Posts by Allvo Lilard:
- 3D Technology
- Artificial Intelligence
- Computer Aided Design
- Cyber security
- Digital marketing
- Drone Technology
- Geographic Information Systems
- Internet of Things
- Remote Sensing
- Smart cities
Crypto currency is a digital or virtual currency designed to function as a medium of exchange. It utilizes computerized encoding and decoding technology to secure and verify transactions, and control the creation of new units. To help accountants and financial professionals gain a strong understanding of crypto currencies, the new blockchain technology supporting them, and the role they’ll play in our capital markets.
Digital currencies such as Bitcoin threaten to shake up the financial services industry, enabling organizations to facilitate secure transactions more swiftly than today’s asset exchanges.
Bitcoin’s blockchain technology, a decentralized digital ledger that verifies transactions between parties, can process trades, bonds and others in record time, ultimately improving the client experience. That untapped potential is a big reason why business organizations are building innovation labs to test other crypto currencies, among other digital technologies, for future use.
Blockchain, as the digital ledger, will heavily impact the way we do business in the financial services industry.
Blockchain makes cryptocurrency legit for financial services
Bitcoin and its ilk have been shunned by banking executives because they lack the backing of a centralized bank and have been used to conduct illegal transactions, such as buying and selling drugs and weapons online. Yet banks such as Bank of New York Mellon and the Bank of England have warmed to crypto currencies as renowned technology experts have championed the blockchain for its potential to shake up the financial services sector.
Banks have over the last two decades reduced settlement of stocks, bonds and other assets, which involves communications and vetting from multiple parties, from five to two days. That time lag between transaction and settlement time courts financial risk. But financial services firms using a blockchain to facilitate trades could complete transactions in record time, because the technology serves as an unimpeachable authority that doesn’t require vetting between multiple parties.
Blockchain, the technology remains in its infancy, as the financial services industry is just beginning to explore the blockchain’s potential. To cultivate the industry’s interest in the technology, some banks have launched innovation labs, where startups are attempting to build a blockchain solution that is secure, scalable, efficient and trustworthy.
Future of Finance Competition which includes a series of “immersion workshops” designed to encourage startups to develop their ideas for blockchain or other technologies that can advance global banking.
In the forseen future it will be established that, financial transaction volumes will shift toward the blockchain.
In the management of a relationship or as part of an agreement, business and all parties involved often put a contract in place. The contract defines the terms and conditions that apply in the partnership or relationship like Purchaser/merchant, tenant/Owner, subscriber/service provider.
A traditional contract, the one that is still broadly used to date, is a written document that frameworks cooperation, it includes the terms and conditions of a partnership or service agreement. The contract is written in human language and may be subject to interpretation. Since the written contract is not void of ambiguity, both parties can have a different interpretation of the contract. It requires a third party to enforce the law and to decide during a dispute for instance, but it is common that a third party is often involved even though there is no dispute.
WHAT ARE SMART CONTRACTS
Smart contracts are translations of an agreement including terms and conditions into a computational code (script). Blockchain developers write the script in a programming language like Java, C++, etc. in a way that it is void of ambiguity and does not lead to interpretation. The code translates a set of rules that are automatically executed and validated. A straightforward example is a translation of: “if X provides the service, Y pays for it.”
Smart contracts codes are uploaded into the blockchain to check the validity of a contract and enable required steps. From its initialization, a smart contract is automatically executed. The main difference between smart contract and a traditional contract is that smart contract doesn’t rely on a third party; cryptographic code enforces it.
Blockchain has so many facilities and the best thing is that it gets rid of the middlemen altogether. So, you won’t have to pay any intermediate anymore, not while you’re on blockchain network anyway. Blockchain technology has introduced smart contracts that change the very nature of how we do business today.
This system really saves up a lot of time. They have their fair share of problems. However, they are one of the cheaper, faster and more secure methods than all traditional means. It is the sole reason for banks or governments not being so fond of this awesome tech.
Block chain is an innovative new technology with the power to disrupt existing economic and business models. Block chain also has enormous potential for emerging markets. These nations appear poised for a more rapid adoption of block chain, though a framework is needed to assess how the technology can be deployed and which applications and use cases are likely to be seen in the near future.
While the potential of block chain is great, the technology is still at an early stage of development and will need to overcome potential setbacks—technical, regulatory, and organizational—before it becomes mainstream.
In such a context of uncertainty, companies in emerging markets can neither afford to wait until the outcome is evident nor expose their existing business models to overly risky wholescale block chain initiatives. Instead, they will need to adopt an experimental approach that allows them to develop options and thereby learn in the process, inform their strategies, and improve their value propositions.
The success of block chain as a technology depends on the extent of its adoption. An appreciation of the underlying factors or impediments to adoption of this technology will help uncover challenges that may need addressing.
Regions and countries are driven by different social and cultural behaviors, values, principles and economic priorities. These kind of qualitative attributes have a bearing on the extent of adoption of disruptive technologies like block chain. It is important to understand these factors in the local context before assessing a society’s readiness for block chain. We examine some of these critical factors from multiple perspectives – social, cultural, economic, legal and political – and the influence they have on large scale adoption of block chain.
