to their business
development.
The study also illustrates recent trends
in regulation and policy and provides
policy recommendations.
Research
The OECD and MiSE study on blockchain
for SMEs in Italy
Want to know more?
Click here to read the full report!

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Several initiatives to increase the use
of blockchain for SMEs exist in Italy:
• Group of experts: it investigates
different ways to increase
implementation of blockchain in
SMEs
Ad-hoc blockchain policies
• National strategy: it encompasses
a series of policies to create the
perfect regulatory and economic
environment for SMEs and start-
ups.
• Financial incentives: these
encompass different types of
financial support, such as tax
credit, voucher for upskilling,
voucher for consultancy, start-up
capital, etc., for SMEs to
implement blockchain in their
business models.

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The MiSE hosts a series of workshops
and training targeted at SMEs to
boost implementation of the
blockchain technology.
Most recently, MiSE hosted the
renowned workshop on ‘blockchain
for the traceability of goods Made
in Italy’ in the textile sector with
the goal to ensure quality, origin,
environmental and ethical
sustainability of the products.
Workshop and training Want to know more?
Click here to read the workshop
summary

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