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Blockchain Fundamentals

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Santiago Rivera González
Santiago Rivera González

Transactions are verified through consensus between participants without a central authority, ensuring integrity through cryptography. This allows blockchain to be used for a range of business processes and new industries. Blockchain consists of a distributed digital ledger of transactions grouped in blocks and verified through consensus of nodes before being added to the permanent, unalterable chain in a way that eliminates the need for intermediaries.

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Transactions are verified through consensus — participants confirm changes with one another—and cryptography ensures the integrity and security of the information. This eliminates the need for a central certifying authority. Blockchain can be used for a range of business processes and is also the foundation for new industry ecosystems. Blockchain fundamentals Someone requests a transaction. The transaction is complete. The new block is then added to the existing blockchain, in a way that is permanent and unalterable. Once verified, the transaction is combined with other transactions to create a new block of data for the ledger. A verified transaction can involve cryptocurrency and other digital tokens, records, or other information. The requested transaction is broadcast to a peer-to-peer network consisting of nodes. A blockchain is a distributed, tamperproof digital ledger. Validation The nodes validate the transaction and the user’s status using known algorithms. Digital representations of assets, securities, and currencies, which can be used to fractionalize asset ownership, increase liquidity, and improve transaction speeds among token holders. Right to goods or services, such as data storage, advertising rights, or energy propositions. Rights to the value of an underlying commodity, such as oil or coffee beans. Investment interest in a company, including entitlement to profits or rise in company value. Like Bitcoin and Ether, these are payment consideration similar to traditional fiat currencies. Digital tokens Currency tokens Utility tokens Commodity tokens Security tokens
Putting blockchain to work Smart contracts allow for automated transactions based on predetermined conditions or triggering events. This unlocks a second layer of value for blockchain use cases, while making it easier to maintain and enforce governance throughout the blockchain network. © 2018 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. 463977-2018 pwc.com/blockchainsurvey Records and contract management Ensuring that contracts are executed according to listed conditions and enabling consumers to share records across multiple entities, while safeguarding data privacy. Asset traceability Finance Payments, royalties, and licensing Identity management Audit and compliance Digital currencies Tracking goods and parts along the supply chain and throughout their life cycle to improve decision making about inventory management and repairs. Accelerating settlement times and minimizing disputes and reconciliations through automated, real-time, three-way matching and billing, and seamless cross-border payments. Automating predetermined contract terms and enabling faster royalty payments and subscription revenue settlements, while increasing trust in customer data. Authenticating identity on a blockchain for credential, identity, and loyalty and rewards program management. Facilitating financial transactions with a decentralized currency that crosses borders and eliminates intermediaries. Enabling real-time transaction-level assurance and providing additional transparency to stakeholders. Tax and customs Automating and streamlining compliance burdens by executing transactions precisely and reliably while automatically generating documentation. Benefits Barriers Increased transparency and traceability Faster transactions Elimination of intermediaries Lower costs Regulatory uncertainty Collaboration challenges Complex technology Trust issues

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Blockchain Fundamentals

  • 1. Transactions are verified through consensus — participants confirm changes with one another—and cryptography ensures the integrity and security of the information. This eliminates the need for a central certifying authority. Blockchain can be used for a range of business processes and is also the foundation for new industry ecosystems. Blockchain fundamentals Someone requests a transaction. The transaction is complete. The new block is then added to the existing blockchain, in a way that is permanent and unalterable. Once verified, the transaction is combined with other transactions to create a new block of data for the ledger. A verified transaction can involve cryptocurrency and other digital tokens, records, or other information. The requested transaction is broadcast to a peer-to-peer network consisting of nodes. A blockchain is a distributed, tamperproof digital ledger. Validation The nodes validate the transaction and the user’s status using known algorithms. Digital representations of assets, securities, and currencies, which can be used to fractionalize asset ownership, increase liquidity, and improve transaction speeds among token holders. Right to goods or services, such as data storage, advertising rights, or energy propositions. Rights to the value of an underlying commodity, such as oil or coffee beans. Investment interest in a company, including entitlement to profits or rise in company value. Like Bitcoin and Ether, these are payment consideration similar to traditional fiat currencies. Digital tokens Currency tokens Utility tokens Commodity tokens Security tokens
  • 2. Putting blockchain to work Smart contracts allow for automated transactions based on predetermined conditions or triggering events. This unlocks a second layer of value for blockchain use cases, while making it easier to maintain and enforce governance throughout the blockchain network. © 2018 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. 463977-2018 pwc.com/blockchainsurvey Records and contract management Ensuring that contracts are executed according to listed conditions and enabling consumers to share records across multiple entities, while safeguarding data privacy. Asset traceability Finance Payments, royalties, and licensing Identity management Audit and compliance Digital currencies Tracking goods and parts along the supply chain and throughout their life cycle to improve decision making about inventory management and repairs. Accelerating settlement times and minimizing disputes and reconciliations through automated, real-time, three-way matching and billing, and seamless cross-border payments. Automating predetermined contract terms and enabling faster royalty payments and subscription revenue settlements, while increasing trust in customer data. Authenticating identity on a blockchain for credential, identity, and loyalty and rewards program management. Facilitating financial transactions with a decentralized currency that crosses borders and eliminates intermediaries. Enabling real-time transaction-level assurance and providing additional transparency to stakeholders. Tax and customs Automating and streamlining compliance burdens by executing transactions precisely and reliably while automatically generating documentation. Benefits Barriers Increased transparency and traceability Faster transactions Elimination of intermediaries Lower costs Regulatory uncertainty Collaboration challenges Complex technology Trust issues