In financial services, for example, the existing infrastructure is shallow in almost all low-income countries, many of which have also suffered from de-risking in the wake of the financial crisis. Fortunately, this handicap may accelerate adoption of block chain, as a lack of financial infrastructure also means less organizational resistance to the new technology and lower transition costs for moving from a legacy to a new system.
Consequently, regulators and existing financial institutions in emerging markets have less incentive to prevent the block chain revolution, as it does not massively disrupt existing market conditions. Global payments and trade finance are examples of sectors experiencing a flurry of initiatives from market frontrunners and new entrants alike.
Both have high transaction and verification costs that block chain can reduce by improving the speed, transparency, and process. Emerging market nations have large population segments that remain underserved in terms of financial and banking services due to the high cost of customer acquisition for traditional financial institutions.
In addition, the extensive use of mobile based services, particularly in Africa and Asia, provides an easy avenue for a blockchain-based system to extend its services. Even in lower income countries, mobile penetration is extremely high, at 83 percent among the 16-to-65 age bracket. If blockchain manages to provide proof of concept for a viable business model in payments for mobile banks and other financial players, it would advance the longstanding developmental goal of financial inclusion. Serving previously unprofitable customers and small and medium-sized companies can generate up to $380 billion in additional revenues.
So blockchain may provide emerging markets an opportunity to leapfrog traditional technologies, as happened with mobile technology in many emerging market regions, particularly Sub-Saharan Africa.
I have concluded that when blockchain is combined with cryptocurrency, marketplaces can be ‘bootstrapped’ to function without the use of traditional ‘trusted parties’ and thereby result in significantly lower networking costs for participants. We also find that open blockchains will likely have the most drastic effect on market structure, challenging the market power of incumbents and lowering the cost of entry for new entrants.
Blockchain technology enables multiple parties to reach an agreement on the authenticity of a transaction in a decentralized manner. These outcomes are then permanently recorded across a shared database known as a blockchain, which is cryptographically secured.
Because the blockchain ledger is shared among all participants involved, no one has sole ownership over the information that is recorded on the blockchain. This makes sure that the information cannot be tampered with. Multiple blockchain configurations are in use today that utilize different methods of reaching an agreement or consensus, depending on the type of blockchain network. For example, today’s well-known bitcoin blockchain operates as a permissionless network in which anyone can participate. Alternatively, many enterprises are choosing to operate a permissioned blockchain in which only known entities may participate as this model provides more privacy, speed, and administrative tools to manage the network.
By design, a blockchain business network securely shares information between different organizations by distributing ledger transactions to peer nodes located throughout the business network, including nodes physically located within a competing organization’s security environment and domain. The same blockchain security design features that enable these secure cross-organizational information transfers are also ideally suited to ensure the safe, efficient and cost-effective transfer of information across different government and military network security domains — for example between classified and unclassified military networks.
The security controls and assured sharing inherent to high assurance off-the-shelf hardware infrastructures, can provide secure, timely and consistent end-to-end sharing of information within and across disparate security domains. A blockchain-based cross-domain solution is likely to be less complex, more effective and less expensive than traditional, special-purpose cross-domain guards when mitigating the high stakes security risks of cross-domain information transfer.
The value to you
A blockchain cross-domain solution reduces frictions to your information exchange process and improves accessibility, accountability and traceability of information exchange. Specifically, it provides:
A single shared view of each asset throughout its life cycle regardless of the network domain.
In a standard cross-domain guard, there is no way to ensure the information residing on each side of the guard remains in sync over its lifecycle. The scope of the guard’s visibility and control is limited.
Auditable control and oversight of asset information throughout the life cycle.
The shared ledger provides a definitive, unalterable record of what was shared and by whom, even across network security domains. This eliminates trying to track and tie together the separate guard-only data flows.
Information sharing rather than merely moving data.
Data controls and sharing occur naturally and directly via the shared ledger as part of the normal blockchain business network. A traditional guard merely moves data.
Reduced cost with higher security.
The technology leverages commercially maintained open source blockchain rather than proprietary, one-off, special-purpose, limited market guard technologies. A larger user base translates to more demand, faster detection of shortcomings, and shorter innovation and repair cycle.
Blockchain has the potential to change the rules by automating trust, increasing transparency, and simplifying business processes. However, to unleash its full potential, it needs to be based on an established set of standards that meets the complex needs of the enterprise. In addition, today’s organizations are seeking industry specific solutions to transform their business processes and need the ability to build blockchain networks that are interoperable.
It’s unknown to many what BLOCKCHAIN actually means. Let’s start from the basics.
A blockchain is a so-called Distributed Ledger Technology, a database made of consecutive blocks of data, cryptographically approved and recorded by a network of validators by means of computing power.
Such structure means that a blockchain is:
- Decentralized: the network is validated and updated by its own users, and they retain a copy of the whole blockchain. Central control is not required.
- Immutable:every transaction is recorded in a cryptographically-approved block, which is dependent on the block before it. Editing a data record in a blockchain would change the cryptographic code (or hash) and become a bright anomaly to all validators.
