BLOCKCHAIN

It is a distributed digital ledger that permits transaction to be gathered into blocks

and recorded cryptographically in chronological order and allows the resulting
ledger to accessed by different servers

Two types of blockchains: Public and Private

BENEFITS OF BLOCKCHAIN
Consistent
Democratic
Secure and accurate
Permanent and tamper resistant
Quickly updated
Intelligent
BLOCKCHAIN APPLICATION
Clearing, payments and settlement function in
financial services companies
Creation and use of digital entity within an
enterprise
Smart Contracts
BLOCKCHAIN EXAMPLE (CROSS BORDER PAYMENT)

Sender Correspondent
Bank of Sender
Sender Bank Sender
Sender's Bank Bank

Receiver Correspondent
Reciever Bank of Reciever Receiver
Bank
Reciever's Bank Bank
 Is what we have already good enough?
"If your requirements are fulfilled by today's relational databases, you'd be
insane to use blockchain"
- Gideon Greenspan

"We always overestimate the change that will occur in the next two years
and underestimate the change that will occur in the next ten"

-Bill Gates

Their Arguments suggests that Blockchain is in nascent stage and might

be required tomorrow but not today.
 Network Effects

A network effect describes anything that becomes more valuable to its

users as more users use it

Broadcast Network Homogeneous Network Heterogeneous Network

Broadcast Skype Facebook
Sarnoff's Law (N) Metcalfe's Law (N^2) Reed's Law (2^N)

If blockchain attracts diverse users , its value will be described by Reed's

Law and it will become increasingly valuable as engagement increases
 Considerations for Future
Businesses should determine how to use it or they should wait until others try it, see
how they do it and learn from their mistakes
Financial services industry may undergo a greater degree of evolution
industries that has complicated global supply chains might get motivated to adobt
blockchain
JP Morgan Chase is piloting Quorum to strengthen their global payments function

There is less clarity surrounding financial services industry regulations

If blockchain can deliver products and services that improves customer

experience and profitability then it can lead a company to capture profitable share
of a competitive marketplace
MERKLE TREE
A Merkle Tree is a mathematical data structure used in blockchain technology to

efficiently verify the integrity and authenticity of large datasets, such as

transaction data.
It is made up of leaf node which represents a single piece of data
A hash is a string of numbers and letters that can be used to verify that a given

set of data is the same as the original set of transactions

The hashes on the bottom row are referred to as "leaves," the intermediate

hashes as "branches," and the hash at the top as the "root".

The hashes are combined repeatedely untill only one hash is left which is called

the merkle root.

BENEFITS OF MERKLE TREE
It validates the data's integrity
Takes little disk space as compared to other data structure like verkle
Easy to breakdown data into tiny sets for efficient verification purpose
They have immutable data structures which means that once a merkle tree

has been created it can't be modified.

 PROOF OF WORK vs PROOF OF STAKE
Proof of work is a consensus mechanism
which requires solving a complex
mathematical problem using computing
power to validate a new block on the
blockchain.
Probability of mining a block is
determined by the amount of
computational work done by miner.
The first miner to crack a block's
cryptographic puzzle receives a reward.
Bitcoin uses proof of work function called
SHA256.
Proof of stake is a consensus mechanism
which requires putting on stake an amount
of tokens to become a validator.
Probability of validating a new block is
determined by how large of a stake a
person holds (how many coins they
possess).
Instead of receiving a block reward, the
validator is compensated with network
fees.
Ethereum has switched to this function in
2022 which requires staking of 32 ETH to
activate a node.
PUBLIC BLOCKCHAINS vs PRIVATE BLOCKCHAINS
Public blockchains are public networks In Private blockchain, a network
that are accessible to everyone. administrator oversees and users must give
As a result of decentralisation and active their permission to join the network.
involvement, a public network is more Hacks, hazards, and data
secure. It is essentially difficult for hackers breaches/manipulation are more likely to
to assault the system and take over the occur on a private blockchain. Hackers can
consensus network because of the larger easily put the entire network in jeopardy. It
number of nodes in the network. is therefore less secure.
Public blockchains allow all users to take A private blockchain uses as many
part in the network: this compromises resources as required and thus is faster
their efficiency and speed. and more efficient.
Industries where blockchain would be relevant
Banking and payments
Blockchain could provide banking services to people who were earlier not part

of the banking system

Easy & Faster money transfers (Abra is a bitcoin based remittance service)

Cyber security
Blockchain's decentralised framework makes it difficult to hack
Increased data security due to anonymity
Eliminates the need for middlemen

Elections
Tamper proof voting systems
Traceability
Democracy earth & follow my vote are using blockchain solutions for the same
 MARKET SEGMENTATION OF BLOCKCHAIN
On the basis of application
A)Exchanges: this market includes capital market (equity/derivatives), corporate services (IPO, dividends) and index
licensing. Blockchain reduces settlement time period and decreases cost since it eliminates the intermediaries.
B)Payments: dominant segment, blockchain improves payment system efficiency, minimizes operating costs, and
offers transparency. It gives rise to microtransactions which traditional systems do not process because they are too
small to be cost effective. It majorly includes cryptocurrency and cross boarder payments
C)NFTs Gaming: crypto games are being developed in which players can play and win digital currency which can be
converted to real life money, this encourages gamers to participate.

On the basis of sectors

A)Infrastructure: In infrastructure there are some areas like supply chain, land ownership, identification verification, can
benefit from implementation of blockchain. SCM: track originality of product, secured record of land to ensure that
proper data is maintained and it is not manipulated.
B)Data Analytics: In this market, blockchain helps to ensure data integrity since data on blockchain can not be
manipulated. Lenovo used blockchain to detect fraudulent documents and forms. They used it to validate digital
signatures by verifying it through blockchain record.
C)Institutional Crypto: use of cryptocurrencies and blockchain technology by traditional financial institutions
D)Financial
a.Defi: new financial system that is built on top of blockchain technology, enabling open and decentralized access to
financial service
b.Consumer Yield: Consumer yield is earning a return on your investment and other financial assets. So, this market
looks to implement concept of tokenization and NFTs. A token is created for real life asset which is transferred in
blockchain. So instead of owning an antique item physically, I can just own its token.

Others:
A)RegTech: regulatory technology, it refers to the use of technology like blockchain to help financial institutions and
other organizations to comply with regulatory requirements. Blockchain enables real-time, automated reporting, as a
result organizations can comply with regulatory reporting requirements more efficiently and accurately.
Digital currency services provider Trading Cryptocurrencies
and crypto backed loans
Uses advanced fraud prevention
Provide customers with a secure
and fraud monitoring tools to
and accessible platform to store
secure users' funds and
and manage their investments
keep their accounts safe.
 Enables users to exchange
cryptocurrencies and digital assets
quickly, securely, and with low fees,
while maintaining a high degree of
security.
Provides users with a secure
and immutable ledger of
transactions
Provides a digital wallet and an
API allowing users to securely
connect their wallets to other
trading platforms.
Thank you