Blockchain Technology Review

What is blockchain?

A blockchain is an incorruptible distributed ledger that is…

1. Hosted by multiple parties
2. Secured by crypto algorithms
3. Append-only/immutable and thus verifiable in data storage

How does it work?

Categorization: Public vs. Private vs. Hybrid Blockchains

• Public: It is permission-less to join the network.
• Private: The permission to join is centrally controlled.
• Hybrid: Multi-parties control the permission to join.

Do you need a blockchain?

Architecture

Hardware

Basic Utils

Basic Utils

Ledger

Ledger

Concensus

Concensus

Smart Contract

Smart Contract

APIs

APIs

dApps

dApps

Dev

Ops

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1. Hardware: computer resources = computing + networking + storage

2. Basic Utils: P2P network + crypto + data storage w/ db or filesystem

3. Ledger: chain of data blocks + domain-specific data models

4. Consensus: write first consensus later (PoW/PoS/DPoS) / consensus first write later (PBFT)

5. Smart Contract: limited program running on the blockchain

6. API: RPC + SDK

7. dApps: 1) transfer of values 2) data certification 3) data access control

8. DevOps: deployment, operations, metrics, logs

Industries

1. Financial Services

   • crypto exchange: binance, coinbase, etc.
   • international payments: ripple, stellar, etc.
   • Know Your Customer (KYC) / anti-money laundry (AML): civic

2. Health care

   • sharing data across providers, insurers, vendors, auditors, etc

3. Public sector

   • asset tokenization
   • transparent voting in public election

4. Energy and resources

   • trading
   • sharing data across suppliers, shippers, contractors, and authorities

5. Technology, media, and telecom

   • DRM and incentivizing content creator
   • securing operations and data storage of IoT devices

6. Consumer and industrial products

   • loyalty points programs in traveling
   • document signing
   • supply-chain management

Case Study: Ripple for Cross-border Payments

• Partnering with 200+ banks
• 47 trillion dollar cross-border payments market
• Huge hassles and costs. A large number of businesses cannot afford the high transaction fee of traditional cross-border payments.
  • Without ripple, it may take days to fulfill the transaction in some African countries
    1. Quote the exchange rate
    2. Find the path in those hops
    3. Lock the quote
    4. Validate, KYC, AML, etc…
  • With ripple, users in country A buys ripple tokens, pay with ripple, and then users in another country just withdraw. It just takes a few minutes and during which the token price will not fluctuate much.

Killer Apps

• Graphite Docs: Similar to Google Docs but everything is encrypted when data leaves your computer.
• Textile Photos: Phone App like a private Instagram. Photos are encrypted and stored on IPFS, a decentralized storage network running by the community.
• Augur: Web App where people can bet on predictions on many things.
• Blockstack: Tools for developers to build DApps.
• D.Tube: Video streaming service that is add-free but content creators are rewarded by tokens. Similarly ThetaNetwork for e-sports videos.
• OpenBazaar: Online marketplace with no platform fees, powered by cryptocurrency.

Challenges

• Network Effects. It is hard to convince users leaving existing well-established centralized services.
• Privacy vs. Free Services. Would people like to buy services with crypto? Or would people like to sacrifice privacy for free services?
• Efficiency in decentralized systems. Complex and decentralizes systems vs. simple and centralized systems.