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What is Blockchain?
What is Blockchain?
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What is Blockchain?

17/07/2018

Blockchain is thought by many as the biggest innovation in the field of computer science since the internet. Its first application is cryptocurrency (first of which is bitcoin) but more generally it refers to a computer infrastructure designed to record any trust based transaction. The main innovation is to manage the records and updates through peer-to-peer networks

Blockchain is thought by many as the biggest innovation in the field of computer science since the internet. Its first application is cryptocurrency (first of which is bitcoin) but more generally it refers to a computer infrastructure designed to record any trust based transaction. The main innovation is to manage the records and updates through peer-to-peer networks.

HOW BLOCKCHAIN APPLIES TO MONEY TRANSFER?

 
 
AS
Alex wants to send money
to Sam on one of his
blockchain accounts
Alex digitally
signs the transaction
The transaction is broadcast to all the peers in the network who verify its validity. All recent transactions in the network are added into a new block
This block is added to the blockchain which permanently records the transaction and updates the ledger
All participants synchronise on this new version: it can be taken for granted that a given transaction is settled
S
Sam receives
the money

SOME DOMAINS OF APPLICATION

This table list all the domains where Blockchain applies. Blockchain is presents in health records, copyright and property, authenticity (art, luxury), votes and public records, money transfer and contracts and notary acts.
Health records
This table list all the domains where Blockchain applies. Blockchain is presents in health records, copyright and property, authenticity (art, luxury), votes and public records, money transfer and contracts and notary acts.
Copyright & property
This table list all the domains where Blockchain applies. Blockchain is presents in health records, copyright and property, authenticity (art, luxury), votes and public records, money transfer and contracts and notary acts.
Authenticity (art, luxury)
This table list all the domains where Blockchain applies. Blockchain is presents in health records, copyright and property, authenticity (art, luxury), votes and public records, money transfer and contracts and notary acts.
Votes & Public records
This table list all the domains where Blockchain applies. Blockchain is presents in health records, copyright and property, authenticity (art, luxury), votes and public records, money transfer and contracts and notary acts.
Money transfer
This table list all the domains where Blockchain applies. Blockchain is presents in health records, copyright and property, authenticity (art, luxury), votes and public records, money transfer and contracts and notary acts.
Contracts & notary acts

WHAT ARE WE DOING?

Since 2014, we focused on three pillars to explore the potential of blockchain
  • Development of services using blockchain: Fund distribution tool connecting fund buyers and sellers, Corporate Event Connect for custody clients
  • Investment in startups and partnerships: LiquidShare for SME post-trade and R3, a distributed ledger platform for financial services
  • Active role to shape the future: involvement in consortia and in discussions inside and outside our industry

INDUSTRY IMPLICATIONS

Opportunities
Uncertainties
  • New generation of market infrastructures: Blockchain are new market infrastructures to transfer value
  • Transparency: Blockchain ensures traceability and transparency of transactions
  • Reduced friction: Processes involving the sharing and complex manipulation of data can become more efficient
  • It is based on an open source software, where financial institutions and tech start-ups can develop products by re-using a common public framework.
  • A technology still looking for a large market: More work remains to bridge the gap between this promising technology and real world use case. This includes huge IT developments as well as an adaptation to customer needs and habits.
  • Scalability and privacy: Blockchain has limited scalability and privacy capabilities. Improvements on this front are expected but are slow to materialise
  • A peer-to-peer dream yet to materialise: Blockchain based systems need to prove their value to users compared to centralised systems, which are easier to setup and operate
  • The regulatory framework may need to evolve in order to allow for new operating models

KEY DATES

 
2008
2013
2014
2017
2018
Publication of the Bitcoin white paper by Satoshi Nakamoto (an alias) followed by the launch of the network and release as an open source software in 2009
Development of new protocols looking at use cases beyond cash payments such as the issuing and transfer of financial instruments
Launch of the Ethereum Project via an initial coin offering, a type of crowd funding campaign. Ethereum allows smart contracts to be deployed.
The Australian Securities Exchange decides to migrate its current infrastructure to a blockchain based system.
Estonia announces further development of blockchain based e-residency and governmentbacked cryptocurrency

OUR VISION

We believe blockchain has the potential to change the way ownership is recorded and how transactions are processed. Multiple layer reconciliations may become a method of the past as it could be eventually replaced by this new system. More open and public ledgers will also bring true value to society. We are at the beginning of this journey and the amount of resources focusing on the development of this technology is accelerating. In a changing world, it is paramount to explore the opportunities that exists, from open networks to consortium and private infrastructure.

IN A CHANGING WORLD

Digital technologies are changing the way we work. Anticipating how the world will change is much more than just a legitimate concern for the BNP Paribas Group, it is a major strategic priority.

The adoption of new technologies can represent a huge cost, but missing an opportunity that could shape the future of our industry is perhaps an even bigger cost.

Additionally, one of our main business principles is safety of assets and as such, cybersecurity is a cornerstone of our digital transformation. The technical, legal and regulatory environment for these matters is increasingly complex, hence our continuous investment in data and information security.

The pace of change in technology calls for agility and a need to adapt our business model. We hope our insights will help you address these issues.

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