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Know more about Blockchain: Overview,

Technology, Application Areas and Use


Cases
“Blockchain technology continues to redefine not only how the exchange sector operates, but
the global financial economy as a whole.” – Bob Greifeld, Chief Executive of NASDAQ

“In financial markets there’s always a mechanism to correct an attack. In a blockchain there
is no mechanism to correct it — people have to accept it.”- Robert Sams, founder and chief
executive of London-based Clearmatics.

“Blockchain technology has the ability to optimize the global infrastructure to deal with
global issues in this space much more efficiently than current systems.” – Marwan Forzley,
Founder of Align Commerce

Everyone is talking about blockchain, the new technology in the FinTech Industry. The
concept of blockchain has energized the financial services industry globally. The concept has
already brought a disruption in the financial industry. LTP brings to you the overview,
technology, application areas and use cases of blockchain.

What is blockchain?

Source: Dupress

A blockchain is a public ledger of all bitcoin transactions that have ever been executed. A
block is the “current” part of a blockchain which records some or all of the recent
transactions, and once completed, goes into the blockchain as permanent database. Each time
a block gets completed, a new block is generated. Blocks are linked to each other (like a
chain) in proper linear, chronological order with every block containing a hash of the
previous block. To use conventional banking as an analogy, the blockchain is like a full
history of banking transactions. Bitcoin transactions are entered chronologically in a
blockchain just the way bank transactions are. Meanwhile, blocks, are like individual bank
statements. The full copy of the blockchain has records of every bitcoin transaction ever
executed. It can thus provide insight about facts like how much value belonged to a particular
address at any point in the past. Some developers have begun looking at the creation of other
different blockchains as they do not believe on depending on a single blockchain. Parallel
blockchains and sidechains allow for tradeoffs and improved scalability using alternative,
completely independent blockchains, thus, allowing for more innovation.

To give an example of the blockchain concept, we found out about a product called Gyft, an
online platform for gift cards where you can buy, sell and redeem gift cards. It is a
partnership between 44-year-old merchant acquirer/processor/FinTech firm First Data and
blockchain infrastructure provider Chain to offer gift cards for SMBs using blockchain. The
product will be rolled out soon and will become a solid example of blockchain-based
innovation that has nothing to do with bitcoin. Why does it make sense? A majority of the
SMBs don’t have gift card programs and therefore, POS installed at SMBs don’t accept them.
It is costly to offer a gift card program and difficult to see the immediate benefits. It’s
basically postponed gratification for a retailer, but large retailers understand it very well and
have gift cards acceptance. Blockchain allows Gyft to offer a great gift card solution to SMB
customers.

Benefits of blockchain technology as specified byForbesare:

1. As a public ledger system, blockchain records and validate each and every transaction
made, which makes it secure and reliable.
2. All the transactions made are authorized by miners, which makes the transactions
immutable and prevent it from the threat of hacking.
3. Blockchain technology discards the need of any third-party or central authority for
peer-to-peer transactions.
4. Decentralization of the technology.

Banks and other financial institutions have also been active in investing (time and/or money)
in this space. The following are some of the banks and other FIs who have shown intent on
blockchain. The below timeline depicts the announcements by different FIs and their partners
(if any) along with the potential use cases they are exploring.

Deutsche Bank:

The bank has said that it has been exploring various use cases of blockchain in areas like
payments and settlement of fiat currencies, asset registries, enforcement and clearing
derivative contracts, regulatory reporting, KYC, AML registries, improving post-trade
processing services, etc. It has been experimenting on these technologies at their innovation
labs in London, Berlin and Silicon Valley (July 2015).

NASDAQ:

The stock exchange firm initially revealed (May 2015) that they were planning to use
blockchain as an enterprise-wide technology to enhance their capabilities on the NASDAQ
Private Market Platform. The NASDAQ Private Market Platform is a new initiative launched
in January 2014, to enable pre-IPO trading among private companies. It has also said that
they would leverage the Open Assets Protocol, a colored coin concept, to build their private
exchange platform. Later, in June 2015, it announced a partnership with Chain, a blockchain
infrastructure provider for FIs and enterprises.

DBS Bank:

The bank organized a blockchain hackathon in Singapore in partnership with Coin Republic,
a Singapore-based bitcoin company & Startupbootcamp FinTech. (May 2015)

BitX, Blockstrap and Colu provided the APIs for the two-day hackathon series. The winners
were Omnichain (first place, an investment platform for emerging markets), Nubank (second
place, provides banking for the unbanked) and BlockIntel (third place, a transaction security
platform).