The first-ever product built on this technology is quite famous: the Bitcoin.
Every time a validator computes a block’s hash, he/she can be rewarded with coins, in order to create an economic incentive for this behavior. But again, Bitcoin is just an application of the blockchain technology.
In fact, it has several use cases across different industries. Among these, the Banking sector is safely assumed to experience a blockchain revolution.
There are many innovative, network business models that are coming after traditional financial services and banking organizations, and big banks are beginning to realize they must evolve in response if they want to remain viable in a digitally centric world — whether it comes by acquiring, partnering or developing leading-edge technologies. But what’s less clear is why, exactly, these new entrants are so disruptive and powerful. What enables them to skirt perceived constraints of these once ‘too large to fail’ incumbents and exploit unseen possibilities? In short, it is network-centered thinking with platform-based business models.
Blockchain enthusiasts believe that the application possibilities are endless — improving the way we hold and transfer secure goods from money to deeds to music to intellectual property. In fact, blockchain, as a pure platform technology, may be able to cut out the middlemen.
This technology can radically change many established processes in international finance.
- Payments and remittance: a blockchain can enable peer-to-peer transactions over the internet. Oversea and cross-border payments can therefore become faster and cheaper.
- Issuance, ownership and transfer of financial instruments: the peer-to-peer nature implies that users are able to transfer ownership without intermediaries. This concept can apply to securities markets.
- Servicing of instruments: advanced blockchain platforms (such as Ethereum) support smart contracts, i.e. they can pre-program actions in the blockchain, such as dividend or coupon payments.
- Regulatory reporting: this is straightforward, as the blockchain is not only a database, but also an immutable record. Hence, it allows a transparent and accurate reporting.
- Know-Your-Client and Anti-Money Laundering: every identity can be stored as a permanent ID in a blockchain, which means a much more efficient KYC AML process.
- Reconciliation: this process becomes abruptly redundant, as every user owns a copy of the whole database (one version of truth).
- Clearing and settlement: a programmable blockchain allows for a much safer trade lifecycle.
Of these 7 use cases, we should focus our attention on the last one.
The revolution of a streamlined trade lifecycle
The trade lifecycle in the financial industry is incredibly important, as it is the basis for trillions of financial assets.
In fact, approximately 80 to 90% of world trades happens because of trade finance.
In practice, the most common product is the LoC, “Letter of Credit”, which guarantees a payment from one party to another. How does this letter enable global trade?
In short, trade finance reconciles exporters and importers’ needs by guaranteeing a payment between parties and reducing risk. The first actor, the exporter, maximizes its utility by receiving the payment before shipping goods to the exporter, while the latter does so by paying upon receiving those same goods.
Simply put, this impasse is solved by two banks and one Letter of Credit.
The importer’s bank issues a LoC to the exporter via its bank, essentially guaranteeing payment once proof of shipment of purchased goods is available.
This mechanism has been solving the trust issue between the parties, protecting them and electing banks as money holders, for years. How? Easy guess: paperwork, the only way to reconcile different parties and certify goods movements.
Until the blockchain.
The purchase is first shared with the import bank by using a so-called Smart Contract.
In real-time, the bank can digitally review the agreement, and draft the required documents to send to the export bank.
The latter will review them and generate a Smart Contract to cover terms & conditions and obligations.
Then, everything becomes a matter of digital signatures in the contract.
In fact, the exporter signs the Blockchain-equivalent letter of credit to initiate shipment, which is inspected and digitally approved and signed in every phase by 3rd parties’ audits, recording every step in the smart contract.
Finally, the reception of goods automatically triggers the payment, which is automated, again, via smart contract.
What can we expect in the next future
In the most extreme case, it is possible to assume that the whole trade lifecycle will be managed entirely peer-to-peer in the future.
Importers and exporters will sign the agreement, store funds in a smart contract, certify the logistic process by using dedicated IoT devices connected to the blockchain, and unlock the funds once delivery is proven.
The process of disintermediation from banks is certainly supported by the technology’s characteristics and potentials, but it is yet to be proved as viable and as safe as the current solutions.
In a milder scenario, banks will simply be able to simplify the process by an order of magnitude, creating a win-win disruption where traders enjoy less risks and low-latency payments.
Both cases equally show how the Blockchain can radically change decades-old process and industries.
A blockchain is a mesh network of computers linked not to a central server but rather to each other. Computers in this network define and agree upon a shared state of data and adhere to certain constraints imposed upon this data.
This shared state is simply a distributed state machine, with each “block” making a change to the current, known, shared state.
In general, blockchain technology has the core characteristics of decentralization, accountability, and security. This technique can improve operational efficiency and save costs significantly. The demand and usage of applications built on blockchain architecture will only evolve.
The blockchain technique allows digital information to be distributed, rather than copied. This distributed ledger provides transparency, trust, and data security.
Blockchain architecture is being used very broadly in the financial industry. However, these days, this technology is employed not only for cryptocurrencies, but also for record keeping, digital notary, and smart contracts.
The blockchain is a decentralized, distributed ledger (public or private) of different kinds of transactions arranged into a P2P network. This network consists of many computers, but in a way that the data cannot be altered without the consensus of the whole network (each separate computer).
