FIN8260-Applications of

Financial Technology

Class 8 – Virtual and Crypto

Currencies continued
Today’s FinTech Agenda
• All about the Blockchain
• Is it one of the greatest inventions?
• Blockchain and Industry
• Blockchain and the Economy
• Blockchain and Health Care
• Assignment #2: Group Exercise - In class work period
Blockchain: How
did we get here?
Stage 1: Blockchain-Bitcoin/Digital Currencies
• While the ideas that would go into the blockchain were swirling around in computer science
communities, it was the pseudonymous developer of Bitcoin, Satoshi Nakamoto, who outlined the
blockchain as we know it in the white paper for BTC. In this way, blockchain technology began with
the Bitcoin network. While blockchain has since gone on to see use in a huge variety of other areas,
in some sense it was designed specially for this digital currency and for advancing the goals of digital
currencies more broadly.
• In the earliest stages, blockchain set up the basic premise of a shared public ledger that supports a
cryptocurrency network. Satoshi's idea of blockchain makes use of 1-megabyte (MB) blocks of
information on bitcoin transactions. Blocks are linked together through a complex cryptographic
verification process, forming an immutable chain. Even in its earliest guises, blockchain technology
set up many of the central features of these systems, which remain today. Indeed, bitcoin's blockchain
remains largely unchanged from these earliest efforts.

Source: Monex
Stage 2: Blockchain and Smart Contracts
• As time went on, developers began to believe that a blockchain could do more than simply document
transactions. Founders of Ethereum, for instance, had the idea that assets and trust agreements
could also benefit from blockchain management. In this way, Ethereum represents the second-
generation of the blockchain technology.
• The major innovation brought about by Ethereum was the advent of smart contracts. Typically,
contracts in the mainstream business world are managed between two separate entities, sometimes
with other entities assisting in the oversight process. Smart contracts are those that are self-managing
on a blockchain. They are triggered by an event like the passing of an expiration date or the
achievement of a particular price goal; in response, the smart contract manages itself, making
adjustments as needed and without the input of outside entities.
• At this point, we may still be in the process of harnessing the untapped potential of smart contracts.
Thus, whether we have truly moved on to the subsequent stage of the development of blockchain is
debatable.

Source: Monex
Stage 3: Blockchain and the Future
• One of the major issues facing blockchain is scaling. Bitcoin remains
troubled by transaction processing times and bottlenecking. Many new
digital currencies have attempted to revise their blockchains in order to
accommodate these issues, but with varying degrees of success. In the
future, one of the most important developments paving the way for
blockchain technology going forward will likely have to do with scalability.

Source: Monex
Blockchain and
Industry
Blockchain is Revolutionizing Content
Distribution
• Though blockchain technology began with cryptocurrencies, it has
expanded into other industries and areas, including content distribution.
• Flixxo is an example of a decentralized content distribution service in which
users earn cryptocurrency tokens for sharing videos across the network.
• The traditional model of content distribution tends to favor distributors over
creators; blockchain technology may eventually level the playing field.

Source: Flixxo
The Evolution of Blockchain: Flixxo
• Flixxo, a decentralized content distribution platform,
allows creators to offer their content to very specialized
audiences, who pay cryptocurrency tokens to fund and enjoy their
projects. To earn Flixxo tokens, participants in Flixxo simply make
the videos on their computer available to the network, much like
the peer-to-peer service BitTorrent. Whether these are the indie
favorites of the filmmakers they’ve subscribed to or triple-A titles is
irrelevant. This decentralized crowdfunding and hosting solution is
offloading the costs of running the network on the users, but also
making it more lucrative and rewarding to take part.
Blockchain Technology is Changing Real Estate
• Blockchain technology has impacted the real estate industry in a
variety of ways, including offering a new means for buyers and
sellers to connect with one another.
• Blockchain could be used to cut intermediaries out of the real
estate transaction process, thereby reducing costs.
• This technology could also help to codify the practice of fractional
ownership of real estate.

Source: Flixxo
The Evolution of Blockchain: Real Estate Platforms
and Marketplaces
• Real estate technology has traditionally been primarily concerned with listings and with
connecting buyers and sellers. However, blockchain introduces new ways to trade real
estate and can enable trading platforms and online marketplaces to support real estate
transactions more comprehensively. For example, ATLANT has developed a platform that
uses blockchain technology to facilitate real estate and rental property transactions. By
tokenizing real property, assets can then be traded much like stocks on an exchange and
transactions can be done online.
• ATLANT allows sellers to tokenize assets, essentially handling it like a stock sale, and
liquidating that asset through a token sale using the platform. The collected tokens can be
exchanged for fiat currency, with buyers owning a percentage stake of the property.
Using Blockchain To Change Travel
• Already heralded as a game changer for multiple industries, blockchain is
emerging as a powerful technological force that promises to change the
travel industry’s status quo.  
• For an industry as fragmented as travel, blockchain-based services are
already isolating major pain points, working to resolve common challenges
by focusing on streamlining processes and building a more equitable
ecosystem that shuns gatekeepers.  The technology’s impact is more than
hypothetical, with several new businesses emerging to disrupt several
nodes on the industry’s supply chain.