EBA:

Euro Banking Association (EBA) has released a report (in May 2015) talking about the
implications of crypto-technologies from the perspective of transaction banking and payment
professionals in the coming one to three years. It has noted that these technologies could be
leveraged by banks to reduce governance and audit costs, to provide better products and
faster time to market.

US Federal Reserve:

Federal Reserve is reportedly working with IBM on developing a new digital payment system
tied to blockchain. (Mar 2015)

SCB:

In a post on LinkedIn, Anju Patwardhan, Chief Innovation Officer of Standard Chartered


Bank, said that blockchain could be leveraged to cut costs and improve the transparency of
financial transactions. (July 2015)

There have also been reports that derivatives companies CME Group, Deutsche Boerse,
clearing houses DTCC (depository trust & clearing corporation) and EuroCCP are working
on projects around the use of blockchain in areas such as clearing. Also, there has been news
that money transfer service provider Western Union could possibly look into Ripple
technology to understand blockchain.

Below is a brief of banks experimenting with blockchain that we have previously reported:

Fidor Bank:

The bank has partnered with Kraken to provide a digital currency exchange in EU, and with
Bitcoin.de, a P2P BTC trading platform in Germany. It later partnered with Ripple Labs to
provide money transfer services.

LHV Bank:

Reported to have started working on blockchain technology in June 2014. They developed an
app based on colored coins called Cuber Wallet in June 2015. They also have partnerships
with Coinbase & Coinfloor and are experimenting on digital security with blockchain.

CBW Bank, Cross River Bank:

Partnered with Ripple Labs to build risk management system and provide lower cost
remittance services.

Rabobank, ABN Amro, ING Bank: Exploring blockchain for various banking services.
Rabobank has also partnered with Ripple Labs.
Goldman Sachs:

Goldman Sachs participated as a lead investor in bitcoin startup Circle Internet Financial
Ltd.’s $50M funding round. It has also reported extensively on bitcoin and blockchain in their
annual publication Future of Finance.

BBVA Ventures:

Investor in Coinbase. Has also released research report stating interest in blockchain
technology.

Santander:

Claims to have 20-25 use cases for blockchain and has a team called “Crypto 2.0” to research
the use of blockchain in banking.

Westpac:

Westpac had partnered with Ripple to develop a low-cost, cross-border payments platform.
Reinventure, its VC arm, participated in Coinbase’s $75M Series C funding.

UBS:

Has a cryptocurrency lab in London and is experimenting in the areas of payments, trading &
settlement, smart bonds. It is planning to build an enterprise-wide product called “utility
settlement coin” in partnership with Clearmatics. It has also stated that they have 20-25 use
cases of blockchain for finance.

BNY Mellon:

Created own currency called “BK Coins” as a corporate recognition program which can be
redeemed for gifts and other rewards.

Barclays Bank:

The bank has two bitcoin labs in London that are open for various bitcoin and blockchain
entrepreneurs, coders and businesses. It has also partnered with Safello, to develop various
banking services on blockchain. It is also running accelerators to provide blockchain
enthusiasts mentoring and a chance to work with the bank on specific projects (Everledger is
one of the companies that has emerged from Barclays’ accelerator program). Barclays also
claims to have 45 experiments they want to do internally.

CBA: Has partnered with Ripple Labs to implement blockchain ledger system for payment
settlements between its subsidiaries.

USAA Bank: Created a research team to study uses of bitcoin.

ANZ Bank: Partnered with Ripple to explore potential use cases of blockchain.

BNP Paribas: Experimenting at making transactions faster by using blockchain.


Societe Generale: Planning to staff employees with BTC, blockchain and cryptocurrency
expertise.

Citibank:

They have set up three separate systems within Citi that deploy blockchain-based distributed
technologies. They developed an equivalent to bitcoin called “Citicoin,” which is being used
internally to understand the digital currency trading system better.

Public and private blockchain concepts and examples:

Public blockchain: A public blockchain is a platform where anyone on the platform would
be able to read or write to the platform, provided they are able to show proof of work for the
same. There has been a lot of activity in this space as the number of potential users that any
technology in this space could generate is high. Also, a public blockchain is considered to be
a fully decentralized blockchain. Some examples:

 Ethereum, a provider of a decentralized platform and programming language that


helps running smart contracts and allows developers to publish distributed
applications.
 Factom, a provider of records management, records business processes for business
and governments.
 Blockstream, a provider of sidechain technology, focused on extending capabilities of
bitcoin. The company has started experimenting on providing accounting (considered
a function to be done on private blockchain) with the use of public blockchain
technology.