The structure of blockchain technology is represented by a list of blocks with transactions in a particular order. These lists can be stored as a flat file (txt. format) or in the form of a simple database. Two vital data structures used in blockchain include:
- Pointers – variables that keep information about the location of another variable. Specifically, this is pointing to the position of another variable.
- Linked lists – a sequence of blocks where each block has specific data and links to the following block with the help of a pointer.
Logically, the first block does not contain the pointer since this one is the first in a chain. At the same time, there is potentially going to be a final block within the blockchain database that has a pointer with no value.
Basically, the following blockchain sequence diagram is a connected list of records:
Blockchain architecture can serve the following purposes for organizations and enterprises:
- Cost reduction – lots of money is spent on sustaining centrally held databases (e.g. banks, governmental institutions) by keeping data current secure from cyber crimes and other corrupt intentions.
- History of data – within a blockchain structure, it is possible to check the history of any transaction at any moment in time. This is a ever-growing archive, while a centralized database is more of a snapshot of information at a specific point.
- Data validity & security – once entered, the data is hard to tamper with due to the blockchain’s nature. It takes time to proceed with record validation, since the process occurs in each independent network rather than via compound processing power. This means that the system sacrifices performance speed, but instead guarantees high data security and validity.
Types of Blockchain Architecture Explained
Nodes in Public vs. Private Blockchains
All blockchain structures fall into three categories:
- Public blockchain architecture
A public blockchain architecture means that the data and access to the system is available to anyone who is willing to participate (e.g. Bitcoin, Ethereum, and Litecoin blockchain systems are public).
- Private blockchain architecture
As opposed to public blockchain architecture, the private system is controlled only by users from a specific organization or authorized users who have an invitation for participation.
- Consortium blockchain architecture
This blockchain structure can consist of a few organizations. In a consortium, procedures are set up and controlled by the preliminary assigned users.
These are the core blockchain architecture components:
- Node – user or computer within the blockchain architecture (each has an independent copy of the whole blockchain ledger)
- Transaction – smallest building block of a blockchain system (records, information, etc.) that serves as the purpose of blockchain
- Block – a data structure used for keeping a set of transactions which is distributed to all nodes in the network
- Chain – a sequence of blocks in a specific order
- Miners – specific nodes which perform the block verification process before adding anything to the blockchain structure
- Consensus (consensus protocol) – a set of rules and arrangements to carry out blockchain operations
Any new record or transaction within the blockchain implies the building of a new block. Each record is then proven and digitally signed to ensure its genuineness. Before this block is added to the network, it should be verified by the majority of nodes in the system.
The data stored inside each block depends on the type of blockchain. For instance, in the Bitcoin blockchain structure, the block maintains data about the receiver, sender, and the amount of coins.
A hash is like a fingerprint (long record consisting of some digits and letters). Each block hash is generated with the help of a cryptographic hash algorithm (SHA 256). Consequently, this helps to identify each block in a blockchain structure easily. The moment a block is created, it automatically attaches a hash, while any changes made in a block affect the change of a hash too. Simply stated, hashes help to detect any changes in blocks.
The final element within the block is the hash from a previous block. This creates a chain of blocks and is the main element behind blockchain architecture’s security..
Any corrupt attempts provoke the blocks to change. All the following blocks then carry incorrect information and render the whole blockchain system invalid.
On the other hand, in theory, it could be possible to adjust all the blocks with the help of strong computer processors. However, there is a solution that eliminates this possibility called proof-of-work. This allows a user to slow down the process of creation of new blocks. In Bitcoin blockchain architecture, it takes around 10 minutes to determine the necessary proof-of-work and add a new block to the chain. This work is done by miners – special nodes within the Bitcoin blockchain structure. Miners get to keep the transaction fees from the block that they verified as a reward.
Each new user (node) joining the peer-to-peer network of blockchain receives a full copy of the system. Once a new block is created, it is sent to each node within the blockchain system. Then, each node verifies the block and checks whether the information stated there is correct. If everything is alright, the block is added to the local blockchain in each node.
All the nodes inside a blockchain architecture create a consensus protocol. A consensus system is a set of network rules, and if everyone abides by them, they become self-enforced inside the blockchain.
For example, the Bitcoin blockchain has a consensus rule stating that a transaction amount must be cut in half after every 200,000 blocks. This means that if a block produces a verification reward of 10 BTC, this value must be halved after every 200,000 blocks.
As well, there can only be 4 million BTC left to be mined, since there is a maximum of 21 million BTC laid down in the Bitcoin blockchain system by the protocol. Once the miners unlock this many, the supply of Bitcoins ends unless the protocol is changed.
To recap, this makes blockchain technology immutable and cryptographically secure by eliminating any third-parties. It is impossible to tamper with the blockchain system; as it would be necessary to tamper with all of its blocks, recalculate the proof-of-work for each block, and also control more than 50% of all the nodes in a peer-to-peer network.
Blockchain Network Creation
Once an organization, or a few, decide to implement a blockchain solution, they are already creating a network. The network could be viewed as companies with their personnel or from the perspective of the technical infrastructure within these companies.
