Governments are starting to realise that blockchain technology holds promise and offers opportunities for innovation in its methods of interaction with citizens and building digital services. Also referred to as ‘distributed ledger technology’, the blockchain is a way of recording information in a linear manner, somewhat like a database. Protected using encryption, each part of the chain is digitally signed for non-repudiation of the information therein. For example, cryptocurrencies, such as Bitcoin, use a blockchain based on a decentralized model, replacing the traditional middleman of current banking processes, and as a result making it a more seamless and potentially faster way to transact money or data.

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Blockchain,
Cryptocurrencies
and Banking.

2. SUMMARY
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▪ 1) Evolution of Money
▪ 2) Blockchain Definition
▪ 3) Benefits:
✓ Blockchain Banking Applications
✓ Removal of Intermediaries
✓ Voting Management
✓ Dividends and Shares
✓ The Blockchain as a Proof Chain
✓ Crossing the Border with a Blockchain
▪ 4) Challenge: Which blockchain to use ?
▪ 5) The Future of Banking

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Evolution
of Money
1

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Human beings have had a love affair with the concept of money. From physical currencies to digital technologies
such as « Bitcoin », cryptocurrencies are taking coinage into a new era.
1. Evolution of Money
Shells
Miniature replicas
of tools made of
bronze
Coinage
often made from
precious and rare
metals like silver and
gold
Cryptocurrencies

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Blockchain
Definition
2

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2. What is a blockchain?
« A blockchain is a chain of information broken up into blocks of data
and each one is protected using public - private key encryption.
To access the data, you need the proper key.»
Cryptocurrencies (i.e. : bitcoin) use the blockchain as a conduit.
4

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Blockchain can be compared to DNA
2. What is a blockchain?
Each block contains a specific
piece of information.
Each block of data represents a
transaction of currency and you can
follow the chain to build up a picture of
each transaction through to the
current one.
The individual units (nucleotides
of the gene, i.e. ATGC) can be
described as being a simple codon.
Each gene contains a
specific piece of
information.
Similar to how a gene in DNA
is transcribed into blue eyes
or blonde hair.
Like the encryption in the
block -chain.

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Benefits of
Blockchain
3

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3. Blockchain Banking Applications
• The evolution or revolution, in the way bitcoin
mechanisms operate, has not been lost on
banks.
• Cryptocurrencies are being seen as a new
innovation from the Fintech sector to sweep
away some of the more legacy business
models in banking.
Many banks
(Citi, Santander, UBS…)
are now starting to
embrace the idea of
blockchain.

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• Blockchain allows to transfer assets
worldwide on a secure way in P2P.
• Encrypted transactions are registered
in a ledger authenticated by more than
2 witnesses from the blockchain
ecosystem.
3. Blockchain Banking Applications

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3. Removal of Intermediaries
Is it possible? Yes!
The inherent cryptography based security
of the blockchain can make this possible.
Current system:
• Banks have a centralised ledger which acts as a custodian.
Blockchain:
• No central ledger - It’s a decentralised trust model not dependent on a single entity.
• Financial market researchers (TABB Group), have speculated that the use of the
blockchain in syndicated loans may happen as early as Q2 2016.
• The financial sector needs to have its check and balances in place, such as agreed
standards. (TABB Group)

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3. Voting Management
• Proxy voting has become complex. It involves a
chain of processes that culminate in a vote.
• The vote may well be crucial to the
continuation of a company and can involve
M&A.
• Votes management has taken an electronic
route more recently with the allowance for
electronic proxy voting.

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l
Can be open to fraud
and security issues
The use of the blockchain as a proxy voting mechanism:
“The Estonian NASDAQ market will be using blockchain based technology
to provide proxy voting at AGM’s and all possible from a voter’s mobile device” (October 2015).
Bob Greifeld - NASDAQ Chief Executive
Boost voting turnout
+
Retain the ease of use of an
electronic vote
Improve security
++
3. Voting Management

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3. Dividends and Shares
• In 2015, the U.S. Security and Exchange Commission (SEC) approved the use of
blockchain technology to allow Internet trader Overstock.com to issue company
shares.
• Blockchains keep a record of every transaction and its owner, throughout the
lifetime of a given piece of information (including a stock certificate).
Transactions are handled in a very seamless and traceable manner.
overstock.com Company Dividends=

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3. The Blockchain as a Proof Chain
• Can be used to verify the status of a given
transaction or data entity at a given time.
• Any type of information can be encrypted and
placed within the blockchain = Database
• Transactions are verified by a community of users
for an increased level of trust.
• Each part of the block in the chain is individually
time stamped and cryptographically signed.

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• Any process that now requires documentation and proof of validity or certification
could have those paper documents replaced by individual blocks.
• The blockchain could be used to create certified and verified identities for a greater
level of assurance when performing financial transactions.
• Even processes such as the certification of precious gemstones could benefit
from blockchain technology; speeding up the process and building in hardened trust
models that go beyond the centralized, single intermediary system we currently
have.
3. The Blockchain as a Proof Chain

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3. Crossing the Border with a Blockchain
Seamless cross-border payments
Current challenges
• Frictions
• Multiple banks
• Multiple intermediaries
Blockchain makes the experience more streamlined and reduces costs.
Advantages of a blockchain
• Simplifies process based on inherent
accountability, assurance and verification
• Allows localised transactions
• Makes cross-border payments as easy as
exchanging emails between countries
• Allows for financial system compliance by
auditing each part of the money movement
through the chain

18. SUMMARY
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Which
Blockchain to
Use?
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4. Which Blockchain Should be Used?
Should we use a private blockchain…
• Some would like to impose their blockchain: Ripple and some Fintech
companies such as Etherium.
…or open one?
• The blockchain community and banks are against relying on a company to
transfer their asset securely.
Private blockchain or Open blockchain?

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The Future of
Banking
5

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of those were actively exploring their use.
5. The Future is Blocked
The previous issue around the obfuscation of and inability to trace transactions
and the criminal elements use of cryptocurrencies is being left behind.
The positive aspects of the blockchain technology for creating more efficient
and speeded up processing systems is now too attractive to ignore.
of the surveyed financial professionals believed that
technologies like the blockchain would be beneficial to
institutional markets.
94%
50%

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