Integrated Workshop

Executive MBA
Integrated Workshop Submission: Oct 2019

Student Name: Nidhi Kadam Enrolment Number: 161300912036

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Blockchain – Past, Present & Future

Introduction............................................................................................................................4
Blockchain........................................................................................................................4
Working..............................................................................................................................5
Unique Qualities.........................................................................................................................6
Decentralized..........................................................................................................................6
Cryptographic.........................................................................................................................6
Immutable...............................................................................................................................6
Transparent.............................................................................................................................6
Free, Safe and Automated......................................................................................................6
Bitcoin....................................................................................................................................7
Secure.....................................................................................................................................7
Private.....................................................................................................................................7
Efficient..................................................................................................................................7
Accurate..................................................................................................................................7
Role in our lives and jobs...........................................................................................................9
Electronic transfer gateways and auction houses...................................................................9
Middle platforms like Uber and AirBnB....................................................................9
Television channel subscriptions................................................................................9
Direct paying Royalties..................................................................................................9
e-Commerce & reviews.................................................................................................9
Healthcare..........................................................................................................................9
Impact on Banks, Accounting firms & the Financial companies.............................................10
Faster, round the clock Banking...........................................................................................10
Cryptocurrency.....................................................................................................................11
Stock Exchange, Loan, Insurance.........................................................................................11
Second era of the internet.........................................................................................................12

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..................................................................................................................................................13
A bubble or a revolution?.........................................................................................................14

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Introduction
The Blockchain is hailed as the second internet revolution. Since its infancy
stage, it is taking the world by storm as banks, accounting firms and the financial
companies are taking it seriously too. Blockchain is not just another exaggerated
up bubble, rather it is the future for real. Let’s have a look at what it is, how it is
relevant and what’s its role in our lives and jobs?

Blockchain

The blockchain is an undeniably ingenious invention – the brainchild of a

person or group of people known by the pseudonym, Satoshi Nakamoto. His goal
was to invent something; many people failed to create before digital cash. The
blockchain is an incorruptible, distributed, decentralized, public ledger of
economic transactions that can be programmed to record not just financial
transactions but virtually everything of value. It is the record-keeping technology
behind bitcoin.

“Announcing the first release of Bitcoin, a new electronic cash system that
uses a peer-to-peer network to prevent double-spending. It’s completely
decentralized with no server or central authority.”
– Satoshi Nakamoto

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Working

The blockchain is a linked list which contains data and a hash pointer which
points to its previous block, hence creating the chain. A hash pointer is like a
pointer, but instead of just containing the address of the previous block it also
contains the hash of the data inside the previous block.

One party to a transaction initiates the process by creating a block. This block
is verified by thousands, perhaps millions of computers distributed around the
net. The verified block is added to a chain, which is stored across the net,
creating not just a unique record, but a unique record with a unique history.

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Unique Qualities

Here are the selling points of blockchain for businesses on the market today
in more detail, as the reasons that make blockchains so amazingly reliable,
trailblazing and admirable –
Decentralized

The blockchain network has no central authority - it is the very definition

of a democratized system. It is a time-stamped series of immutable record of
data that is managed by cluster of computers not owned by any single entity. It is
not owned by a single entity; hence it is called decentralized. Blockchain does
not store any of its information in a central location. Instead, the blockchain is
copied and spread across a network of computers. Whenever a new block is
added to the blockchain, every computer on the network updates its blockchain
to reflect the change. By spreading that information across a network, rather
than storing it in one central database, blockchain becomes more difficult to
tamper with. If a copy of the blockchain fell into the hands of a hacker, only a
single copy of the information, rather than the entire network, would be
compromised.
Cryptographic

Each of these blocks of data are secured and bound to each other using
cryptographic principles called a chain. The data is cryptographically stored
inside a blockchain.

Immutable

The blockchain is immutable, so no one can tamper with the data that is
inside the blockchain. Falsifying a single record would mean falsifying the entire
chain in millions of instances. That is virtually impossible.