To make it more concrete, let’s take the example of diamonds. Risks and challenges associated with diamonds exist during every part of the process, from the extraction of diamonds to their final, commercial result. Consumers want to be sure they are purchasing real and ethical diamonds. Government institutions want to keep track of their taxation and exports. Blockchain architecture can be used to eliminate these risks.
The parties involved in this network include:
- Diamond Manufacturers
- Government Institutions
- Diamond Transporters
- Diamond Sellers
Blockchain solutions organize all these parties into a peer-to-peer network that helps to remove all the mentioned risks and build a transparent system. Everyone would receive access to the synchronized data of a “shared, immutable ledger” and be able to keep track of the diamond’s moving from manufacturing to the final consumer. The blockchain ledger would hold the sequence of all actions occurring like diamond mining, refining, and distribution.
In most cases, each organization within a network holds their own copy synced together with clever protocols and technical layers of blockchain network (called peers). As well, in order to outline a few processes happening at the same time, there is the Ordering Service. This is shared among all parties deciding the transactions within the blockchain structure and their order. In case with multiple users, there is a Membership Services Provider (MSP) that allows access for particular users inside the network.
In the end, all the transactions during this path are kept in a general ledger (e.g data with diamond photos, place of extraction, color, serial number, place where it was cut, purified, sold, etc.). This information is complete and authentic.
Here is a high-level hyperledger architecture diagram to create a blockchain solution.
Diagram from the Hyperledger Composer
Blockchain Code Creation
After the blockchain network is set up, the next step is to agree upon the type of business transactions happening inside the blockchain architecture. In reality, these rules are written in legal agreements. Logically, within the blockchain code, this refers to a Smart Contract (also called as Chaincode or Business Network Definition from Hyperledger Composer).
Skills Required to Build Blockchain Architecture
To be a blockchain developer is a demanding task that requires a lot of technical skills and a complex background. Generally, in order to work with blockchain architecture, a strong background in Computer Science or Engineering is most desirable. As well, knowledge pertaining to consensus methods, data structures, decentralized ledgers, cryptographies and cryptocurrencies, and data security is also highly sought after.
Recently, the task of developing a blockchain has been simplified with the help of Ethereum and other similar blockchain software. Ethereum is an open source software platform based on blockchain technology allowing for the building and deployment of decentralized applications (DApps).
In terms of the coding skills required to develop a blockchain solution, one should become familiar with a range of programming languages, not one specifically. If the goal is to implement a customizable blockchain system, programming languages such as C++, Python, C, Java, and Ruby help to accomplish this task. As well, web development skills like HTML, CSS, Node JS could become handy.
In case you are interested in writing smart contracts (smart contracts are the programs stored in the blockchain system and used to automatically exchange coins or any other funds based on predefined conditions) using Ethereum, the contract-based programming language Solidity is required.
Aside from hard programming skills, blockchain developers need to understand business requirements and operations, as well as possess great cooperation and negotiation skills.
Key Characteristics of Blockchain Architecture
Blockchain architecture possesses a lot of benefits for businesses. Here are several embedded characteristics:
- Cryptography – blockchain transactions are validated and trustworthy due to the complex computations and cryptographic proof among involved parties
- Immutability – any records made in a blockchain cannot be changed or deleted
- Provenance – refers to the fact that it is possible to track the origin of every transaction inside the blockchain ledger
- Decentralization – each member of the blockchain structure has access to the whole distributed database. As opposed to the central-based system, consensus algorithm allows for control of the network
- Anonymity– each blockchain network participant has a generated address, not user identity. This keeps users’ anonymity, especially in a public blockchain structure
- Transparency – the blockchain system cannot be corrupted. This is very unlikely to happen, as it requires huge computing power to overwrite the blockchain network completely
Create Your Own Blockchain Architecture
To summarize everything, blockchain technology can be viewed from business, legal, and technical perspectives as a great solution. It can help businesses run daily operations more easily within a network of mutually agreeing members. From a legal perspective, any intermediaries are excluded from the blockchain ledger and any connection is made between involved parties only. At the same time, technically, it ensures control, security, and privacy of data inside the system.
Blockchain technology enables organizations & companies in the following ways:
- Possibility to complete transactions much more quickly and with trust
- Cost reduction for businesses, or cross-enterprise processes while removing intermediaries, inefficiencies, and duplications
- Introduction of modern digital interaction
- Opportunity to keep detailed control over business processes and transactions without a central control point
- Remove cheating, cyber attacks, or other electronic crimes
A blockchain, with its transparent mechanisms and maximum clarity, will ultimately revolutionize the way individuals and societies carry out transactions and deal with one another. Unsurprisingly, many projects already exist using blockchain architecture.
The future looks bright for blockchain solutions. These are applied in fields like crowdfunding, stock trading, the sharing economy, in many aspect of the healthcare industry, etc.
This blockchain-as-a-service (BaaS) provides the easiest, lowest-risk gateway to experimenting with distributed ledger technology in the cloud. Eliminate the need for a large upfront capital investment and fast-track blockchain implementation across your business.