Source: Investopedia
The Evolution of Blockchain: Travel
• The major travel service aggregators that emerged across the internet like Expedia and
Priceline have since come to dominate airfare bookings, but at a serious cost to both
travelers and airlines. Bookings on these websites tend to include hefty fees and surcharges
made possible by their largely unchallenged status as gatekeepers. Blockchain-based
startup Winding Tree is already working to unseat these entrenched giants by challenging
their role as industry
• With its LÍF token, Winding Tree seeks to connect travelers directly with service providers
like airlines, hotels, and tour guides, minimizing associated fees for travelers all while
reducing costs for service providers.  The company’s clever use of smart contracts and the
ERC827 protocol delivers better savings for all travel industry stakeholders while its
nonprofit status assures there are no middlemen adding unnecessary fees to the booking
process
Blockchain Is Changing Energy
• Even as other industries are swept up in waves of disruption unleashed by
technology, the energy industry has been slow to embrace change. But the
introduction of blockchain promises to speed things up and radically
transform the industry's processes and markets
• The first one is in enabling a peer-to-peer energy trading model. The
proliferation of Distributed Energy Grids (DERs) or independent renewable
energy sources (such as solar panels) that connect to the grid has helped
convert energy consumers into producers who are able to sell excess power
back to the grid.

Source:
 Blockchain: Energy Leaders
• Brooklyn Microgrid is developing an app that enables energy
trading between consumers in a neighborhood within the borough.
• Similarly, Grid Singularity, a European startup, is focusing on the
exchange of granular and private data between different parties
within the energy.
Blockchain Is a Game-Changer for Online
Advertising
• Advertising can employ blockchain in a plethora of unique ways. The applications of this
technology in advertising will help ad creatives target audiences better, share data, make
users safer and more private, and democratize who controls the data that the industry relies
on.
• One of the most notable features of blockchain as a finance application is anonymity. For
advertising, anonymity is sometimes counter-productive. Blockchain solutions for advertising
will instead make use of the robust accountability that the technology provides, wiping the
slate clean for all participants
Blockchain: A new direction for Online
Advertising
• Blockchains built since the original (bitcoin) have expanded upon the importance of such
transparency, and many of the most influential chains will find their killer apps in the
advertising world.
• Companies like Papyrus exemplify this trend, with platforms that make it easy for users to
know exactly who is paying to advertise to them, and where their data is coming from. With
Papyrus, these users can even decide not to share any of their browsing habits or other
usage data, though if they do, advertisers can pay them for it directly.

Source: Papryus
Health Care is Moving to the Blockchain
• Patient data often is scattered across different facilities, making it difficult to access at crucial
times. Blockchain technology could revolutionize the way that health data is stored and
transmitted. Indeed, given that it sports an ultra-secure cryptographic database and shared
ledger to provide for speedy and easy communication, blockchain tech may be just the
solution for the industry.
• With blockchain, health care systems could store medical records confidentially, updating
patient data across multiple facilities and locations in real time and with security. This would
free up time and resources in health facilities to be further dedicated toward patient care and
innovation, rather than administration.
Blockchain: A Healthy Option
• Utilizing blockchain, Hashed Health generates a free and open community for health care
professionals to discuss and partner in an effort to explore blockchain's uses in the
industry. The company also provides an advisory branch to help health care organizations
understand how blockchain can be integrated into existing systems.
• The company has a lab that aims to develop new blockchain tech solutions to problems
that have plagued the health care industry.

Source: Hashed Health

Bradk

Break
Blockchain and
the Economy
How Blockchain Can Help Economies
• From insurance and real estate to crowdfunding and data management, the potential
applications of blockchain technology are numerous, and it's likely that there will be new
ways of adapting this technology to the mainstream business world in the future as well.

• But one important use of blockchain technology may be outside the mainstream business
world: Some of the world's most impoverished nations may benefit from the integration of
blockchain technology in various ways.

• How?
The Blockchain and Economies
1. Protect Children: The Democratic Republic of Congo, a central African country ravaged by a
devastating and protracted war that has led to millions of deaths, is routinely listed among the
poorest nations in the world. Bitcoin News highlights a project slated for launch later this year
that could help to protect children there from forced labor. This project will provide global
manufacturers of high-tech devices like smartphones with a guarantee that cobalt used in lithium-ion
batteries was not mined by children. Democratic Republic of Congo has a significant problem with
informal mining sites, many of which include child workers.
2. Food+Necessities: In Venezuela, where hyperinflation has prompted dramatic shortages of basic
necessities and food, bitcoin and other cryptocurrencies could help ease the strain. Given its global
usage and the relative ease of cross-border payments and transfers, cryptocurrency has been a
viable alternative to an increasingly problematic local fiat money for many Venezuelan citizens

Source: Hashed Health

The Blockchain and Jobs
1. High salaries for workers in blockchain are a function of increased demand
and short supply.
2. For example, Microsoft Corp. has started a blockchain-as-a-service (BAAS)
platform within Azure, its cloud division.

Source: Microsoft
Blockchain and the Global Economy
• Transparency and Trust:
• Blockchain technology can help to prevent future crises like the one from 2008 crash.
• How? If every asset's value and ownership is securely recorded in a shared ledger
that is entirely transparent and immutable, the corrupt practices that allowed
institutions to hide their struggles will no longer be possible, according to the report.
• Blockchain expert Alex Tapscott has also argued that blockchain technology can
enhance transparency of capital flows, thereby helping to prevent future financial
disasters.

Source: CoinTelegraph
Reading
What You Need to Know
About Blockchain,
by Gartner Group
Assignment #3
• Group Presentation.
• Grade: 15%
• Any questions, I am here to assist.