Private blockchain: A private blockchain, on the other hand, allows only the owner to have
the rights on any changes that have to be done. This could be seen as a similar version to the
existing infrastructure wherein the owner (a centralized authority) would have the power to
change the rules, revert transactions, etc. based on the need. This could be a concept with
huge interest from FIs and large companies. It could find use cases to build proprietary
systems and reduce the costs while at the same time, increase their efficiency. Some of the
examples could be:

 Eris Industries aims to be the provider of shared software database using blockchain
technology.
 Blockstack aims to provide financial institutions back office operations, including
clearing & settlement on a private blockchain.
 Multichain, provides an open source distributed database for financial transactions.
 Chain Inc., a provider of blockchain APIs. Chain partnered with Nasdaq OMX Group
Inc., to provide a platform that enables trading private company shares with the
blockchain.

Let’s explore if there is a hybrid blockchain concept (third type). A consortium blockchain
would be a mix of both the public and private. Wherein the ability to read and write could be
extended to a certain number of people/nodes. This could be used by groups of
organization/firms, who get together, work on developing different models by collaborating
with each other. Hence, they could gain a blockchain with restricted access, work on their
solutions and maintain the intellectual property rights within the consortium.
Let’s explore if there is a hybrid blockchain concept\ Blockchain: The new innovation for
financial services

Blockchain has been one of the most awe-inspiring innovations since the Internet came into
existence. Blockchain technology basically allows everyone to hold and make transactions as
strangers but in a completely transparent manner. There is no mediator in between two people
making the transaction, and the entire process becomes easier and cheaper. This concept can
be applied to the entire digital world making any kind of exchange/transactions secure (and
not just bitcoin). This article will take you through numerous such business models and
companies that are beginning to sprout based on blockchain tech.

The blockchain network consists of nodes, i.e., distributed servers. All the nodes can accept
and process the transaction. The nodes on the network share information about the candidate
transaction. As much as the logic/tech part of it sounds confusing, the business models are so
much easier to understand and are really impressive.

What you have already seen is that blockchain distributed ledger is an in-erasable record of
bitcoin transactions. The network of computers around the world running bitcoin software
will take care of the performance and maintenance of the blockchain network. About six
times per hour, a new group of accepted transactions (a block) is created, added to the
blockchain and quickly published to all nodes. This allows bitcoin software to determine
when a particular bitcoin amount has been spent.

It is this feature of Blockchain technology that has grown in its popularity amongst large
banks, developers and entrepreneurs. Santander Bank, the world’s 10th largest bank, has also
been investigating blockchain technology. They have announced that an internal team is
working on applying blockchain technology and distributed ledgers on various use cases in
the bank. Other international banks like Citi and JPMorgan have also been showing interest
in Blockchain technology.

Many startups are building their businesses around blockchain technology. Consequently, VC
firms like KPCB are showing interest in investing in these startups. While startups like
Coinometrics gather data and research on qualitative and quantitative behaviors on
blockchains, there are others like BTCJam who provide bitcoin-based loans. A number of
other startups built around blockchain technology include BlockCypher, BitPay and
BitPagos. Another interesting startup, Chain, helps companies build financial products
around blockchain technology with its bitcoin data API. NASDAQ has chosen Chain to run a
pilot around blockchain technology on the NASDAQ Private Market.

With growing applications of blockchain technology and triggers by VC firms like KPCB
Edge funds, the day is not too far when the blockchain might disrupt the entire FinTech
industry.

What are blockchain use cases and initiatives taken by financial services industry?

The interest of financial institutions on blockchain is quite evident considering that Santander
Bank has identified 20 to 25 use cases for the technology. The bank also estimated that the
usage of blockchain by banks can reduce the infrastructure cost by up to $20 billion a year.
Other banks such as UBS have set up a blockchain research lab in London, Goldman Sachs
has invested in bitcoin startup Circle, and NASDAQ is also experimenting with the
technology.

Blockchain technology allows everyone to hold and make transactions as strangers but in a
completely transparent manner. There is no mediator in between two people making the
transaction, and the entire process becomes easier and cheaper. This concept can be applied
to the entire digital world, making any kind of exchange/transactions secure.

The major focus is on non-financial use cases of blockchain. The non-financial use cases of
blockchain have been hot in the recent past with more than 50+ startups coming up in this
space. Blockchain Capital (formerly known as Crypto Currency Partners) very recently
managed to raise US$7 million towards their second investment fund for bitcoin and
blockchain-related ventures specifically focusing on non-financial use cases.

The current non-financial uses cases developed by startups in the sector mainly focus on asset
servicing, the Internet of Things, identity management and documentary trade. It will be quite
fascinating to see how these use cases are being adopted by governments and the public
sector alike to streamline processes, thereby improving the life of the masses.