Traditional systems tend to be cumbersome, error-prone and maddeningly slow. Intermediaries are often needed to mediate the process and resolve conflicts. Naturally, this costs stress, time, and money. In contrast, users find the blockchain cheaper, more transparent, and more effective. Small wonder that a growing number of financial services are using this system to introduce innovations, such as smart bonds . The former automatically pays bondholders their coupons once certain preprogrammed terms are met. The latter are digital contracts that self-execute and self-maintain, again when terms are met.
Examples of blockchain financial services applications
1 Asset Management: Trade Processing and Settlement
Traditional trade processes within asset management (where parties trade and manage assets) can be expensive and risky, particularly when it comes to cross border transactions. Each party in the process, such as broker, custodian, or the settlement manager, keeps their own records which create significant inefficiencies and room for error. The blockchain ledger reduces error by encrypting the records. At the same time, the ledger simplifies the process, while canceling the need for intermediaries.
2 Insurance: Claims processing
Claims processing can be a frustrating and thankless procedure. Insurance processors have to wade through fraudulent claims, fragmented data sources, or abandoned policies for users to state a few – and process these forms manually. Room for error is huge. The blockchain provides a perfect system for risk-free management and transparency. Its encryption properties allow insurers to capture the ownership of assets to be insured.
3 Payments: Cross-Border Payments
The global payments sector is error-prone, costly, and open to money laundering. It takes days if not longer for money to cross the world. The blockchain is already providing solutions with remittance companies such as Abra, Align Commerce and Bitspark that offer end-to-end blockchain powered remittance services. In 2004, Santander became one of the first banks to merge blockchain to a payments app, enabling customers to make international payments 24 hours a day, while clearing the next day.
Three Companies Leading the Blockchain as a Service (BaaS) Revolution
Ethereum Blockchain as a Service by Microsoft Azure: In November 2015, Microsoft and ConsenSys entered a partnership to create Ethereum blockchain as a service (EBaaS) on Microsoft Azure. The service is aimed to empower corporate clients, partners and developers to experiment with distributed ledger technology by offering them “a single-click, cloud-based blockchain developer environment.
In addition to the opportunity to experiment, it allows them to create private-, public- and consortium-based blockchain environments using industry-leading frameworks very quickly, distributing their blockchain products with Azure’s World Wide distributed (private) platform.
Rubix by Deloitte: Rubix provides solutions for clients to understand and capture the power of blockchain for their businesses. The solution allows to prototype, test and build customized blockchain and smart contract application for any use case.
They build blockchain-based apps more rapidly on Rubix because its blockchain as a service API allows us to focus on user experience and business domain.”
Photogrammetry is the science and technology of obtaining spatial measurements and other geometrically reliable derived products from photographs.
Photogrammetry is an engineering discipline and as such heavily influenced by developments in computer science and electronics. The ever increasing use of computers has had and will continue to have a great impact on photogrammetry. The discipline is as many others, in a constant state of change. This becomes especially evident in the shift from analog to analytical and digital methods.
Mapping from aerial photographs can take on numerous forms and can employ either hardcopy or softcopy approaches. Traditionally, topographic maps have been produced from hardcopy stereo-pairs in a stereo-plotter device. A stereo-plotter is designed to transfer map information without distortions, from stereo photographs. A similar device can be used to transfer image information, with distortions removed, in the form of an Orthophoto.
Orthophotos combine the geometric utility of a map with the extra “real-world image” information provided by a photograph. The process of creating an Orthophoto depends on the existence of a reliable DEM for the area being mapped. The DEM is usually prepared photogrammetrically as well. A digital photogrammetric workstation generally provide the integrated functionality for such tasks as generating: DEMs, digital Orthophotos, perspective views, and “fly-throughs” simulations, as well as the extraction of spatially referenced GIS data in two or three dimensions.
Data acquisition in photogrammetry is concerned with obtaining reliable information about the properties of surfaces and objects. This is accomplished without physical contact with the objects which is, in essence, the most obvious difference to surveying. The remotely received information can be grouped into four categories
Geometric information involves the spatial position and the shape of objects. It is the most important information source in photogrammetry.
Physical information refers to properties of electromagnetic radiation, e.g., radiant energy, wavelength, and polarization.
Semantic information is related to the meaning of an image. It is usually obtained by interpreting the recorded data.
Temporal information is related to the change of an object in time, usually obtained by comparing several images which were recorded at different times.
The remotely sensed objects may range from planets to portions of the earth’s surface, to industrial parts, historical buildings or human bodies. The generic name for data acquisition devices is sensor, consisting of an optical and detector system. The sensor is mounted on a platform. The most typical sensors are cameras where photographic material serves as detectors. They are mounted on airplanes as the most common platforms.
The photogrammetric products fall into three categories: photographic products, computational results, and maps.
Photographic products are derivatives of single photographs or composites of overlapping photographs. During the time of exposure, a latent image is formed which is developed to a negative. At the same time diapositives and paper prints are produced. Enlargements may be quite useful for preliminary design or planning studies. A better approximation to a map is rectifications. A plane rectification involves just tipping and tilting the diapositive so that it will be parallel to the ground. If the ground has a relief, then the rectified photograph still has errors. Only a differentially rectified photograph, better known as orthophoto, is geometrically identical with a map.
