BLOCKCHAIN IN THE CYBER WORLD

What is a Blockchain

1. A blockchain is a digitized, decentralized, public ledger of

all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most
recent transactions) are recorded and added to it in chronological order, it allows market
participants to keep track of digital currency transactions without central recordkeeping.
Each node (a computer connected to the network) gets a copy of the blockchain, which
is downloaded automatically.

2. Originally developed as the accounting method for the virtual currency Bitcoin,
blockchains – which use what's known as distributed ledger technology (DLT) – are
appearing in a variety of commercial applications today. Currently, the technology is
primarily used to verify transactions, within digital currencies though it is possible to
digitize, code and insert practically any document into the blockchain. Doing so creates
an indelible record that cannot be changed; furthermore, the record’s authenticity can
be verified by the entire community using the blockchain instead of a single centralized
authority.

Blockchains and Bitcoin

3. The blockchain is perhaps the main technological innovation of Bitcoin. Bitcoin

isn’t regulated by a central authority. Instead, its users dictate and validate transactions
when one person pays another for goods or services, eliminating the need for a third
party to process or store payments. The completed transaction is publicly recorded into
blocks and eventually into the blockchain, where it’s verified and relayed by other
Bitcoin users. On average, a new block is appended to the blockchain every 10
minutes, through mining.

4. Based on the Bitcoin protocol, the blockchain database is shared by all nodes
participating in a system. Upon joining the network, each connected computer receives
a copy of the blockchain, which has records, and stands as proof of, every transaction
ever executed. It can thus provide insight about facts like how much value belonged a
particular address at any point in the past. Blockchain.info provides access to the entire
Bitcoin blockchain.
Blockchains and Tech Companies

5. Attracted by the idea of removing the middleman and moving towards

democratization and decentralization, tech startups are adopting blockchain technology
with the goal of disrupting a variety of industries.

6. Among the startups leveraging blockchain technology for IOT devices is 21 Inc.
The Silicon Valley-based startup received a total of $116 million in funding in 2015.

According to the firm, the funding will be used to embed Bitcoin mining chips into
connected IOT devices and cell phones.

7. BTC Jam, a P2P lending platform headquartered in San Francisco, specializes

in providing Bitcoin-based loans. Over the last year, the company has lent more than
$15 million.

8. Storj is just one company that is currently beta-testing the concept of developing
cloud storage based on a blockchain-powered network, with the goal of improving
security while decreasing users' dependency on a single storage provider's centralized
system. The company even offers users the opportunity to rent out storage capacity
they do not need, similar to the way that property owners rent out extra rooms on
Airbnb.

9. Proof of Existence one of the first non-financial companies to utilize blockchains,

is a platform for executing contracts. It uses DLT to store encrypted information, thus
enabling a transaction that cannot be replicated to be linked to a unique document.

10. Even established firms are interested. Microsoft Corporation (MSFT) has also
expressed interest in blockchain technology, having recently formed a partnership with
blockchain firm ConsenSys. In December 2015, Microsoft and ConsenSys announced
Ethereum Blockchain as a Service (EBaaS) on Azure — Microsoft’s cloud computing
platform — to provide a single-click, cloud-based environment to clients and developers.
In June 2016, the two companies started developing an open source, blockchain-based
identity system for people, products, apps and services.

Advantages of Blockchains

11. Efficiencies resulting from DLT can add up to some serious cost savings. DLT
systems make it possible for businesses and banks to streamline internal operations,
dramatically reducing the expense, mistakes, and delays caused by traditional methods
for reconciliation of records.
12. The widespread adoption of DLT will bring enormous cost savings in three areas,
advocates say:

(a) Electronic ledgers are much cheaper to maintain than traditional

accounting systems; the employee headcount in back offices can be greatly
reduced.

(b) Nearly fully automated DLT systems result in far fewer errors and the
elimination of repetitive confirmation steps.

(c) Minimizing the processing delay also means less capital being held
against the risks of pending transactions.

13. In addition, some smaller number of millions will be saved by shrinking the
amount of capital that broker/dealers are required to put up to back unsettled,
outstanding trades. Greater transparency and ease of auditing should lead to savings in
anti-money laundering regulatory compliance costs, too.

14. Blockchain's removal of almost all human involvement in processing is

particularly beneficial in cross-border trades, which usually take much longer because of
time-zone issues and the fact that all parties must confirm payment processing.
Blockchain systems can set up smart contracts or payments triggered when certain
conditions are met. The blockchain cotton transaction mentioned above, for example,
used a smart contract that automatically made partial payments when the cotton
shipment reached specific geographic milestones.

The Bottom Line

15. Given the incredible opportunity for decentralization, blockchain technology offers
the ability to create businesses and operations that are both flexible and secure.
Whether companies will succeed in deploying blockchain technology to create products
and services consumers will trust and adopt remains to be seen. Nevertheless, this is
definitely a space investors should watch. The demand for blockchain-based services is
on the rise, and the technology is maturing and advancing at a rapid pace.

16. The potential applications for blockchain technology are almost without limit. At
the moment, several of these applications are still either in the development stage or
in beta testing. With more money being poured into blockchain-based startups,
consumers should not be surprised to see DLT services and products becoming more
mainstream in the near future.
REFERENCES

1. https://www.investopedia.com/tech/how-does-blockchain-work/
Blockchain can actually be thought of as the combination of several different
existing technologies. While these technologies themselves aren't new, it is the ways in
which they are combined and applied which brought about blockchain. According to
CoinDesk, these three component technologies are:

(a) Private key cryptography.

(b) A distributed network that includes a shared ledger.

(c) Means of accounting for the transactions and records related to the
network.

2. https://www.finextra.com/newsarticle/28955/blockchain-tech-could-save-
cash-equities-market-6bn-a-year---goldman-sachs The use of blockchain
technology for clearing and settlement in the cash equities market could save banks
around the world $6 billion a year, mainly through lower headcounts and back office IT
costs, according to a Goldman Sachs report.

3. https://www.livemint.com/Technology/HYeJAIqv6LEsbXtAepob4N/Using-
blockchain-technology-to-build-Indias-economy.html If the government is
serious about building India’s economy and bringing prosperity to all its citizens, it
needs to fix the remittance problem. It can do so by adopting blockchain technology and
digital assets for faster, low-cost, efficient remittances.

4. https://www.deccanchronicle.com/technology/in-other-news/070818/5-
blockchain-startups-disrupting-various-sectors-in-india.html Cryptocurrency and
Blockchain — the buzz words in the economy globally, are unique technologies
disrupting the various sectors. Banks, financial institutions and many others are
adopting blockchain technology faster than anticipated. Globally, this technology is
widely accepted but in India it is still at nascent stage. Blockchain startups have started
picking momentum in India and addressing various issues with the help of blockchain
technology. Here is a compiled a list of some interesting startups in this space in India.