This document provides an overview of blockchain technology and its potential applications. In 3 sentences:
Blockchain offers a new way to build trust and integrity into a financial system by creating a distributed, tamper-proof database where all participants validate transactions and reach consensus, thereby making the records immutable; while originally developed for cryptocurrencies like Bitcoin, the core concept of blockchain has broader applications and can be used to securely record and share all types of data between parties; major banks and organizations now see the potential for blockchain to transform industries by reducing costs, improving transparency, and enabling novel applications.
3. 2008
BofA buys struggling CountrywideJan 11
Fed forces sale of Bear StearnsMar 16
Lehman Brothers files for bankruptcySep 15
Fed bails out AIG for $85BSep 16
Washington Mutual failsSep 25
Market crashes; system almost collapsesSep 29
Gov’t authorizes $700B for bank bailoutOct 3
4. A B
We have been solving for the wrong problem
instead of solving for trust
C
5. BA C
we should have been solving for integrity
We have been solving for the wrong problem
6. BA
maybe we don’t need trust
We have been solving for the wrong problem
7. “The root problem with conventional
currency is all the trust that’s required to
make it work…the history of fiat currencies
is full of breaches of that trust.”
— Satoshi Nakamoto (creator of Bitcoin)
14. A purely peer-to-peer version of electronic
cash would allow online payments to be sent
directly from one party to another without
going through a financial institution.
15. A
A
A
B
B
A
A
C
B
Let’s combine the best of peer-to-peer…
Peer to Peer
No fees
Resilient
No single point of failure
Distributed power
Freedom to innovate
No large attack target
16. A
A
A
C
And the best of centralization…
C
A
A
A
B
B
B
Central Counterparty
Increased reliability
Reduced reconciliation
Single connection
Universal system of record
Reduced complexity
Transaction safety
17. A
To create the best of both worlds…
A
A
C
C
A
A
A
B
B
B
Central Counterparty
A
A
B
B
A
A
C
B
Peer to Peer
18. A
B B A
C
A
A blockchain built on integrity
Blockchain Solution
C
19. A B
Alice wants to send money to Bob.
How does a blockchain work?
20. The transaction is posted to a block along
with other transactions.
A B C D E F
G H
M N
I J
O P
K L
Q R
21. The block is sent to all validators in the network
A B C D E F
G H
M N
I J
O P
K L
Q R
Node A
Node B
Node C
Node D
Node E
22. The network approves the valid transactions.
A B
N
C D E F
G H
M
I J
O P
K L
Q R
Node A
Node B
Node C
Node D
Node E
23. The block is added to the blockchain
A B
Block 432568
+ 10 Transactions
Block 432567
117 Transactions
Block 432566
24. Block 432568
+ 10 Transactions
Block 432567
117 Transactions
Block 432566
As the chain builds,
the transaction
becomes immutable.
25. Block 432568
+ 10 Transactions
Block 432567
117 Transactions
Block 432566
Block 432569
112 Transactions
As the chain builds,
the transaction
becomes immutable.
26. Block 432568
+ 10 Transactions
Block 432569
112 Transactions
Block 432570
38 Transactions
As the chain builds,
the transaction
becomes immutable.
27. Block 432568
Block 432569
112 Transactions
Block 432570
38 Transactions
Block 432571
96 Transactions
As the chain builds,
the transaction
becomes immutable.
28. Blockchain is…
..a technical tour-de-force
- Bill Gates
…a once in a generation opportunity
- PriceWaterhouseCoopers
…the first native digital medium for value,
just as the internet was the first native
digital medium for information
- Harvard Business Review