Blockchain Adrian Zaragoza

Present Day Contracts, transactions, and the records have not kept up with the digital transformation. Transactions end up being costly; middlemen are required to perform some transactions (contracts, transfer of ownerships, etc.) Blockchain is the answer to this problem Open, distributed ledger that can record transactions between two parties Efficient, verified, and permanent

Blockchain Principles Distributed Database Each user (node) on the blockchain has access to the database and its history. The information is decentralized. Peer to Peer Transmission Communication occurs between peers. Each node stores and sends information to all other nodes. Transparency with Pseudonymity Transactions and its value are visible to everyone in the blockchain system 30-plus character alphanumeric address for each user (node) Transactions occur between addresses

Blockchain Principles Irreversibility of Records Records cannot be altered; linked to every transaction record that came before them Many computational algorithms and approaches ensures records to be permanent, chronologically ordered, and available to everyone in the network Computational Logic Blockchain transactions can be programmed; users can set up algorithms and rules to automatically trigger transactions between nodes Inventory in Transit: The software can track the status of the inventory and when it lands in the customer, the payment is automatically sent to the supplier

Blockchain Adoption Two dimensions affect how foundational technology evolves Novelty: degree to which an application is new to the world Higher in novelty will require more effort to ensure users understand what problems the new technology solves Complexity: the number and diversity of parties that need to work together to produce value with the technology. “network effect” Adoption of foundational technologies happens in four phases Single use Localization Substitution Transformation

Four Phases of Adoption Single Use: Applications that create better, less costly, highly focused solutions Examples: E-mail as an alternative to phone calls, faxes, snail mail Bitcoin: alternative global payment method Localization: Applications that are relatively high in novelty but need only a limited number of users to create immediate value Easy to promote their adoption Local private blockchain networks Substitution Applications that build on existing single-use and localized applications, but are high in coordination needs because they involve broader and increasingly public uses Transformation: Applications that involve coordinating the activity of many actors and gaining institutional agreement on standards and processes Requires major social, legal, and political change

Implementing Blockchain in Organizations Start with single use applications. Easier to implement and minimizes risk Add bitcoin as a payment option Localized applications can be the next step for organizations Private blockchain networks Financial service companies reduce transaction costs with private blockchain networks Tracking items through complex supply chains Careful planning for substitute applications. Focus on cost effective solutions that don’t require users to change their behaviors. First Data’s gift card blockchain software Transformative applications will need more time; pending

Areas Benefiting from Blockchain software Banks: Many banks have invested funds for research and development in blockchain software Real Estate Healthcare Supply Chain Management Currency

Cryptocurrency

Cryptocurrencies Irreversible: After a confirmation, a transaction can’t be reversed. Pseudonymous: Transactions and accounts are not connected to real world identities Fast and Global: transactions are completed instantly and confirmed within a couple of minutes Secure: funds are locked in a public key cryptography system. Only the owner of the key is able to send cryptocurrency. Cryptography and algorithms makes it secure Permissionless: Anyone can use cryptocurrency Two of the major cryptocurrencies are Bitcoin and Ethereum

Smart Contracts Smart contracts help you exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman Contracts written in code

REX-Global Real Estate Uses Rex Tokens for transactions Utilizes smart contracts to lower fees https://www.youtube.com/watch?v=IpPEgS2-5Ng

https://www.youtube.com/watch?v=CNFqoSABFgs

Question Would your organization (current employer) benefit from Blockchain? If so, how?

Question Which of the following is NOT a blockchain principle? A. Transparency B. Computational Logic C. Centralized Database D. Irreversibility

Question Which of the four phases of adoption is low in complexity and low in novelty? A. Substitution B. Single Use C. Transformation D. Localization

Question What can you exchange with smart contracts? A. Money B. Shares C. Property D. All of the Above