BitFury, a Bitcoin blockchain infrastructure provider and transaction processing company, has released a white paper outlining basic components of blockchain-based asset ledgers, as well as their use cases for financial services firms.
Entitled ‘Digital Assets on Public Blockchains,’ the white paper aims to educate and inform readers on the requirements and main components of public blockchains for use with digital assets.
The paper names the benefits of using blockchain technology for digital asset management which include the fact that the system provides an unprecedented level of resistance to counterfeit, openness, transparency and auditability.
“Blockchain could be one of transformative technologies for digital asset management, serving as a specialized platform as a service (PaaS) with significant growth potential,” it says.
“Blockchain technology could allow decoupling tasks associated with asset management and transaction processing, therefore providing an attractive alternative to existing centralized asset management platforms for small and medium-sized businesses, third-party application developers and end customers.”
BitFury identifies several use cases for blockchain technology, for instance digital assets could represent publicly traded financial assets (e.g., securities) which could be traded in a decentralized manner without requiring intermediaries. They could also represent e-money, such as alternative currencies (e.g., local currencies or in-game currencies), or claims of fiat money, as well as discounts, coupons, vouchers, gift cards, etc.
Finally, digital asset coins could be used to implement voting by sending tokens to the one of several designated addresses. Several organizations around the world have started exploring possible applications of blockchain technology for e-governance. For instance, in Europe, the D-Cent project is aimed at developing digital tools to enable direct democracy and economic empowerment. D-Cent is financially supported by the European Union’s Seventh Framework Program for research, technological development and demonstration.
In Ukraine, a number of initiatives debuted this year. One project is called E-Vox and consists in an Ethereum-based electronic election system. Another one is called E-Auction and aims at creating and deploying a transparent and decentralized digital auction system based on blockchain technology for state property privatization and lease.
The BitFury whitepaper notes that different types of blockchains can serve different purposes and argues that permissionless public blockchains offer the most potential for creating a ubiquitous infrastructure for the Internet of Value.
“In order to capture consumer-to-consumer markets and to maximize the scope of blockchain-based asset services in other cases, asset blockchains need to be open for third-party participation (including transaction processing, asset issuance and application development),” the paper reads. “Thus, permissionless or loosely regulated public permissioned blockchains could provide a fitting environment for customer-centric assets.”
On the other hand, business-oriented assets requiring blockchains with restricted access in the short term due to compliance, can opt for private, permissioned distributed ledgers.
The paper comes at a time when blockchain technology is gaining momentum, attracting investment and interest among some of the world’s leading banks and financial institutions.
A number of collaborations have emerged in recent months, the most notable one being R3 CEV’s blockchain consortium which brings together 42 banks and financial institutions to create standards and protocols for using blockchain in financial services.
Earlier this month, R3 CEV completed a trial in which 40 of its member banks tested five different blockchains to issue, trade and redeem a fixed-income product; the largest trial on blockchain technology of a real-world process in the financial markets, the company claimed.
Another initiative is called the Hyperledger Project and is a collaborative effort part of by the Linux Foundation. The Hyperledger Project was initiated by Intel, IBM, Digital Asset Holdings, Deutsche Borse Group, among other firms, and aims at creating a cross-industry open standard for distributed ledgers to transform the way business transactions are conducted globally.
Read BitFury’s ‘Digital Assets on Public Blockchains’ whitepaper: http://bitfury.com/content/5-white-papers-research/bitfury-digital_assets_on_public_blockchains-1.pdf
Featured image: Global Bitcoin Network by Oez, via Shutterstock.
