Blockchain Technology

and the Financial Services Market

Analysis Report

By prateek kumar 1
Introduction
For several years, the hype surrounding the distributed ledger approach and
blockchain technology has grown steadily, fostering discussions and research
activities on potential areas of application throughout the financial services
industry. Current research and several use cases reflect the first feasible
implementations of the technology, bringing major changes for segments and
processes within the industry. An increasing number of banks are realizing the
urgency of the topic and are exploring ways of using blockchain technology. A
differentiated approach is necessary to elaborate on the potential impacts on
industry segments and financial institutions, as blockchain technology is
characterized by complexity and several limitations. Drawing from a broad
range of statements from experts from both Infosys Consulting and institutions
from various sectors of the industry, this paper provides a high-level business-
case viewpoint for several years, the hype surrounding the distributed.

So, what exactly in Block Chain Technology?

A blockchain is a growing list of records, called blocks, which are linked
using cryptography. Each block contains a cryptographic hash of the previous
block a timestamp, and transaction data. By design, a blockchain is resistant to
modification of the data. It is “an open, distributed ledger that can record
transactions between two parties efficiently and in a verifiable and permanent
way.

By prateek kumar 2
How does it work?
Without Blockchain:

With Blockchain:

Real time example (Booking a ticket)

Think of a railway company. We buy tickets on an app or the web. The credit
card company takes a cut for processing the transaction. With blockchain, not
only can the railway operator save on credit card processing fees, it can move
the entire ticketing process to the blockchain. The two parties in the

By prateek kumar 3
transaction are the railway company and the passenger. The ticket is a block,
which will be added to a ticket blockchain. Just as a monetary transaction on
blockchain is a unique, independently verifiable and unfalsifiable record (like
Bitcoin), so can your ticket be.

Analysis for this scenario:

ß The Most important point to note is that It’s free. 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
a transaction.
ß Independently verifiable and unfalsifiable record.

Why is it introduced?

The normal Architecture used Currently

By prateek kumar 4
Drawbacks:
ß Firstly, because they are centralized, all the data is stored in one spot.
This makes them easy target spots for potential hackers.

ß If the centralized system were to go through a software upgrade, it

would halt the entire system

ß Worst case scenario, what if this entity gets corrupted and malicious? If
that happens then all the data that is inside the blockchain will be
compromised

3 Pillars of Blockchain Technology to overcome these:

1.Decentralization

2.Transparency

3.Immutability

By prateek kumar 5
1.Decentralization

The network of nodes is composed of the members and computers of the network. Nodes
are responsible for the maintenance of the ledger and the verification of transactions. Since
the distributed ledger technology is a network approach, it benefits from a high number of
nodes. The greater the number of network members working on the verification of the
transactions, the higher the mutual processing power.

[ Bitcoin structure of blockchain technology in 2015]

By prateek kumar 6
2.Transparency
One of the most interesting and misunderstood concepts in blockchain technology is
“transparency.” A person’s identity is hidden via complex cryptography and represented
only by their public address. So, if you were to look up a person’s transaction history, you
will not see “Bob sent 1 BTC” instead you will see
1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ

3. Immutability
Immutability, in the context of the blockchain, means that once something
has been entered into the blockchain, it cannot be tampered with.

Even a small difference in transaction would have dramatic changes in the

hash values used in cryptography.

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Business Application of block chain technology

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