Financial and non-financial use cases of blockchain:

It is now a known fact that the use cases of blockchain have been increasing by the day.
There has increasingly been a large number of ways in which real-world assets could be
linked to the blockchain and traded digitally. A proof-of-concept is being run for trading
commodities (like physical bars of gold, silver and diamond) after being authenticated via
blockchain, establishing ownership of real-estate properties, to provide election voting, etc.

Apart from startups, banks also have been actively investing in this decentralized system as
we have shown in a timeline. Various banks have shown interest and started experimenting
with the blockchain.

The below infographic provides a snapshot of companies and the broad applications that they
are providing over blockchain. These include both non-financial and financial/currency-
related (bitcoin and other digital currencies) applications.

Below is a quick description of each of the use cases:

App development: Proof of ownership of modules in app development

Digital content: Proof of ownership for digital content storage and delivery

Ride-sharing: Points-based value transfer for ride-sharing

Digital security trading: Ownership and transfer


Digitization of documents/contracts: Digitization of documents/contracts and proof of
ownership for transfers

Decentralized storage: Decentralized storage using a network of computers on blockchain

Company incorporations: Digitizing company incorporations, transfer of equity/ownership


and governance

Decentralized Internet and computing resources: Decentralized Internet and computing


resources to cover every home and business

Home automation: Platform to link the home network and electrical devices to the cloud

Digital identity: Provides digital identity that protects consumer privacy

Escrow/custodian service: Escrow/custodian service for the gaming industry; loan servicing
and e-commerce

IT portal: A smart contract IT portal executing order fulfillment in


ecommerce/manufacturing

Patient records: Decentralized patient records management

Digitizing assets: Improves anti-counterfeit measures

Reputation management: Helps users engage, share reputation and collect feedback

Prediction platform: Decentralized prediction platform for the share markets, elections, etc.

Enables authenticity of a review: Enables authenticity of a review through trustworthy


endorsements for employee peer reviews

Marketplace for sales and purchases of digital assets: Proof of ownership and a
marketplace for sales and purchases of digital assets

Interest in blockchain has been coming in from every corner of the world with major ones
being banks and technology providers. Banks’ interest in bitcoin blockchain is seeing a huge
uptick with the exploration of potential use cases for the distributed ledger system
(blockchain technology).

LTP Blockchain Momentum 2016:

As we come close to the end of 2015, LTP brings to you the LTP Blockchain Momentum
Infographic. In the middle of 2015, we brought to you the use cases of blockchain in the
financial and the non-financial domain. Now, we have done an intensive study on the
segments in blockchain which are growing exponentially and lagging behind as well.

Here is an infographic on the segments of blockchain.


We have been interviewing several investors and companies across the world to study their
sentiments about blockchain. While creating this infographic, we have considered:

– The opinions of investors

– The companies (startups and unicorns) that are operating in each segment or look to invest

– The deals and partnerships they have struck

– The funding raised by the companies

We have noticed that the sentiments about blockchain are particularly very high in a few
financial segments.Remittance is one such segment where companies are interested in using
blockchain to perform faster remittances and reduce the cost of sending remittance at the
same time. The trading platform is another such segment where investors are optimistic about
the use of blockchain. Next in the list of attractive segments is P2P transfer using blockchain
technology.

In the case of the non-financial domain, there are a few segments that investors and large
conglomerates are eyeing. Smart contracts is one segment where investors are betting.
Companies who operate in this segment were able to raise significant amounts of funding and
were able to gain investors’ trust. The gold & silver trading segment is another such segment
which is in the watch list of several investors. The use of blockchain in industrial IoT has not
been growing significantly but is expected to grow in the years to come. There are a few
segments where we have seen multiple players operating, but the growth of these segments is
stagnant or low. Digital content, document storage and delivery is the segment where we
have seen multiple companies operate, but this segment has failed to gain investor
confidence.

LTP’s momentum infographic depicts our opinion about the segments that are not specific to
any company. We will regularly update the LTP Blockchain Momentum Infographic for
our readers to give them a clear view of what is happening in the blockchain Industry.

There have been multiple use cases where the financial services industry has shown keen
interest:

1. Bitcoin-powered wallets

We have also provided a complete analysis of how a particular segment like capital markets
can benefit from Blockchain:

How Blockchain Technology Will Play an Imperative Role in Capital Markets


Blockchain technology has been acknowledged as one of the most disruptive innovations
since the advent of the Internet. The financial industry has also started looking to leverage it
to store and transfer its value to other financial instruments. Capital Markets is one such
industry in the financial space where industry experts are optimistic about the use of
blockchain technology.

But what is the burning problem that needs to be resolved using blockchain technology?

