Blockchain and Other Distributed Ledger Technologies Primer

Abstract

Blockchain and other distributed ledger technologies offer new tamper-proof ways to verify identity and ownership, to make near-instant payments without the need for the involvement of third parties, to store value (e.g. through cryptocurrency), to facilitate peer-to-peer fundraising and lending (e.g. ICOs and STOs), to automate the execution of contractual agreements and related workflows (e.g. via smart contracts), to improve auditability, to distribute data storage, and to do all of this more securely., 1 2 The transformative impact of blockchain technologies has been equated to the advent of the internet. As with early applications of the internet, the applications of blockchain technologies are just in their infancy and have much more potential for growth in breadth and impact on business and society. The business value of these expanding blockchain applications includes expanded opportunities for product innovation (companies offering new or enhanced products and services enabled by use of blockchain technologies), business model innovation (finding more efficient, effective and profitable ways to serve existing and/or new customers), operational efficiency (automating workflows, removing third parties and related costs, reducing downtime and errors), customer access (being able to remotely serve billions of customers in developing economies who previously couldn&s;t be served due to lack of bank accounts identity verification mechanisms, and high third-party costs), risk mitigation (enhanced security, privacy and auditability from blockchain&s;s sophisticated cryptography, distributed consensus, immutability, and ability to shard data so it does not exist in complete form on any one node), and social change (enhanced transparency may lead to changes in customer behaviors that businesses can capitalize on or may need to adapt to).