Transparent

The blockchain is transparent so one can track the data if they want to.
Since it is a shared and immutable ledger, the information in it is open for
anyone and everyone to see. Hence, anything that is built on the blockchain is by
its very nature transparent and everyone involved is accountable for their
actions. Even though personal information on the blockchain is kept private, the
technology itself is almost always open source. That means that users on the
blockchain network can modify the code as they see fit, so long as they have
most of the network’s computational power backing them. Keeping data on the
blockchain open source also makes tampering with data that much more difficult.
With millions of computers on the blockchain network at any given time, for
example, it is unlikely that anyone could make a change without being noticed.

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Free, Safe and Automated

A blockchain carries no transaction cost. (An infrastructure cost yes, but no

transaction cost.) The blockchain is a simple yet ingenious way of passing
information from A to B in a fully automated and safe manner. Typically,
consumers pay a bank to verify a transaction, a notary to sign a document, or a
minister to perform a marriage. Blockchain eliminates the need for third-party
verification and, with it, their associated costs. Business owners incur a small fee
whenever they accept payments using credit cards, for example, because banks
must process those transactions. Bitcoin, on the other hand, does not have a
central authority and has virtually no transaction fees.

Bitcoin

Bitcoin uses this model for monetary transactions. Not only can the blockchain
transfer and store money, but it can also replace all processes and business
models which rely on charging a small fee for any transaction between two
parties.
Secure

Once a transaction is recorded, its authenticity must be verified by the

blockchain network. Thousands or even millions of computers on the blockchain
rush to confirm that the details of the purchase are correct. After a computer has
validated the transaction, it is added to the blockchain in the form of a block.
Each block on the blockchain contains its own unique hash, along with the unique
hash of the block before it. When the information on a block is edited in any way,
that block’s hash code changes — however, the hash code on the block after it
would not. This discrepancy makes it extremely difficult for information on the
blockchain to be changed without notice.

Private

Many blockchain networks operate as public databases, meaning that anyone

with an internet connection can view a list of the network’s transaction history.
Although users can access details about transactions, they cannot access
identifying information about the users making those transactions. It is a
common misperception that blockchain networks like bitcoin are anonymous,
when in fact they are only confidential. That is, when a user makes public
transactions, their unique code called a public key, is recorded on the blockchain,
rather than their personal information. Although a person’s identity is still linked
to their blockchain address, this prevents hackers from obtaining a user’s
personal information, as can occur when a bank is hacked.

Efficient

Transactions placed through a central authority can take up to a few days to

settle. If you attempt to deposit a check on Friday evening, for example, you may

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not actually see funds in your account until Monday morning. Whereas financial
institutions operate during business hours, five days a week, blockchain is
working 24 hours a day, seven days a week. Transactions can be completed in
about ten minutes and can be considered secure after just a few hours. This is
particularly useful for cross-border trades, which usually take much longer
because of time-zone issues and the fact that all parties must confirm payment
processing.
Accurate

Transactions on the blockchain network are approved by a network of

thousands or millions of computers. This removes almost all human involvement
in the verification process, resulting in less human error and a more accurate
record of information. Even if a computer on the network were to make a
computational mistake, the error would only be made to one copy of the
blockchain. In order for that error to spread to the rest of the blockchain, it would
need to be made by at least 51% of the network’s computers — a near
impossibility.

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Role in our lives and jobs

By allowing digital information to be distributed but not copied, blockchain

technology created the backbone of a new type of internet. Originally devised for
the digital currency, Bitcoin, (Buy Bitcoin) the tech community has now found
other potential uses for the technology.

Electronic transfer gateways and auction houses

Using blockchain technology the transaction is free. Monetary gateway

channels used for transactions will cease to exist. So will auction houses and any
other business entity based on the market-maker principle.

Middle platforms like Uber and AirBnB

Recent entrants like Uber and AirBnB are threatened by blockchain

technology. A consumer just needs to encode the transactional information for a
car ride or an overnight stay, to get a perfectly safe way that disrupts the
business model of the companies which have just begun to challenge the
traditional economy. It is not just cutting out the fee-processing middleman, it is
also eliminating the need for the match-making platform.