1. For the movement of assets from one institution to another, the ledger balances of these
assets have to move. This is a cumbersome job. Involvement of more intermediaries in the
transaction results in the exchange of more number of messages. This again results in the
updation of more ledgers. There are several intermediaries involved in a trade, like
exchanges, central counterparties (CCPs), central securities depositories (CSDs), brokers,
custodians and investment managers. For correct accounting and to complete the business
transaction, intermediaries need to update their respective ledgers based on the messages
exchanged between them. This essentially means that every time a transaction happens,
additional messaging needs to be done. This creates a delay and also additional cost.
Sometimes, to enable a particular transaction and the corresponding ledger updates,
intermediaries may need to complete a few additional ledger transfers in the form of
realignment, securities borrowing or cash management. This introduces additional delays in
the transaction lifecycle and is usually referred to as a settlement cycle in capital markets
(represented as T+n days, where “T” represents the transaction date and “n” represents the
number of days taken for the transaction to be settled).

The use of blockchain technology for creating a shared flat ledger to process transactions
between multiple intermediaries is the most important thing the capital market segment
expects. The technical solution will help in reducing time and costs involved in a transaction.
The solution will also be capable of facilitating the real-time transfer of assets.

Financial institutions can build a shared flat ledger using blockchain technology that can be
managed by trusted processing nodes. Using digital signatures, financial intermediaries can
update the ledger to complete a business transaction. The shared ledger needs to be encrypted
to protect the confidentiality of the data. Key processes involved in executing a trade like
security issuance, trading, clearing and settlement can be redesigned and simplified using
such a solution. LTP feels that this use case of blockchain technology will be the first thing
that companies operating in the capital market segment would like to implement.

2. Client onboarding & account maintenance is the next segment in capital markets where we
will witness the surge of blockchain technology. KYC costs are very high. Reducing the
KYC cost and eliminating the number of KYC checks is what companies across the world are
looking for. A blockchain system that stored and facilitated KYC data is something which
can be implemented that will help in reducing cost and eliminate the number of KYC checks.
Blockchain startups that focus on improving identity management are already into the
business.

Let’s Talk Payments feels this is the segment where there will be growth attractiveness
and usage of blockchain technology in next few years.
Blockchain technology can be used as open source software to customize and further tailor
business rules for transaction processing based on organizational requirements. Areas like
over-the-counter (OTC) derivatives and bonds trading will immensely benefit through
blockchain technology. Blockchain technology can provide a real-time, cost-effective and
secure settlement model that is global and decentralized. So it’s just a matter of time before
we watch blockchain play an imperative role in capital markets.

How Blockchain can help Public and Private Stock Exchanges? Part 2

Sometime back we wrote about Blockchain Technology and its potential role in the Capital
Markets. We wanted to write an update to that article but there was so much to say that it
turned into a full-fledged article. To give our readers a recap, capital markets is one of the
industries in the financial space where industry experts are optimistic about the use of
blockchain technology. Also, in this article, we will discuss the benefits and challenges of
implementing blockchain technology and will explain how public and private platforms are
integrating this technology.

Problem Statement: There are several intermediaries involved in a trade, like exchanges,
central counterparties (CCPs), central securities depositories (CSDs), brokers, custodians and
investment managers. For correct accounting and to complete the business transaction,
intermediaries need to update their respective ledgers based on the messages exchanged
between them. This essentially means that every time a transaction happens, additional
messaging needs to be done. This creates a delay and also additional cost. Sometimes, to
enable a particular transaction and the corresponding ledger updates, intermediaries may need
to complete a few additional ledger transfers in the form of realignment, securities borrowing
or cash management. This introduces additional delays in the transaction lifecycle and is
usually referred to as a settlement cycle in capital markets (represented as T+n days, where
“T” represents the transaction date and “n” represents the number of days taken for the
transaction to be settled).

Solutions from Blockchain Technology:

1. Financial institutions can build a shared flat ledger using blockchain technology managed
by trusted processing nodes. Using digital signatures, financial intermediaries can update the
ledger to complete a business transaction. The shared ledger needs to be encrypted to protect
the confidentiality of the data. Key processes involved in executing a trade – such as security
issuance, trading, clearing, and settlement – can be redesigned and simplified using such a
solution

1. Belgium-based financial services company Euroclear explains the solution as “The


record of each security would be held on a flat accounting basis: put simply, with
multiple levels of beneficial ownership in a single ledger. Also, there would be no
need to operate data normalisation, reconcile internal systems, or agree on exposures
and obligations. We would have standardised processes and services, shared reference
data, standardised processing capabilities (such as reconciliations), near real-time
data, and improved understanding of counterparty worthiness. For privileged
participants such as regulators, we would have transparent data on holdings, among
many other improvements.”

