Blockchain &Smart Contracts

Project Management tools in the 21st Century

1

Ancient Ledgers – Early Transactional Trust 2

Modern Ledgers – Still Basically the Same? 3

Current Information Systems

Lack of transparency

Current systems are not open.

Problems thrive due to hoarding

of information.

Centralised Transactions

Transactions are centralised in

select institutions, invisible to

most people.

Wastage

Systems have lots of double

handling and middle men. Lack

of automation. Promotes errors.

Ownership

Funds held in institutions can be

appropriated without consent –

Greece. Same with data.

Fraud

Lack of visibility and siloed

information means fraud can go

undetected and un-prevented.

Trust

Users must trust centralised

entities to be truthful. Limited

information makes verification

difficult. Big contracts to mitigate

risk.

4

Finance and Information Silos – Just a Few of Many Today

Bitcoin – The Genesis of Blockchain

A global ledger – hosted by many ‘nodes’

Blocks and Transactions

Built-In Verification Incentives Distributed Ledger

Transactions are broadcast to

nodes, and nodes validate

transactions, write them into

permanent ‘blocks’. Blocks are

just records of transactions.

Once on the network, cannot

be changed, ever.

Public and private keys are

encrypted which promote

security. Signatures can be

verified with algorithms.

Anyone not playing by rules

will be rejected by network.

Entries are added to the

ledger by miner nodes.

Nodes compete to get a

reward – expending

computing power. Incentives

keep them competing and

honest.

Distributed nature offers

security. The more nodes, the

more secure. The longer the

‘chain’, the more nodes, the

harder it is to attack. Ledger is

auditable – easy to pick up

issues.

6

Bitcoin is a global financial ledger, where all transactions are verified, stored permanently and everyone has complete visibility.

The Bitcoin Network

(Simplified)

Summary of a Traditional ‘Public’ Blockchain

• A distributed, open database

• Stores transactions in permanent data ‘blocks’

• Many copies of ledger worldwide

• Allows online payments without a bank

• Harnesses the power of encryption

• Built on game theory and economic incentives

• Borderless and decentralised

• Immune (in most cases) to tampering

• Secured by maths

• One of the safest ways to store value (on the

large networks)

11

If we can exchange value on a trustless global ledger, why stop at simple payments?

Ethereum & Smart Contracts 13

Ethereum

• A programmable blockchain for more than transactions

• User accounts and autonomous (contract) accounts

• A distributed, blockchain ‘operating system’

Smart contracts – applications on a blockchain

• Immutable, reliable and autonomous accounts

• Can be programmed to exchange information

automatically (as opposed to manually ala Bitcoin)

• Parties can reliably automate relationships/transactions in

agreed upon ways and have complete visibility

What does this mean? 14

The ‘level playing field’ where

people can automate their

transactional relationship

Blockchain

Code & Finance

If money is on an open platform – without

intermediaries – then code can interact with that

money without intermediaries. No banks, no paypal,

no third-party API solutions – just money and business

logic.

Visible and Consistent

Smart contracts allow transactional code - programs

which can ‘listen’ for events on the blockchain and

execute pre-determined actions, including sending

transactions of their own. This means reliable, multi-

party business logic with complete visibility.

Q & A

Traditional (Passive)

Relationship

Smart Contract (Active)

Relationship

Blockchain technology can

provide a level playing field

for parties where money and

information is exchanged.

Smart contracts allow parties add code directly to this exchange, meaning certainty of behaviour and visibility to all involved.

Blockchain: What do we

get?

18• A level online playing field

• A shared record of truth not held by any one party

• A platform-native financial unit of exchange

• Open information exchange viewable by everyone

• Automated auditability

• Code which can be programmed to act consistently

• Direct transactions between value producers and consumers

• The means to automate relationships, increase visibility and reduce the need for trust

How is Blockchain Being Used In Projects

Today?

Food Supply Chains – Walmart & Others

20

Port Management – Rotterdam, NED

21

Distributed Power – Puerto Rico

22

Blockchain Bonds – World Bank and Commbank

23

Blockchain-Based Flight Insurance – AXA

24

Not to mention… 25

Public or Private?

Public Private 27

Public vs Private DLT Platforms 28

Public Blockchain Private Blockchain

Benefit of a large distributed ledger More granular control

Wide development pool, updated automatically Can have private data

Security by decentralisation You set the rules

Wide applicability and inter-operability Generally faster

No need for trust from third parties Easier to run current applications and code

Code and smart contracts are public Responsible for updates and security

Typically slower Harder for parties to participate

Rules set by consensus of entire blockchain Less secure – more attractive for attack

More difficult to integrate current code Lack of decentralisation

Limited control over base blockchain A normal database may be better!

The Big Question:

What am I wanting to achieve?

State of Distributed Ledger Technology 30

It’s Still Early

• Railroad tracks and roads of blockchain are still being laid down

• Still waiting for many of the cars and trains to begin running

• Several enterprise contenders

• Several more about to launch

• Community adoption is happening gradually

• The examples are the ‘early movers’

Not everything needs a blockchain

• Distributed database may suffice – depends on your usecase

• Must resist the temptation to ‘sprinkle a little blockchain’ on everything

Along with AI, Blockchain may be the biggest digital innovation for business

• DLT is a trust layer for the internet

• Allows trustless, automated interactions

• Free flow of money – and the building of business logic around it

When should I consider blockchain for projects? 31

Ask:

1. Are we conducting international transactions?

2. Do we have trust or visibility issues in our relationships (including with

customers)?

3. Is there wastage, double handling or excessive administration in our

monetary processes?

4. Where are we paying people to act as trust intermediaries?

5. Could we benefit from having code govern our agreements with other

parties?

6. Do we have silos of information in our multi-party workflow?

7. Would we benefit from a ‘level playing field’ or ‘common source of truth’ in

our project (especially if other parties are involved)?

8. Could we benefit from building an open, digital structure, especially if the

project is global?

How Can DLT Be Used In Projects?

• Decentralised Autonomous Organisations

• Traceability and Active Auditing

• Supply Chain Management

• Smart Legal Contracts

• Active Agreements

• Information and Risk Management

• Relationship Automation

• Transactional Reliability

• Smart Assets

• Registers and Ledgers

• Payments, Escrow and Funds Management

• Removing Intermediaries

32

Where to Next? 33

Resources

• Podcasts (Software Engineering Daily, Epicenter, The FOMO Show)

• BlockSense website – blocksense.com.au

Meetups

• Blockchain for Business, Bitcoin & Blockchain Brisbane, Women in Blockchain,

Cardano – many other meetups

Education and Training

• Workshops & Masterclasses

• Strategic Sessions

Begin a small project

• Easiest way to tackle an obvious, but small usecases

• Get people familiar with the technology

Matthew Shearing34

Blockchain | Smart Contracts | Law | Risk & Security

© Matthew Shearing and BlockSense, 2018. All rights reserved. block-sense.io

Services:

• Training & Workshops

• Consulting

• Advisory

Email me: matt@block-sense.io

Podcast: The FOMO Show (fomo.show)

blocksense.com.au

Q & A