Television channel subscriptions

Because blockchain transactions are free, channels can charge a

minuscule amount, say 1/100 of a cent for a video view or article read. Why
should a consumer pay The Economist or National Geographic an annual
subscription fee if they can pay per article on Facebook or WhatsApp. Blockchain
transactions carry no transaction cost. A channel can charge for anything in any
amount without worrying about third parties cutting into their profits.

Direct paying Royalties

Blockchain may make selling recorded music profitable again for artists by
cutting out music companies and distributors like Apple or Spotify. The music a
listener buys could even be encoded in the blockchain itself, making it a cloud
archive for any song purchased. Because the amounts charged can be so small,
subscription and streaming services will become irrelevant.

e-Commerce & reviews

eBooks could be fitted with blockchain code. Instead of Amazon taking a

cut, and the credit card company earning money on the sale, the books would
circulate in encoded form and a successful blockchain transaction would transfer
money to the author and unlock the book. Transfer all the money to the author,
not just meagre royalties. A reader could do this on a book review website like
Goodreads. The marketplace Amazon is then unnecessary. Successful iterations
could even include reviews and other third-party information about the book.

Healthcare

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Healthcare has emerged, in earnest, as one of the most exciting areas.

Companies are working to unclog bottlenecks in the system, from clinical trial
data to personal health records.

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Impact on Banks, Accounting firms & the Financial companies

Much of the focus around blockchain has been on its potential to

fundamentally change the financial services industry, by –
 Dropping the cost and complexity of financial transactions
 Making the world’s unbanked a viable new market
 Improving transparency and regulation.

It’s already having a big impact on that sector. However, blockchain can go
far beyond financial services and transform business, government and society in
perhaps even more profound ways.
Currently, finance offers the strongest use cases for the technology.
International remittances, for instance. The World Bank estimates that over $430
billion US in money transfers were sent in 2015. And now there is a high demand
for blockchain developers.

The blockchain potentially cuts out the middleman for these types of
transactions. Personal computing became accessible to the general public with
the invention of the Graphical User Interface (GUI), which took the form of a
“desktop”. Similarly, the most common GUI devised for the blockchain are the
so-called “wallet” applications, which people use to buy things with Bitcoin, and
store it along with other cryptocurrencies.

Online transactions are closely connected to the processes of identity

verification. It is easy to imagine that wallet apps will transform in the coming
years to include other types of identity management.

Faster, round the clock Banking

Perhaps no industry stands to benefit from integrating blockchain into its

business operations more than banking. Financial institutions only operate during
business hours, five days a week. That means if one tries to deposit a check on
Friday at 6 p.m., must wait until Monday morning to see that money hit the
account. Even if one makes the deposit during business hours, the transaction
can still take 1-3 days to verify due to the sheer volume of transactions that
banks need to settle. Blockchain, on the other hand, never sleeps.

By integrating blockchain into banks, consumers can see their transactions

processed in as little as 10 minutes, basically the time it takes to add a block to
the blockchain, regardless of the time or day of the week. With blockchain, banks
also can exchange funds between institutions more quickly and securely. In the
stock trading business, for example, the settlement and clearing process can

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take up to three days (or longer, if banks are trading internationally), meaning
that the money and shares are frozen for that time.

Given the size of the sums involved, even the few days that the money is
in transit can carry significant costs and risks for banks. Santander, a European
bank, put the potential savings at $20 billion a year. Capgemini, a French
consultancy, estimates that consumers could save up to $16 billion in banking
and insurance fees each year through blockchain-based applications.

Cryptocurrency

Few people know, but cryptocurrencies emerged as a side product of

another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first
and still most important cryptocurrency, never intended to invent a currency. In
his announcement of Bitcoin in late 2008, Satoshi said he developed “A Peer-to-
Peer Electronic Cash System.”

