Basic introduction in blockchain, smart contracts, permissioned ledgers

Koen Vingerhoets – find me on

Agenda
1. Shortest blockchain intro ever
2. A high level view on distributed ledger technology
3. Capita selecta : smart contracts
4. Capita selecta : which blockchain?
5. Closing thoughts

2008 – “Satoshi Nakamoto” writes…

Bitcoin is a unique transfer of value

Blockchain persists all the unique transfers

Basic introduction in blockchain, smart contracts, permissioned ledgers

Blockchain : a technical definition
The blockchain is, from a technical point of view,
 A unique, public and transparent distributed ledger
 That stores all transactions immutably and
 Permits predefined actions on those transactions
 In a cryptographically secured environment.

Blockchain : a business definition
The blockchain is, from a business point of view,
 A shared platform
 On which parties who don’t know or trust each other
 Are able to collaborate with respect for privacy
 Without relying on a possibly corrupt administrator.

Understanding distributed ledgers
Nomen est omen : blockchain
A transaction is
- Declaration of an incident
- Pictures of the accident
- Signed contract
- A proof of payment
- An offer from car repair
- Steps in the RDR wizard
- …

Understanding distributed ledgers
Encryption vs hashing
vs
1. Every hash is unique
2. Infinitly reproducable
3. One way traffic
A hash is NOT unique

Blockchain : a database with benefits

Transparency

Understanding distributed ledgers - transparency
Permissioned vs permissionless
vs

Ownership
Transparency

Understanding distributed ledgers - ownership
How value is stored
Nicki -> KoenIN 0,8 BTC
Wim -> KoenIN 0,6 BTC
Koen -> ThomasOUT 1 BTC
Wim -> KoenREST 0,4 BTC
Koen receives two payments
- 0,8 BTC from Nicki
- 0,6 BTC from Wim
Koen transfers 1 BTC to Thomas
- 0,8 BTC + 0,2 BTC
- 0,4 BTC is unspent transaction
• (A defined number of) assets are
stored on the blockchain
• Each asset is identified
• Assets are divided
• Assets are transferred (not copied)
=> Clear view on who owns what when.

Ownership
Transparency
Traceability

Understanding distributed ledgers - traceability
Defense of the sequence

Ownership
Transparency
Traceability
Distributed

Understanding distributed ledgers - distributed
Centralized vs distributed
Trusted party &
Single point of failure

TrustOwnership
Transparency
Traceability
Distributed

Understanding distributed ledgers - trust
Consensus as a service

TrustOwnership
Transparency
Traceability
Distributed
Smart contracts

Understanding distributed ledgers – smart contracts
Smart contracts

TrustOwnership
Transparency
Traceability
Distributed
Smart contracts
Blockchain : a database with benefits…
… to share with our friends ...

Blockchain : a database with benefits…
… to share with our friends ...
… to have a single shared source of truth.
Blockchain:

The problem with smart contracts

Smart contracts : a definition
A smart contract is an agreement whose execution is both automated and enforceable.
• The actual “transaction” among parties is expressed through and independently
executed by computer code, no party can block it or otherwise tamper with.
• It constitutes legally binding rights and obligations of the involved parties.
Advantages:
• Parties are in consensus at all times as to the existence, nature and evolution of
the facts shared among them, which are governed by the program.
• Used to satisfy
• common contractual conditions,
• lower transaction costs and risk, and
• eliminate the need for trusted intermediaries.

Smart contracts : a Ricardian Contract

Blockchain taxonomy
Stakeholders
Public
Consortium
Private
Permissions
Permissionless
Permissioned
on
Permissionless
Permissioned
Granularity
of trust
Blockchain
Distributed
ledger
BITCOIN
FINANCIAL
INSTITUTIONS

Blockchain & financial institutions : the forgotten words
LIABILITY GOVERNANCE REGULATIONS

1. Blockchain strategy is about collaboration.
2. Not just IT, also business is involved (risk appetite).
3. Unpredictable reactions of regulator & Government.
4. Financial signals (ROI) are problematic.
5. Radical uncertainty is the norm.

We
The financial system relies on trust & data.
Blockchain is trust & data.

While I catch my breath now,
some people have to catch their breath
all their life.
With public speaking, I raise bitcoin to support
improving the daily lives of people with cystic fibrosis.
Open your BTC wallet on your smartphone, scan this code.
Or use 1JmSPfvJ751BYi7TVD8xXqWzPpGXqrW9Fj as recipient.
Proceeds go to Muco vzw (www.muco.be)
Thank you for your support and appreciation.
More info, questions or remarks?
Koen.Vingerhoets@kbc.be
Twitter : @IthronKoen
Distributed Ledger Technology Adviser
@ KBC Bank & Insurance

Basic introduction in blockchain, smart contracts, permissioned ledgers

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