Benefits for Capital Market across pre-trade, trade, post-trade and securities servicing (as
mentioned by EuroClear)

1. Pre-Trade:

-Transparency and verification of holdings

-Reduced credit exposures

– Mutualisation of static data

– Simpler KYC/KYCC1 via look through to holding

2. Trade:

– Secure, real-time transaction matching, and immediate irrevocable settlement

– Automatic DVP on a cash ledger

– Automatic reporting & more transparent supervision for market authorities

– Higher AML2 standards

3. Post-Trade:

-No central clearing for real-time cash transactions

– Reduced margin/ collateral requirements

-Faster novation and efficient post-trade processing

-Fungible use of assets on blockchains as collateral

-Auto-execution of smart contracts

4. Custody & securities servicing

– Primary issuance directly onto a blockchain

-Automation and de-duplication of servicing processes

– Richer central datasets with flat accounting hierarchies


– Common reference data

– Fund subscriptions/ redemptions processed automatically on the blockchain

– Simplification of fund servicing, accounting, allocations and administration

Who Are the Pioneers and Early Believers?

Public Platform:

1. NASDAQ: In December 2015, Nasdaq announced in an official statement that its


blockchain ledger technology, Linq, was able to complete and record a private securities
transaction successfully – the first of its kind using blockchain technology. NASDAQ Linq is
a digital ledger technology that leverages a blockchain to facilitate the issuance, cataloguing,
and recording of transfers of shares of privately held companies on the NASDAQ Private
Market. It will complement ExactEquity, NASDAQ Private Market’s cloud-based
capitalization table management, and stock plan administration solution. NASDAQ Linq
clients will be provided with a comprehensive historical record of issuance and transfer of
their securities, thus offering increased auditability, issuance governance and transfer of
ownership capabilities.

2. ASX: Australia’s biggest stock exchange, the ASX, has confirmed that it is developing a
private blockchain with U.S.-based firm Digital Asset as a post-trade solution for the
Australian equity market. The ASX has paid AUD $14.9 million for a 5% equity interest in
Digital Asset Holdings (DAH), a fee that will also fund an initial phase of development of the
privately distributed ledger solution.

Private Platforms:

1. Chain.com: Blockchain startup Chain documented the issuance of shares to a private


investor using Nasdaq’s blockchain-enabled technology. The issuer of private securities was
able to digitally represent a record of ownership using Nasdaq Linq. It significantly cut the
settlement time and made any paper stock certificates redundant. Also, Linq enables issuers
and investors to complete and execute subscription documents online.

2. Funderbeam: Funderbeam is set to launch the world’s first blockchain-based investment


trading platform over the next few months, through a partnership with colored coins
developer ChromaWay. Every syndicate will be paired with a microfund that will own actual
stakes in startups. So, when syndicate members want to trade all or parts of their holdings,
they will trade digital stakes in that microfund. The company will be using the blockchain to
verify each transaction before enforcing it. The same will happen when investors sell their
digital stakes/rights. In every investment, each ownership change will have a secure,
distributed audit trail.

Challenges in Adopting Blockchain Technology in the Capital Market

1. High Standards of Technology: High standards need to be set for the security,
robustness, and performance of blockchains. Integration with existing non-blockchain
systems such as risk management platforms will also be a requirement in the near future.
2. Upgrading of Regulation and Legislations: New regulatory principles need to be
integrated in order to make blockchain technologies an integral part of the market
infrastructure.

3. Standards and Governance: Industry alignment will be required on certain design point,
such as: whether systems are completely open (as with Bitcoin) or use permission-based
access requirements; the principles for suitability in interacting with the ledger; and the
interoperability between different networks, which may potentially run different consensus
protocols and safeguards against coding errors, thus creating unforeseen knock-on effects.

4. Managing Operational Risk of Transition: Operational risk needs to be minimized. This


move will require a quick recovery of participants to revert to the traditional ecosystem as a
fallback.

11 Blockchain Companies Applying Distributed Ledger Technology to Compliance &


Security

Blockchain Applications Beyond the Financial Services Industry

Blockchain fever hasn’t been limited to financial institutions. Along with banks and FinTech
startups, non-financial players have been paying attention and looking for ways to leverage
the opportunities that distributed ledger technology opens. Let’s look at some interesting
examples of the non-financial applications of blockchain technology.