Cryptocurrencies can be sent directly between two parties via the use of
private and public keys. These transfers can be done with minimal processing
fees, allowing users to avoid the steep fees charged by traditional financial
institutions.

Stock Exchange, Loan, Insurance

In the financial world the applications are more obvious and the
revolutionary changes more imminent. Blockchains will change the way stock
exchanges work, loans are bundled, and insurances contracted. They will
eliminate bank accounts and practically all services offered by banks.

Almost every financial institution will go bankrupt or be forced to change

fundamentally, once the advantages of a safe ledger without transaction fees is
widely understood and implemented. After all, the financial system is built on
taking a small cut of your money for the privilege of facilitating a transaction.

Bankers will become mere advisers, not gatekeepers of money.

Stockbrokers will no longer be able to earn commissions and the buy/sell spread
will disappear.

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Second era of the internet

'Blockchain represents the second era of the internet.' Twenty-three years

ago, we thought the internet was the most extravagant thing to ever hit our
homes, allowing us a portal into the unknown.

For decades, we’ve had the internet of information. Now we’re getting the
internet of value. This will enable profound changes on how we live. We can fix
the deep structures and architecture of government and how we create public
value, and maybe even build a second era of democracy based on accountability
to citizens, transparency and a culture of public deliberation.

More broadly, it gives those of us who want a better world another kick at
the can to rewrite the economic power grid and the old order of things.

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A bubble or a revolution?

Blockchain technology is still at its early stage, with a lot of undiscovered

potentials. VCs, corporate VCs, and corporations are investing in blockchain
initiatives looking to transform traditional use cases. According to Gartner, the
business value-add of blockchain will grow to slightly more than $176 billion by
2025, and then it will exceed $3.1 trillion by 2030.

Blockchain was first introduced in 2009 with its first application, Bitcoin. In
its simplest form, Blockchain is a decentralized digital database, in which
untrusted parties can share a digital history and reach consensus without an
intermediary. Blockchain 2.0, introduced by ethereum with smart contracts,
allowed its utilization to grow from cryptocurrencies to inter-organizational use
cases. This enabled the exchange of value in a truly peer-to-peer fashion, without
the involvement of middlemen, and the potential for a programmable economy.
Compared to traditional apps, decentralized apps (dApps) built on blockchain
have a different infrastructure. Blockchain is used as the database, and smart
contracts replace APIs.

Currently, the most popular blockchain solutions for Proof-of-Concepts

(POCs) are ethereum, Hyperledger Fabric and R3’s Corda.

 By 2020, permissioned blockchains will start to be anchored to

public blockchains using sidechains.

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 By 2022, to satisfy the scalability required to integrate both private

and public blockchains, it is important for the consensus algorithms,
mainly used in public blockchain, with more efficient Sybil
resistance (ex: POW, DPOS, POS, etc.) and consensus protocol for
data structures (ex: Nakamoto, Avalanche, Algorand, etc.). Second
layer solutions will become more mature so that not all the nodes
need to process the transactions but through “off-chain” protocols
(ex: Lightning Network, Plasma, State Channels, etc.) or side-chain
solutions (i.e. Ethereum’s “child chains”, Polkadot, etc.).

 By 2023, permissioned blockchain will be able to ensure that

entities running the nodes are trustworthy, fair and reliable without
utilizing cryptocurrency as an incentive. Data confidentiality will
allow enterprises to preserve privacy while integrating while sharing
information with competing companies (i.e. Zk-SNARK).

 As dependable smart contracts can securely manage transactions

among businesses, transaction risk assurance services will begin to
emerge to help assess risk scores for transactions and keep
members in consortium legally accountable.

 By 2028, scalable enterprise-grade blockchain will emerge and fully

integrate both public and private blockchains on an infrastructure
level.

Today, blockchain technology allows us to transfer ownership of money,

contracts, patents, and assets. While these transactions can happen digitally on
a technical level without intermediaries, society will still require central
authorities to play the role of guarantors.

Blockchain is certainly not a bubble but a revolution. It is surely in its early

stage but it will soon change the world as Internet did, in past.

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