Blockchain Technologies, Digital Currencies and the future of International Financial Centres Prepared by Bitt Inc. for ICAB Annual International Business Workshop Presentation August 25, 2017 info@bitt.com
A blockchain is an append-only database of transactions that cannot be tampered with. It consists of a few key elements: It is a shared , openly accessible, replicable ● ledger Blockchain and It’s governance is a distributed database ● Distributed Ledger synchronizing mechanism known as a consensus algorithm . Technology It represents triple ledger entry bookkeeping ● where every transaction that takes place on a distributed ledger has a mathematical receipt called a transaction ID. It is publicly verifiable by anyone and every ● single transaction is accessible to view. It is an immutable ledger and cannot be edited, ● forged or tampered with.
Benefits of a Blockchain It is ‘ trustless ’ and allows for ‘trust and It removes the risk of forgery that fiat ● ● verification’ for all transactions committed to currency carries and eliminates the the ledger. ‘double-spend’ problem. It operates through consensus and cannot It enables an interconnected financial ● ● be tampered with by a single individual or ecosystems and global value transfer entity. systems. It provides an immutable public record of It provides mathematical representation of ● ● transactions which add to transparency, towards the “Internet of Things” accounting and compliance measures.
What’s Blockchain, Simply Put? A blockchain is a secure and open digital ledger system that cannot be tampered with or changed at any time. This means that everyone on the ledger has access to all recorded entries within the blockchain at every moment in the lifespan of the transaction.
Blockchain Payment: How it Looks
Major Bitcoin Merchants
Bitcoin Payment: How it Looks
Bitcoin Payment: Sending User A User B User A is sending 0.001222 bitcoin to User B. User B Receiver Address: ● 3JUoJ3a4gZ4ZUsj38 cWHQupR8p9MPvP kPK User A is sending to User B’s Sending to Address: ● 3JUoJ3a4gZ4ZUsj38 cWHQupR8p9MPvP kPK
Verification: Payment Receiver Address: ● 3JUoJ3a4gZ4ZUsj38cW HQupR8p9MPvPkPK Transaction ID: ● 3a42b43656f63659a04 1755e7d2c73cf35698c2 173201522e69a29b8a7 c2af76
Verification: Multiple Sources Transaction ID: 3a42b43656f63659a041755e7d2c73cf35698c2173201522e69a29b8a7c2af76 https://blockchain.info https://blockexplorer.com
Financial Institution Stakeholders
Blockchain Applications
Digital Currencies Types
Central Bank Issued Digital Currency By issuing digital currency, a central bank can solve the problem of not having a legal tender to securely, efficiently and uniformly be the medium of exchange in electronic payments settings. In effect, a central bank digital currency solves the problem of inefficient physical notes in much the same way that physical notes solved the problem of cumbersome precious metals.
The inability to transact in ecommerce and ● digital settings. The recurring cost of printing and coining ● physical currency. Security and risks of theft in transportation and ● storage. Logistical challenges and costs of transporting ● Benefits of physical cash. Blockchain applied Limitation during transactions where both ● parties must be present. to Digital Cash Time consumption to count physical cash. ● Issuance The circulation of counterfeit currency. ● Physically damaged currency requiring removal ● from circulation. Challenges tracking tax evasion and money used ● for illicit purposes. Bacterial, fungal and virulent contamination of ● paper notes and coins
Blockchain Digital Assets are ● cryptographically-secured tokens that hold value and can be transferred between two parties without the need of a central counterparty. Blockchain and Distributed Ledger Technology can be ● built on top of to design next generation financial tools such as the “Barbados” digital dollar. Building Blocks of Financial tools is utilizing blockchain technology can ● accomplish micropayments and payment channels to Digital Money using accomplish a low cost, scalable and secure digital Blockchain fiat currency . With blockchain-backed cash the transaction is the ● settlement with the added benefit of immutability and integrity . These Digital Assets open the door to smart ● economies through increased stability, efficiency, security and mobility .
Digitization of The Money Base
The Caribbean Systemic Financial Problems Lengthy Financial Inclusion and Unbanked Lack of Banking Infrastructure Fragmented Currencies Settlement Times Citizens Restrictive Barriers to High Remittance Cost No Open Gateways and Open De-Risking Ecommerce and Innovation Payment Standards in Payments
Heavier dependency on Blockchain Technology for ● clearing, settlement and value transfer. Reason: Cheaper, Faster, Secure Utilizing the full scope of transparency that ● blockchain offers to increase the accounting practices, compliance accuracy and reporting integrity . The Future of Reasons: Immutable and Untampered Ledger Entries International More accessible and open gateways into legacy ● financial services in order to maintain competitive Financial Centres edge. Reason: Increased Competition Democratized and Distributed financial networks in ● terms of services offered and accessed. Reason: Open Standards create opportunity for participation
Ask About…. Application of blockchain within the government ● sector and possible areas of research and innovation Bitt’s primary mission towards building the ● Caribbean’s first Settlement Network Bitt’s software model to create a Digital Cash ● ecosystem for a Central Bank Bitt’s commitment to AML, CTF and AF ● Questions? The potential impact of blockchain towards the field ● of accounting, compliance, legal or governance. Cryptocurrencies worth buying as a speculative ● investment Resources to learn more about bitcoin, blockchain ● and the future of decentralized digital currencies Or anything… ●
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