Composites are frequently used as a first base for general planning studies. Photomosaics are best known, but composites with orthophotos, called orthophoto maps are also used, especially now with the possibility to generate them with methods of digital photogrammetry.
Aerial triangulation is a very successful application of photogrammetry. It delivers 3-D positions of points, measured on photographs, in a ground control coordinate system, e.g., state plane coordinate system. Profiles and cross sections are typical products for highway design where earthwork quantities are computed. Inventory calculations of coal piles or mineral deposits are other examples which may require profile and cross section data. The most popular form for representing portions of the earth’s surface is the DEM (Digital Elevation Model). Here, elevations are measured at regularly spaced grid points.
The development of photogrammetry clearly depends on the general development of science and technology. It is interesting to note that the four major phases of photogrammetry are directly related to the technological inventions of photography, airplanes, computers and electronics.
Photogrammetry had its beginning with the invention of photography by Daguerre and Niepce in 1839. The first generation, from the middle to the end of last century, was very much a pioneering and experimental phase with remarkable achievements in terrestrial and balloon .
The second generation, usually referred to as analog photogrammetry, is characterized by the invention of stereophotogrammetry by Pulfrich (1901). This paved the way for the construction of the first stereoplotter by Orel, in 1908.
Airplanes and cameras became operational during the first world war. Between the two world wars, the main foundations of aerial survey techniques were built and they stand until today. Analog rectification and stereoplotting instruments, based on mechanical and optical technology, became widely available. Photogrammetry established itself as an efficient surveying and mapping method.
The basic mathematical theory was known, but the amount of computation was prohibitive for numerical solutions and consequently all the efforts were aimed toward analog methods. Von Gruber is said to have called photogrammetry the art of avoiding computations. With the advent of the computer, the third generation has begun, under the motto of analytical photogrammetry. Schmid was one of the first photogrammetrists who had access to a computer. He developed the basis of analytical photogrammetry in the fifties, using matrix algebra. For the first time a serious attempt was made to employ adjustment theory to photogrammetric measurements. It still took several years before the first operational computer programs became available. Brown developed the first block adjustment program based on bundles in the late sixties, shortly beforeAckermann reported on a program with independent models as the underlying concept.
As a result, the accuracy performance of aerial triangulation improved by a factor of ten. Apart from aerial triangulation, the analytical plotter is another major invention of the third generation. Again, we observe a time lag between invention and introduction to the photogrammetric practice. Helava invented the analytical plotter in the late fifties.
However, the first instruments became only available in the seventies on a broad base. The fourth generation, digital photogrammetry, is rapidly emerging as a new discipline in photogrammetry. In contrast to all other phases, digital images are used instead of aerial photographs. With the availability of storage devices which permit rapid access to digital imagery, and special microprocessor chips, digital photogrammetry began in earnest only a few years ago. The field is still in its infancy and has not yet made its way into the photogrammetric practice.
 Multilingual Dictionary of Remote Sensing and Photogrammetry, ASPRS, 1983, p. 343.
 Manual of Photogrammetry, ASPRS, 4th Ed., 1980, p. 1056.
 Moffit, F.H. and E. Mikhail, 1980. Photogrammetry, 3rd Ed., Harper & Row Publishers, NY.
 Wolf, P., 1980. Elements of Photogrammetry, McGraw Hill Book Co, NY.
 Kraus, K., 1994. Photogrammetry, Verd. Dümmler Verlag, Bonn.
The term Geographic Information System (GIS) is hard to define. It represents the integration of many subjects. A broadly accepted definition of GIS is the one provided by the National Centre of Geographic Information and Analysis: a GIS is a system of hardware, software and procedures to facilitate the management, manipulation, analysis, modelling, representation and display of georeferenced data to solve complex problems regarding planning and management of resources.
Geographic information systems have emerged in the last decade as an essential tool for urban and resource planning and management. Their capacity to store, retrieve, analyze, model and map large areas with huge volumes of spatial data has led to an extraordinary proliferation of applications.
Geographic information systems are now used for land use planning, utilities management, ecosystems modelling, landscape assessment and planning, transportation and infrastructure planning, market analysis, visual impact analysis, facilities management, tax assessment, real estate analysis and many other applications.
Functions of GIS include: data entry, data display, data management, information retrieval and analysis. A more comprehensive and easy way to define GIS is the one that looks at the disposition, in layers of its data sets. “Group of maps of the same portion of the territory, where a given location has the same coordinates in all the maps included in the system”. This way, it is possible to analyse its thematic and spatial characteristics to obtain a better knowledge of this zone.
Finding distances: GIS can be used to find out what’s occurring within a set distance of a feature.
Mapping and monitoring change: GIS can be used to map the change in an area to anticipate future conditions, decide on a course of action, or to evaluate the results of an action or policy.
Mapping quantities: People map quantities, like where the most and least are, to find places that meet their criteria and take action, or to see the relationships between places. This gives an additional level of information beyond simply mapping the locations of features.
