Blockchain technology is causing a furore across all sectors. And question marks. We bring you up to date.
The blockchain is an unchangeable, highly available and decentralized database in which all information is audit-proof and can be protected against unauthorized access via encryption. Important applications include intelligent contracts ( Smart Contracts ), tracking of goods, rights management and products in the financial and banking sector.
Definition: This is the blockchain
The Blockchain is a novel technique for storing data and allows the secure management of information of any kind. The blockchain originated in the Internet currency Bitcoin , in which monetary values are transferred without a central authority, ie a bank.
Elementary constituents of the blockchain are the transactions. Two parties exchange information with each other. Subsequently, the data is verified and validated, verifying whether a party has the appropriate rights for these transactions. This is followed by mining (German: digging) whereby after a certain time, the transactions are combined into blocks and a hash value is formed over it. Thereafter, the blocks are appended to the chain and distributed over a peer-to-peer network.
What’s up with Blockchain, Bitcoin and Co.?
Another cryptocurrency based on the blockchain principle. Provides a platform for programmable smart contracts. The “ethers” are regarded by fans as a legitimate successor to the Bitcoins (see also above picture).
Microsoft Azure cloud-built service that allows users to put external data into a blockchain without destroying their security and integrity. As an individualized middleware, cryptlets can also be developed by Azure users themselves – in any programming language – and build the bridge from the blockchain to new business services in the cloud.
Digital money, without coins and bills. Cryptography builds a distributed, secure and decentralized payment system. Does not require banks, but computing power and technical aids such as the blockchain.
A blockchain is a distributed database that maintains an ever-growing list of transaction records. The database is extended chronologically linearly, similar to a chain, at the lower end constantly new elements are added (hence the term “block chain” = “block chain”). If one block is complete, the next one is created. Each block contains a checksum of the previous block.
The blockchain technical model was developed as part of the cryptocurrency Bitcoin – a web-based, decentralized, public accounting system for all Bitcoin transactions ever made.
A globally available decentralized payment system and the name of a digital monetary unit. You do not need a bank to handle Bitcoin payments – everything is done through a peer-to-peer network of computers and the blockchain as the central database.
The open source software validates the entire blockchain and was released in early 2009 by a certain “Satoshi Nakamoto” under the name “Bitcoin”. Bitcoin Core was in C ++ soon to be programmed especially for Windows systems. A little later the porting to GNU / Linux followed. Because the developers are divided, there are now some derivatives of Bitcoin software, including Bitcoin XT, Bitcoin Unlimited or Bitcoin Classic.
The “scalable blockchain database” can manage up to one million writes per second, store petabytes of data, and still have a latency of less than a second – all managed in a decentralized manner and with the highest data integrity. The technical basis is blockchain technology.
Financial term for “distributed account management”. Bitcoin is a completely new technical approach to distributing information about specific assignments. There is no longer a classic account managed centrally at a bank, but “account management” is based on a network of communicating systems.
A computer log that can depict or review contracts or provide technical support for negotiating a contract. Could in future replace the written contract.
The startup R3 CEV builds the blockchain-based “Global Fabric for Finance”. With around 50 financial partners, the largest block chain in the world to be developed – a first test run with eleven banks, including Barclays, Credit Suisse, HSBC, UBS and UniCredit has already been successfully completed. R3CEV has entered into a strategic partnership with Microsoft to develop blockchain infrastructure and technology in the Azure Cloud.
A free software with which every user can develop their own blockchain application.
An open source protocol for a payment network – currently under development. P2P payment method and foreign exchange market in one, based on the cryptocurrency “XRP”. However, ripple users are not set to this one currency, but can use any currency – including euros, dollars or yen, for example.
Blockchain brings these benefits
A blockchain is a database with two elementary properties: On the one hand, it is tamper-proof due to a very complex encryption process , the so-called hash function. On the other hand, many copies of the database are distributed across a network, where 51 percent of all instances would need to be changed to successfully forge a database entry. With today’s technology, this would require billions of dollars to be invested to manipulate a single entry in the blockchain. That would be completely uneconomical and ultimately leads to the high security against manipulation of the blockchain.
Another important aspect is the decentralized nature of the blockchain: If the server fails in a classic database , it can no longer be used. If a part of the nodes of the block chain fails, the remaining participating nodes can continue to be used.
