In was conceptualised after almost 15 years. In

In 1991, Stuart
Haber and W. Scott Stornetta proposed procedures for computationally time
stamping a digital document1
so that it would become almost impossible for any user to modify the date of
the document. It is the first known work on a cryptographically secured chain
of blocks. The following year i.e. 1992, 
Dave Bayer, Stuart Haber and W. Scott Stornetta2 proposed an
efficiency improvement that would enable to aggregate several documents into
one single block. However, this idea was conceptualised after almost 15 years.

 

In 2009, the first distributed
blockchain was implemented by an anonymous person or group known as Satoshi
Nakamoto. This blockchain was used to create a ‘cryptocurrency’ called Bitcoin,
the first digital currency, solving problem of double spending and removing
requirement of a trusted administrator.

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The introduction of Bitcoin on the
market generated a positive response both from institutions and customers, who
were eager to discover the benefits it could bring to their daily life. The
finance sector overcame its suspicions and fears over this new technology and
analyzed its underlying mechanisms, which is behind the Bitcoin’s revolution:
the blockchain.

 

 

 

 

 

 

 

 

 

Figure
2?1: The
Blockchain: how does it work?3

The main characteristics of the blockchain can be summed
up as follows:

 

·       Distributed ledger: it is designed to record each transaction which can be
distributed and synchronized across networks (i.e. useful to be applied in
supply chain and financial consortiums) with different benefits in terms of
fraud protections (the system tracks every change and allow changes only for
the authorized users), ownership insurance 
(i.e. for goods’ provenance and intellectual property)  and process’ speed (as the mediator is
replaced by a network);

 

·       Decentralization: the system enables to store the imprints of the assets
(i.e. token, contract, property register, etc.) in a network that can be
accessed over the Internet with different benefits for the users such as
transparency and immutability (the changes in the public blockchain are open to
everyone and all the transactions are immutable), authenticity and lower
transaction costs (the blockchain data is accurate and widely available and by
eliminating third party intermediaries it reduces significantly transaction
fees);

 

·      
Free and safe environment: the system cannot be
corrupted and can be programmed to record virtually different transactions by
any user who uses the protocol
and accepts its conditions. The pillar of
this free and safe environment is based on a mutual trust
between the users. This principle is one of the main characteristics of the
blockchain technology.

 

Nowadays, most financial firms have already applied or are
assessing different ways to apply the blockchain technology to a part of their processes.

 

Blockchain has evolved and has now entered a second phase
referred to as “Blockchain 2.0” with the creation of Smart contracts that will become one of the key pillars for companies applying blockchain. Furthermore,
various industries are now exploring new applications of the distributed
blockchain protocol. In early
2017, Harvard Business Review opined that blockchain is reasonably expected to
trigger as many cascades as e-commerce has done since it was invented in the
late 1990s.

In the last years the number of Blockchain wallets has been rising, starting
from the creation of the Bitcoin cryptocurrency in 2009 and, nowadays, reaching
approximately 15 million users. The figure table below illustrates the total
amount of Blockchain users worldwide, from the Q1 of 2014 to the Q3 of 2017.

 

Figure 2?2:
Blockchain Wallet User4

As the potential of blockchain is still not completely
explored, especially out of the finance sector, most companies worldwide are
approaching this technology to better understand the typology of blockchains
(private, consortium and public ones), that
better fit their needs. They are also exploring different uses of blockchain in
their processes and evaluating its effective benefits in terms of costs and
time savings: companies with efficient centralized system might not need to
implement a decentralized system as their actual needs are completely covered
by the current operating systems.

 

Moreover, different reports worldwide emphasize the
continuous increase of the relevance of
blockchain among the different players of the market: Market and
Markets report from October 2016 stated that the blockchain
technology market size will be worth 2.3 billion by 2021. It appears that the
blockchain technology could not only be disruptive, but also profitable and the first companies acting as pioneers could be the ones
to gain more advantages in terms
of knowledge and efficiency in using the technology.

 

At the moment some industries are much further advanced than others in the application of blockchain
technology, besides the cryptocurrency
use. The insurance and the payments sectors were still the leaders on the
application of the technology while the consumer (retail) and healthcare
sectors were still the latest followers.   

 

Figure 2?3:
Distribution of non Bitcoin use cases5

The last Gartner analysis of the trends that are going to
characterize the year 2018 indicates blockchain, AI and the
digitalization as the main features companies and CIOs are going to focus on.

Figure
2?4: Top 10 Strategic Technology Trends for 2018

 

A distributed ledger project requests cryptographic skills
of the company to understand what is
possible or not , as well as to identify the manner to integrate it into the actual company’s
infrastructure. It is interesting to
note that, according to Gartner, on February 2017 the word “blockchain” was the second word most
searched on its website with an increase of 400% on volume within the last 12
months. In addition to this Gartner itself registered that its clients’
enquiries on blockchain grew more than 600%.

 

It
is therefore undeniable to affirm that the interest about blockchain technology increased significantly in the last
years. At this stage still the
majority of POCs (proof or concepts) carried out among industries belong mostly
to the

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