What is Blockchain and DLT?
Lots of people have asked me about Blockchain...and what is it? Where does one begin?
Where does one begin?
With traditional Financial Services we had 'reliable' sources to go to with a history of pedigree and sound editorial policy. e.g. You want to have a financial perspective? Can't go too far wrong with the FT (Financial Times), Financial News, Wall St Journal, AFR (Australian Financial Review) etc. But the whole Bitcoin and cryptocurrency wave came along and these traditional media are still catering to the traditional mainstream. A lot of the cryptocurrency news wires and sources are not much older than the cryptocurriencies themselves. Which sources are credible? And now, so many outlets just quickly regurgitate press releases it is hard to distinguish (at least for me) which are the meaningful stories.
For me, I just read the headline and try and place it in context. I never wholly trust any source and I always try and verify a story either by putting it into context or directly engaging with the firms or people generating the news. This is the brave new world of crypto. So just like the old school of caveat emptor (buyer/investor beware), so too with the new school of blockchain.
tl;dr (too long, don't read)
No news outlet is totally reliable, irrespective of now 'good' they are.
There is no one answer / go to site for the new blockchain crytpo world.
Just read, read some more and verify. Then challenge yourself, does it make sense? Is it believable? And then read some more!
Bitcoin.
It all started with Bitcoin. When I started out trying to understand more about this 'blockchain' thing there was very little about blockchain (conversely, now there is so much, the problem has become where does one begin?), there was however much more about Bitcoin, so that is where I started.
I started with Satoshi's white paper. The source document if you like!:
Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto
https://bitcoin.org/bitcoin.pdf
To be perfectly honest, as a starting point it was more interesting to just see the paper. The content of the paper, on first reading, didn't leave me feeling I had a grasp on all the concepts.
Then I found a channel on YouTube by the CuriousInvestor.
(https://www.youtube.com/user/CuriousInventor)
I found this posting, How Bitcoin Works Under the Hood (some 22 minutes) really useful:
https://youtu.be/Lx9zgZCMqXE
Bitcoin V Blockchain
The next piece of the journey was decoupling Bitcoin (BTC) from Blockchain. 'Blockchain' has become a noun which is broadly used, sometimes in context, sometimes out of context, to describe the underlying technology framework of Bitcoin.
What does this mean? In the 'real world', we have the 'cyber libertarians' which have embraced the new digital world and things like bitcoin and cryptocurrencies. Meanwhile, we have the Capital Markets (i.e. Banks), that feel that although Bitcoin is still tarnished with images of money laundering and silk road, that does not mean the baby should be thrown out with the bath water. Maybe the underlying technology is good and just needs to be distanced from the negative vibes around Bitcoin?....which is exactly what has transpired. So now we have lots of acceptable news stories around Blockchain technology in Capital Markets whilst the crypto-currency space can continue to evolve.
I think the best practical example of this is a US firm called itBit. They were doing both Bitcoin digital wallets...and trying to sell their blockchain experience to the Capital Markets. This is confusing and muddies the waters. So they reorganised themselves in the same manner that the industry was evolving.
https://www.coindesk.com/itbit-rebrands-paxos-amid-blockchain-pivot/
itBit: serves the Bitcoin market and exchange offering.
https://www.itbit.com/
Paxos: serves the Capital Markets (their primary offerings are in the bullion space on their bankchain fabric).
https://www.paxos.com/
Disambiguation: Blockchain and DLT
Blockchain is the name of the technology platform that underlies Bitcoin. If you want to know any of the vital statistics underlying Bitcoin you can have a look at:
https://blockchain.info/stats
...and this is also the beginning of disambiguation.
blockchain.info is very different from blockchain.com.
The former is statistics and information about the Bitcoin network....the latter is a for profit company that offers Bitcoin wallets.
To try and avoid some of this conflict and overlapping use of the word 'blockchain' people have started to introduce the term Distributed Ledger Technology ("DLT"). I would encourage you to adopt this term in your vocabulary too! Too many people mention 'blockchain' but for me I have to think, in what context are they applying that word? What do they actually mean?
(It was a shame the CSD EuroClear was ever named as such. Basically, they are EuroSettle. They settle stuff, not clear stuff - CCPs do that. I've even seen FT headlines where they have the role of a CSD confused with the role of a CCP).
So, when you talk on this subject, please be precise in what you mean - clarity today may save a lot of re-explaining in the future!
Standards
For a while, I thought a lot of pain could be avoided by the industry if it embraced standards at an early juncture. I put a lot of thought into what those standards might be.
I tried to break them down into a) Technical Standards and b) Operational / Environment standards.
I've now come to the conclusion that these are important headings, but at this juncture, we don't need industry consensus on these attributes. Just an awareness of them. I continue to look into how different fabrics can be benchmarked.
https://www.kynetix.com/news-and-insights/news/kynetix-collaborates-imperial-college-london-put-blockchain-theory-practice/
Questions?
This tab is intended to make the subject accessible - to anyone. If it fails to do so, please let me know! If you feel it could do with more colour, please ask! As ever, with this blog, it is a work in progress.
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