Another advantage is that the blockchain does not require a large infrastructure. For example, banking transactions are also carried out in developing countries without a bank having to exist as the central authority. Even a kind of land register and birth register – which does not exist in all countries – can be mapped via a blockchain.
Insurance giant with blockchain initiative
The five insurance companies Aegon, Allianz, Munich Re, Swiss Re and Zurich have set up a joint initiative for blockchain technology. The B3i project (Blockchain Insurance Industry Initiative) aims to explore how the distributed databases can make insurance more efficient. A first pilot project of the partners should check whether insurance business processes can be mapped and managed using the new technology.
Blockchain technology considerably reduces the expense of documenting and managing insurance contracts and speeds up information and cash flows. However, there are currently no binding industry standards or legal frameworks for these distributed cash books.
On its own initiative, the Alliance had already a few months ago, the trading of so-called ” catastrophe bonds “ on Blockchain basis tested. Trading and administration of these securities could be significantly simplified and accelerated, it said. In particular, the ability to automate financial products as a block-based program code (“smart contract”) seems to have inspired the insurer.
Bundesbank & Deutsche Börse are working on Blockchain
Bundesbank and Deutsche Börse are jointly exploring the opportunities and risks of blockchain technology for financial transactions. “The Deutsche Bundesbank and the German stock exchange have a high interest in the blockchain technology”, said Bundesbank executive committee Carl Ludwig Thiele with the presentation of a prototype for the securities handling on the basis of the new technology. Both partners emphasized that the concept study was far from being ready for the market. So the transaction takes too long to process and is too memory intensive.
The intended prototype of the stock market blockchain is based on the Hyperledger project , which runs under the roof of the Linux Foundation. Among other things, the stock market blockchain should enable securities to be exchanged for centrally issued value units. In addition, simple capital measures such as interest distributions or repayments are also to be settled when a security matures – probably via smart contracts.
In the near future, a 40-member project team from both institutions will design the prototype. Currently, however, it is assumed that an executable version is expected in years rather than months. The hope behind the experiments is that middlemen such as clearing houses can be saved, information flows can be accelerated and contracts can be automated.
42 leading international banks joined forces in September 2015 to form an R3CEV consortium to explore the potential for finance. Currently, more than 70 of the world’s leading financial institutions are associated in this consortium. The aim of the network is to build only one system at the end of development that all banks can use. Currently the project is in the conception phase. It will be another one to two years before a first version is up and running. The savings potential for infrastructure costs in the banking sector is estimated at 50 to 70 percent.
The first product of the association is the Blockchain variant Corda . The new technology is specifically designed for financial institutions and a Distributed Ledger Platform designed to manage and synchronize financial arrangements between regulated financial institutions. The main difference between Bitcoin and Corda is that unlike the Bitcoin Blockchain, Corda does not distribute the entire list of transactions to the nodes, but only to the confirmed transactions.
After nearly every relevant bank and stock exchange in the world joined the consortium in the past 18 months to develop a blockchain on finance, the first banks have now retreated. Despite the high goals and the work done so far, the project is on the brink of failure. In addition to founding member Goldman Sachs, Morgan Stanley, Santander and National Australia Bank have also left the consortium. Rumors suggest that more banks plan to exit . The financial institutions JP Morgan, Macquarie Group, US Bancorp and others are being discussed.
It can therefore be doubted that Verbund will ever produce a marketable product. It is argued that the framework of 70 members with competing interests may be too large to reach consensus on a common platform. For example, Goldman Sachs would have had to pay a lot of money for the project, but ultimately could hardly exert any direct influence on the result. Goldman’s goal is to develop a blockchain on its own .
According to ” Fortune “, the withdrawal of several members is also favored by a change in the financing arrangements. Originally it was planned that the members in return for their investment together receive 90 percent of the shares of the company. Ten percent of the shares should have remained at R3. A corresponding financing round was launched in May 2016. Their goal has since been reduced from the original 200 to 150 million dollars. The banks also collectively receive 60 percent of the company’s shares in exchange for their investment.
Roundtable Computer Week Blockchain
Experts from the professor to the practitioner gathered at the Computerwoche editorial office in early February to dissect the myth Blockchain.
Professor Franz Nees, Karlsruhe University of Applied Sciences Technology and Business: “Is it about new value creation models – or ‘just’ more efficiency?”