Blockchain and commodities

The Real Asset Company enables individuals around the world to buy gold and silver bullion
securely and efficiently. The company’s investor-friendly platform sits on top of global
vaulting infrastructure, providing an online account for buying gold and silver and holding
precious metals. Goldbloc, the company’s gold-backed cryptocurrency adds an additional
layer of transparency and control to users’ gold investment. Backed by one gram of gold, the
company believes its cryptocurrency to be the first step to bringing gold back into the
monetary system.

Uphold is a platform for moving, converting , transacting and holding any form of money or
commodity. The company connects banks, credit and debit cards and bitcoin to digital wallets
for free financial services and transactions. Businesses and consumers can fund their Uphold
accounts via bank transfer or by linking a credit/debit card in addition to bitcoin.

Blockchain and diamonds

The diamond industry is one of the biggest natural resource industries and makes a
substantial part of the GDP in African countries and other major diamond-miners. The
hallmark of the industry is that it is highly criminalized. Stones are small and easy to hide and
transport. The best part for criminals is that transactions can be made confidentially and the
sell returns the value over years. Diamonds are known to be involved in money laundering
and financing of terrorism on a truly massive scale around the world.
Due to a range of challenges with diamonds business, one of the tech pioneers in the sphere is
Everledger. The company provides an immutable ledger for diamond identification and
transaction verification for various stakeholders, from insurance companies to claimants and
law enforcement agencies. Everledger assigns a “digital passport” to each diamond that will
accompany each stone as it is transacted and creates a unique fingerprint.

Blockchain and data management

Factom is one of the most notable blockchain companies applying distributed ledger to the
non-financial market – in this case, data management. The company uses blockchain-based
identity ledgers in database management and data analytics to support various applications.
Businesses and governments can use Factom to simplify records management, record
business processes, and address security and compliance issues. Factom maintains a
permanent, time-stamped record of data in the blockchain that allows companies to reduce
the cost and complexity of conducting audits, managing records, and complying with
government regulations.

Blockchain and cannabis

Serica is one of the examples of a blockchain companies in the cannabis industry. Serica
brings software engineering, cryptofinance, financial custody and blockchain technology to
traditional custodian finance. It allows entrepreneurs to establish their business legitimacy
through the largest network of verified customers in order to grow conversions, registrations,
memberships and average order sizes. Serica’s Secure Socket Layering Technology encrypts
all communications between a user’s personal wallet and Serica. Serica uses the blockchain
in order to track and record every purchase of medical marijuana, providing businesses an
easy way to accept payments online.

There are also companies like Tokken, Hypur and others leveraging bitcoin and blockchain in
cash-heavy businesses like legal marijuana. Read more here.

Blockchain and digital content

Ascribe helps artists and creators to attribute digital art via blockchain. Ascribe’s marketplace
allows to generate digital editions with a unique ID and a digital certificate of authenticity to
prove provenance and authenticity. It also allows to accept consignments from artists and
transfer digital works to collectors with all the terms and legals.

There are also companies like Bitproof, Blockai, Stampery and other companies applying
blockchain to digital art attribution and authentication.

Blockchain and network infrastructure

Ethereum is a platform and a programming language that makes it possible for any developer
to build and publish next-generation distributed applications. Ethereum can be used to codify,
decentralize, secure and trade just about anything: voting, domain names, financial
exchanges, crowdfunding, company governance, contracts and agreements of most kinds,
intellectual property, and even smart property thanks to hardware integration.
ChromaWay offers blockchain as a platform for financial institutions and is working on a
smart contract platform that allows for digitizing and representing workflows in a secure,
private and efficient way.

Blockchain in market forecasting

Augur.net is an open-source, decentralized market prediction platform built on etherum


blockchain. It allows users to trade on the outcome of events, and for the market to then
leverage that crowdsourced information. Augur plans to use decentralized public ledgers to
create a way for anyone in any field, from finance, healthcare and governance, to tap into the
collective forecasting power of a global user base.

Leveraging Blockchain Platforms for Decentralized Applications

We have previously discussed the use-cases that are being developed by leveraging
blockchain in depth. The year 2015 has undoubtedly seen a heavy spike in investments and
hundreds of startups that have cropped up in this space. One major phenomenon was the
development of multiple blockchain platforms. Platforms that would enable various third-
party projects to leverage the core infrastructure and develop its own product have been
mushrooming. While some platforms have started to gain widespread usage, the others are
catching up.

Here are some of the notable platforms that we have seen integrations or projects being built:

Ethereum, Ripple, Eris Industries, MaidSafe, Counterparty, Stellar

Here are some of the other platforms that could be paving ways for projects:

Blockstream, Hyperledger, Epiphyte, PeerNova, Chain.com, Koinify

These blockchain platforms have been utilized by other players either for developing new
projects or use-cases. While financial platforms like Ripple and Stellar have majorly seen
partners in the integration space (gateways integrating to allow transactions), non-financial
use cases have been dominated by Ethereum which has close to 14 different projects that are
being run using their platform.