Mapping locations: GIS can be used to map locations. GIS allows the creation of maps through automated mapping, data capture, and surveying analysis tools.
Mapping densities: While you can see concentrations by simply mapping the locations of features, in areas with many features it may be difficult to see which areas have a higher concentration than others. A density map lets you measure the number of features using a uniform areal unit, such as acres or square miles, so you can clearly see the distribution.
Geospatial data has both spatial and thematic components.
Geographic data can be broken up in two elements: observation or entity and attribute or variable. GIS have to be able to manage both elements.
Spatial component: The observations have two aspects in its localization: absolute localization based in a coordinates system and topological relationship referred to other observations.
Thematic component: The variables or attributes can be studied considering the thematic aspect (statistics), the locational aspect (spatial analysis) or both (GIS).
Data for GIS applications
Data for GIS applications includes:
- remote sensing and aerial photography
- GPS field sampling of attributes
- digitized and scanned data
Vector based GIS
Vector is a data structure, used to store spatial data. Vector data is comprised of lines or arcs, defined by beginning and end points, which meet at nodes. The locations of these nodes and the topological structure are usually stored explicitly. Features are defined by their boundaries only and curved lines are represented as a series of connecting arcs.
Vector storage involves the storage of explicit topology, which raises overheads, however it only stores those points which define a feature and all space outside these features is ‘non-existent’. A vector based GIS is defined by the vectorial representation of its geographic data.
According with the characteristics of this data model, geographic objects are explicitly represented and, within the spatial characteristics, the thematic aspects are associated. There are different ways of organizing this double data base (spatial and thematic).
Vectorial systems are composed of two components: the one that manages spatial data and the one that manages thematic data. This is the named hybrid organization system, as it links a relational data base for the attributes with a topological one for the spatial data. A key element in these kind of systems is the identifier of every object. This identifier is unique and different for each object and allows the system to connect both data bases.
Vector representation of data
Vector data, the basic units of spatial information are points, lines (arcs) and polygons. Each of these units is composed simply as a series of one or more co-ordinate points, for example, a line is a collection of related points, and a polygon is a collection of related lines.
Pairs of numbers expressing horizontal distances along orthogonal axes, or triplets of numbers measuring horizontal and vertical distances, or n-numbers along n-axes expressing a precise location in n-dimensional space. Co-ordinates generally represent locations on the earth’s surface relative to other locations.
A zero-dimensional abstraction of an object represented by a single X,Y co-ordinate. A point normally represents a geographic feature too small to be displayed as a line or area; for example, the location of a building location on a small-scale map, or the location of a service cover on a medium scale map.
A set of ordered co-ordinates that represent the shape of geographic features too narrow to be displayed as an area at the given scale (contours, street centrelines, or streams), or linear features with no area (county boundary lines). A lines is synonymous with an arc.
An ARC/INFO term that is used synonymously with line.
A feature used to represent areas. A polygon is defined by the lines that make up its boundary and a point inside its boundary for identification. Polygons have attributes that describe the geographic feature they represent.
Raster based GIS
Raster representation of data Raster is a method for the storage, processing and display of spatial data. Each area is divided into rows and columns, which form a regular grid structure. Each cell must be rectangular in shape, but not necessarily square. Each cell within this matrix contains location co-ordinates as well as an attribute value.
The spatial location of each cell is implicitly contained within the ordering of the matrix, unlike a vector structure which stores topology explicitly. Areas containing the same attribute value are recognized as such, however, raster structures cannot identify the boundaries of such areas as polygons.
Raster data is an abstraction of the real world where spatial data is expressed as a matrix of cells or pixels, with spatial position implicit in the ordering of the pixels. With the raster data model, spatial data is not continuous but divided into discrete units. This makes raster data particularly suitable for certain types of spatial operation, for example overlays or area calculations.
Raster structures may lead to increased storage in certain situations, since they store each cell in the matrix regardless of whether it is a feature or simply ’empty’ space.
Grid size and resolution
A pixel is the contraction of the words picture element. Commonly used in remote sensing to describe each unit in an image. In raster GIS the pixel equivalent is usually referred to as a cell element or grid cell. Pixel/cell refers to the smallest unit of information available in an image or raster map. This is the smallest element of a display device that can be independently assigned attributes such as color. Pixel size and number of rows and columns: “The size of the pixel must be half of the smallest distance to be represented”.
RASTER DATA MODELS
Advantages and Disadvantages of raster and vector data models
It is a simple data structure
Overlay operations are easily and efficiently implemented
High spatial variability is efficiently represented
It is required for more efficient enhancement and manipulation of digital images.
It provides more compact data than the raster model
It provides efficient encoding of topology and as a result more efficient application of operations such as network analysis.
Better suited to supporting graphics that closely approximate hand drawing maps.
Data capture for raster datasets can include:
Rasterisation of vector data
The process of converting vector data, which is a series of points, lines and polygons, into raster data, which is a series of cells each with a discrete value. This process is essentially easier than the reverse process, which is converting data from raster format to vector format.
Raster to vector conversion
The process of converting an image made up of raster cells into one described by vector data. This may or may not involve the encoding of topology.