Blockchain

Adrian Zaragoza
Present Day
● Contracts, transactions, and the records have not kept up with the digital
transformation.
● Transactions end up being costly; middlemen are required to perform some
transactions (contracts, transfer of ownerships, etc.)
● Blockchain is the answer to this problem
○ Open, distributed ledger that can record transactions between two parties
■ Efficient, verified, and permanent
Blockchain Principles
● Distributed Database
○ Each user (node) on the blockchain has access to the database and its history. The information is
decentralized.
● Peer to Peer Transmission
○ Communication occurs between peers. Each node stores and sends information to all other nodes.
● Transparency with Pseudonymity
○ Transactions and its value are visible to everyone in the blockchain system
○ 30-plus character alphanumeric address for each user (node)
○ Transactions occur between addresses
Blockchain Principles
● Irreversibility of Records
○ Records cannot be altered; linked to every transaction record that came before them
○ Many computational algorithms and approaches ensures records to be permanent, chronologically
ordered, and available to everyone in the network
● Computational Logic
○ Blockchain transactions can be programmed; users can set up algorithms and rules to automatically
trigger transactions between nodes
■ Inventory in Transit: The software can track the status of the inventory and when it lands in the
customer, the payment is automatically sent to the supplier
Blockchain Adoption
● Two dimensions affect how foundational technology evolves
○ Novelty: degree to which an application is new to the world
■ Higher in novelty will require more effort to ensure users understand what problems the new
technology solves
○ Complexity: the number and diversity of parties that need to work together to produce value with the
technology.
■ “network effect”
● Adoption of foundational technologies happens in four phases
○ Single use
○ Localization
○ Substitution
○ Transformation
Four Phases of Adoption
● Single Use: Applications that create better, less costly, highly focused solutions
○ Examples: E-mail as an alternative to phone calls, faxes, snail mail
○ Bitcoin: alternative global payment method
● Localization: Applications that are relatively high in novelty but need only a limited
number of users to create immediate value
○ Easy to promote their adoption
○ Local private blockchain networks
● Substitution
○ Applications that build on existing single-use and localized applications, but are high in coordination
needs because they involve broader and increasingly public uses
● Transformation: Applications that involve coordinating the activity of many actors
and gaining institutional agreement on standards and processes
○ Requires major social, legal, and political change
Implementing Blockchain in Organizations
● Start with single use applications. Easier to implement and minimizes risk
○ Add bitcoin as a payment option
● Localized applications can be the next step for organizations
○ Private blockchain networks
■ Financial service companies reduce transaction costs with private blockchain networks
○ Tracking items through complex supply chains
● Careful planning for substitute applications. Focus on cost effective solutions that
don’t require users to change their behaviors.
○ First Data’s gift card blockchain software
● Transformative applications will need more time; pending
Areas Benefiting from Blockchain software
● Banks: Many banks have invested funds for research and development in blockchain
software
● Real Estate
● Healthcare
● Supply Chain Management
● Currency
Cryptocurrency
Cryptocurrencies
● Irreversible: After a confirmation, a transaction can’t be reversed.
● Pseudonymous: Transactions and accounts are not connected to real world identities
● Fast and Global: transactions are completed instantly and confirmed within a couple
of minutes
● Secure: funds are locked in a public key cryptography system. Only the owner of the
key is able to send cryptocurrency.
○ Cryptography and algorithms makes it secure
● Permissionless: Anyone can use cryptocurrency
● Two of the major cryptocurrencies are Bitcoin and Ethereum
Smart Contracts
● Smart contracts help you
exchange money,
property, shares, or
anything of value in a
transparent, conflict-free
way while avoiding the
services of a middleman
● Contracts written in code
REX-Global Real Estate
● Uses Rex Tokens for
transactions
● Utilizes smart contracts to lower
fees
Question
● Would your organization (current employer) benefit from Blockchain? If so, how?
Question
● Which of the following is NOT a blockchain principle?
○ A. Transparency
○ B. Computational Logic
○ C. Centralized Database
○ D. Irreversibility
Question
● Which of the four phases of adoption is low in complexity and low in novelty?
○ A. Substitution
○ B. Single Use
○ C. Transformation
○ D. Localization
Question
● What can you exchange with smart contracts?
○ A. Money
○ B. Shares
○ C. Property
○ D. All of the Above