“The good thing about the blockchain hype is that we question existing paradigms,” says Olaf Stöwer, Head of Operations at Faizod, a Dresden-based company.
Dr. Robert Bosch, Partner at Bearingpoint: “Many market participants are taming the horse from behind, with the motto: ‘We have a new technology, what can we do with it now?’”
Professor Rainhard Z. Bengez, Senior Manager at Capgemini Consulting: “We are trying to commercialize mistrust.”
Raimund Gross, Innovation Manager Blockchain at SAP: “We move away from centralized systems to the decentralized. This requires new thinking and acting in networks. That’s hard for many. ”
Andrea Martin, Chief Technology Officer at IBM: “We are only interested in use cases.”
Burkhard Blechschmidt, Cognizant’s CIO Advisory: “It’s an ingenious combination of some long known technologies and mathematical models.”
The savings potential of Blockchain
Marco Dunand, the CEO of Mercuria, one of the world’s largest commodity traders (in the oil sector), sees big benefits in the blockchain for his industry. Dunand announced that it wouldpromote collaboration with stakeholders on technology. Finally, Blockchain offers the opportunity to exert great influence on how commodities are traded and exchanged.
Blockchain-based payments can greatly reduce administrative costs. It is estimated that the cost of payments will be reduced by about 30 percent and the functionality of the market will be improved. At the same time, the introduction of such a development will not work so fast unless several companies come together and work on common block chain networks for the oil market.
For the first time, two banks completed cross-border commodities business via Blockchain in October 2016 . It was a supply of cotton shipped from the US to China. The transaction was handled by the Commonwealth Bank of Australia and the US bank Wells Fargo. The Australian cotton trader Brighann Cotton Marketing had ordered the delivery from its subsidiary in Texas – the transaction completed via Blockchain therefore had a value of $ 35,000.
“Existing trade financing processes are ripe for disruption and this demonstrates how companies around the world can benefit from the emerging technologies,” said Michael Eidel, executive manager of the Commonwealth Bank for Payment Services.
The blockchain for journalists
In many countries journalists struggle with censorship and repression. It happens again and again that editorships are closed by government agencies and journalists are arrested. The decentralization of blockchain technology and its relative independence from political institutions can help to bypass global censorship.
“No third party will ever have control over what gets published or not,” reads Veritas’ white paper – The Blockchain for Journalists. “The decisions are democratically made by the community and secured by a validation system, each member has the same participation rights, even the founding members have no privileges.”
The validation takes place as follows:
- The author sends his article to the community.
- The article is distributed arbitrarily to a large number of users.
- Users vote for the article to validate and categorize it.
- 1000 votes must be generated.
- The validation process has to be confirmed by the majority of the network (at least 51 percent).
- Those who voted for the “successful” article will be rewarded with “Trusted Points”.
To ensure that only reputable authors and readers become part of the Veritas platform, the developers have developed a voting-based payment system. According to the whitepaper, each article needs 1000 votes to be validated. Each voice is in turn linked to a specific amount of money. The payout depends on the value of the vote: the higher the value, the higher the payout.
Email on Blockchain basis
Sending e-mails is part of everyday life for many people. The biggest problem with the previous technology is that there is no legal certainty. The sending of a classic letter is accepted in court rather than the manipulation-prone e-mail. In particular, the reading status is uncertain, it can not be proved that the e-mail has actually been received, or was read.
A blockchain-based e-mail system could remedy this situation. Each sent message is written to the blockchain. This allows the sender to prove that he has sent the message. This, in turn, has great advantages, for example when it comes to terminating contracts. Furthermore, the read status can be stored in the blockchain. This proves that the recipient has read the message. Such a system could thus replace the relatively costly sending of registered mail in the future. Legal certainty is guaranteed – unlike the previous e-mail and e-mail letter. Leading supplier of such software is currently the company faizod .
Chat programs and services can also be mapped in a blockchain. This would have the immense advantage of being able to identify the perpetrators in the case of crimes that were arranged in the chat. The legislator would have to create the legal framework and explore the benefits of privacy and law enforcement. Technically, a block-chain-based monitoring of chat messages would be possible today.
14 rules for e-mail traffic
Everything that spans more than two pages belongs in an attached file.