The below figure provides you with a snapshot of various apps/products/integrations that are
being done on the core platforms.

Ripple: Ripple is completely focused on its enterprise strategy, helping banks with real time
settlement for international payments. In 2015, it has launched 2 new solutions for license
Cross-Currency Settlement and FX Market Making. Some of the business that have been
utilizing the Ripple Protocol are:

Fidor Bank: Munich-based Fidor Bank AG was the first bank to integrate Ripple protocol to
provide faster and affordable money transfer services for its customers.
Other banks joining ripple: Cross River Bank, CBW Bank

Gateway support: XAGATE, Bitstamp, Bluzelle, Ripula, The Rock, Gatehub, Payroutes,
eXRP, Tokyo JPY, Exchange Tokyo, Pax Moneta, LakeBTC, SnapSwap, Rippex, Mr.
Ripple, Bitso, BTC2Ripple, Digital Gate Japan

Bluzelle and GateHub also provide users a consumer-facing wallet. GateHub would be used
by the users of Ripple Trade as Ripple has announced that from January 13, Ripple Trade
would be shut down and the users would need to migrate to GateHub which will act as the
new trading platform.

Ethereum: Ethereum provides a decentralized platform for building applications. Ethereum


has seen the highest number of projects that are being built on a blockchain platform and also
has several interesting, emerging use cases. The projects that are being built on Ethereum are:

Augur, Gnosis: Decentralized prediction market

BoardRoom: Blockchain governance platform

Colony: Platform for autonomous blockchain organizations

BlockApps: Tools to build decentralized apps

Airlock: Keyless access protocol for smart property

Provenance: Gather and share information & stories behind products

Slock.it: Smart locking and billing for the sharing economy

DigixGlobal: Technology to own gold assets

WeiFund: Crowdfunding platform

Maker: Autonomous bank & market maker

HitFin: OTC derivatives settlement

Solidity: Online compiler

EtherPArty: Smart contract deployment tools

Eris Industries: Eris industries, which was initially built based on the Ethereum code, has
reworked and has released its platform for anyone to build and deploy blockchain and smart-
contract-based projects. Eris Industries has been supporting projects that are further going to
be developing open platforms to develop decentralized applications. Some of the projects
being developed on its platform are:

Tendermint: Open-source blockchain platform that can support all blockchain applications,
including bitcoin, Ethereum, and ErisDB.
2gather: Decentralized video-sharing service (akin to a decentralized YouTube)

MaidSafe: Provides a distributed platform that enables the creation of applications that help
ensure digital privacy, security and freedom for all. One of its projects is SafeCoin, a digital
token that ensures rewards for users who provide their resources to the SAFE Network.

Stellar: Provider of a decentralized P2P payment network. Some of the projects and
gateways utilizing/integrated on Stellar are:

Wallet: Centaurus (Android), Stellars (iOS), Stargazer (desktop wallet)

Gateways and exchanges integrated: Bittrex, BTC38, Bx.in.th, Coinex, Dividend Rippler,
Kraken, ANXPRO, Poloniex

Other articles by LTP on blockchain:

Financial Institutions: Blockchain Activity Analysis

UK Government Explores Blockchain Technology to maintain its register

Exclusive Interview with Marwan Forzley, Founder, Align Commerce: Insights on


Blockchain for Remittances

E-Coin Introduces Multi-Sig Bitcoin Wallet and Debit Card Inspired by Blockchain
Technology

An Interview with the Founder of Blockchain Company Otonomos

UBS’ Alex Batlin Shares His Views Regarding Blockchain Technology in Finance

Blockchain-Enabled Smart Contracts: Applications and Challenges

Blockchain in Israel: What Does a Startup Nation Do With Distributed Ledger Technology?

What Can Fuel the Blockchain Adoption Engine?

Democracy 2.0: How Blockchain is Building a Political Utopia in Australia

IBM Just Ran Tests on Blockchain: Are We Getting Closer to Implementation?

Nasdaq Is Taking Blockchain From the Lab to Estonia

How Blockchain Is Facilitating Financial Inclusion in Africa

Bank of America Aggressively Files Blockchain-Related Patents. What About the Others?

Bitcoin Vietnam and Coinify to Launch the First Blockchain Payment Processing Platform
for Vietnam

Blockchain Milestone: 11 Banks Witness Instantaneous Global Financial Transactions


Nasdaq Linq Just Enabled First-Ever Private Securities Issuance Using Blockchain

MIT Blockchain Project Enigma to Launch Soon