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 by Forbes are:

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
2. Blockchain powered trading and investment platform
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

2) 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
11 Blockchain API Providers That Are Allowing Developers to Build Next-Generation
Applications

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