In most e-mail systems, there are corresponding functions. As this is known, such negligence is taken ill. Mistakes suggest: The author has either taken no time for me or he is a Schlendrian.
Responsiveness is one of the key benefits of electronic mail. Above all, expected messages should be answered quickly. If you are not extremely busy, you should check the inbox several times a day. However, there is no need to turn on Auto Notify for each incoming email – this distracts you too much from the work.
It is possible to send the message to a group that may interest only one percent of those involved. The effect is similar to a ride on a public transport, where one is forced to listen to the mobile phone conversation of an unknown. Anyone who answers without any need will also generate a lot of electronic garbage. In particular, when attachments are sent, unnecessarily sending to large distributors results in resource issues.
Experton recommends writing the e-mail in a style that resembles a written document (for example, a business letter). Salutation and signature (automatic signature) are a matter of course. In addition, short sentences and – for longer texts – paragraphs are recommended.
In Germany, new case law has been in force since the beginning of 2007, according to which mandatory information about the company (legal form, registered office, register court, management) is required in the appendix. In addition, it may sometimes be useful to attach copyright, copy or other legal clause information. Moreover, companies should formulate rules for e-mail traffic (e-mail policy), which should be disseminated on a regular basis so that new employees are kept up to date.
Actually a truism, and yet a mistake made again and again. Many spammers equip their message with an opt-out function by ostensibly unsubscribing the mail in the subject field with “unsubscribe”. For some spam programs that provide for the automatic sending of electronic waste, such an answer means: The addressee is there, he can receive more spam.
So the distribution circle remains unclear about who has received the message.
This is the only way to get the message out of the plethora of spam messages that fill most of the mailboxes today.
Today, there are many ways to pick up emails (emoticons, pictures, etc.). Shippers should handle it carefully, as not every mail program can handle it and waste resources. In addition, emoticons are sometimes infected with spyware. Therefore: do not download anything from unknown sources!
Recall: An e-mail that has been sent incorrectly or without an attachment will be recalled. Use sparingly, check out messages before they are sent. Often, e-mails are opened quickly and can not be called back.
Automatic answer: The out-of-office feature is really useful and should be applied! However, you should disable them quickly when you’re back in the office.
Resending: Sometimes emails never reach the addressee, perhaps because the mail server goes down. With the resend function they can be sent a second time without any problem. Before sending in the subject line insert a comment like “second try”.
Delivery confirmation: Nice to have, but not absolutely necessary. Does not work with any e-mail system.
Electronic mail offers the chance to quickly log call results from conferences or telephone calls. In this way, the results can be secured for all participants, and all measures are in line with planned measures. What has been fixed in writing is taken more seriously by the participants.
Instead, use the phone. There is no guarantee that an e-mail will be read. Often the message is overlooked, the reading is postponed or the message is deleted as alleged spam.
Using email to spread spam is not only a nuisance, but may also be illegal. And: In most cases, the sender can be quickly identified.
Conclusion: Even the blockchain has disadvantages
In addition to the advantages and applications for blockchain technology listed so far, there are also disadvantages. Markus Demary from the Institute of German Business (IW) in Cologne estimates the power consumption of the Bitcoin currency in a study . Their high hunger for energy stems from the fact that the mining principle proof-of-work binds immense computing power. The result of the study: If indeed half of the world’s population, which does not currently have its own bank account, would one day use the blockchain technology, it would consume more power than is currently produced in the world. “Even if only 10 percent of the world’s population rely on Bitcoin’s blockchain technology, it would require 22.9 percent of global electricity production,” Demary predicts.
The still young database technology has the potential to replace the previous central, relational databases in many areas and industries. The coming months will show whether the high expectations of blockchain technology can be met or whether it remains a theoretical, in practice unworkable idea. 2017 is definitely going to be a pivotal year for the Blockchain community.
- 1 Definition: This is the blockchain
- 2 What’s up with Blockchain, Bitcoin and Co.?
- 3 Blockchain brings these benefits
- 4 Insurance giant with blockchain initiative
- 5 Bundesbank & Deutsche Börse are working on Blockchain
- 6 The blockchain in the banking sector
- 7 Roundtable Computer Week Blockchain
- 8 The savings potential of Blockchain
- 9 The blockchain for journalists
- 10 Email on Blockchain basis
- 11 14 rules for e-mail traffic
- 12 Conclusion: Even the blockchain has disadvantages