Blockchain: Blueprint for a New Economy

protocol stack of the Web. After the

underlying Internet technology and

infrastructure was in place, services

could be built to run on top of it—

Amazon, Netflix, and Airbnb—

becoming increasingly sophisticated

over time and always adding new ways

to take advantage of the underlying

technology. Blockchain 1.0 has been

likened to the underlying TCP/IP

transport layer of the Web, with the

opportunity now available to build 2.0

protocols on top of it (as HTTP, SMTP,

and FTP were in the Internet model).

Blockchain 2.0 protocols either literally

use the Bitcoin blockchain or create

their own separate blockchains, but are

in the same cryptocurrency decentralized

technical architecture model of the three-

layer stack: blockchain, protocol, and

currency. However, it is important to

note that these “new Internet plumbing

layers” are very much still in

development and any metaphor might

become quickly outdated. These

analogies might be like calling Chrome a

“Napster 2.0,” or Facebook or AdBlock

a “Web Browser 3.0.”

The key idea is that the decentralized

transaction ledger functionality of the

blockchain could be used to register,

confirm, and transfer all manner of

contracts and property. Table 2-1 lists

some of the different classes and

examples of property and contracts that

might be transferred with the blockchain.

Satoshi Nakamoto started by specifying

escrow transactions, bonded contracts,

third-party arbitration, and multiparty

signature transactions. All financial

transactions could be reinvented on the

blockchain, including stock, private

equity, crowdfunding instruments, bonds,

mutual funds, annuities, pensions, and all

manner of derivatives (futures, options,

swaps, and other derivatives).

Table 2-1. Blockchain applications

beyond currency (adapted from the

Ledra Capital Mega Master

Blockchain List; see Appendix B)34

Class

Examples

General

Escrow transactions, bonded

contracts, third-party

arbitration, multiparty

signature transactions

Financial

Stock, private equity,

transactions

crowdfunding, bonds, mutual

funds, derivatives, annuities,

pensions

Public

Land and property titles,

records

vehicle registrations,

business licenses, marriage

certificates, death

certificates

Identification Driver’s licenses, identity

cards, passports, voter

registrations

Private

IOUs, loans, contracts, bets,

records

signatures, wills, trusts,

escrows

Attestation

Proof of insurance, proof of

ownership, notarized

documents

Physical

Home, hotel rooms, rental

asset keys

cars, automobile access

Intangible

Patents, trademarks,

assets

copyrights, reservations,

domain names

Public records, too, can be migrated to

the blockchain: land and property titles,

vehicle registrations, business licenses,

marriage certificates, and death

certificates. Digital identity can be

confirmed with the blockchain through

securely encoded driver’s licenses,

identity cards, passports, and voter

registrations. Private records such as

IOUs, loans, contracts, bets, signatures,

wills, trusts, and escrows can be stored.

Attestation can be executed via the

blockchain for proof of insurance, proof

of ownership, and notarized documents.

Physical asset keys (which is explored

further in Chapter 3) can be encoded as

digital assets on the blockchain for

controlled access to homes, hotel rooms,

rental cars, and privately owned or

shared-access automobiles (e.g.,

Getaround). Intangible assets (e.g.,

patents, trademarks, copyrights,

reservations, and domain names) can

also be protected and transferred via the

blockchain. For example, to protect an

idea, instead of trademarking it or

patenting it, you could encode it to the

blockchain and you would have proof of

a specific cargo being registered with a

specific datetime stamp for future proof

(as is discussed in “Digital Art:

Blockchain Attestation Services (Notary,

Intellectual Property Protection)”).

Financial Services

A prime area for blockchain businesses

is interfacing cryptocurrencies with

traditional banking and financial

markets. Venture capital–backed Ripple

Labs is using blockchain technology to

reinvent the banking ecosystem and

allow traditional financial institutions to

conduct their own business more

efficiently. Ripple’s payment network

lets banks transfer funds and foreign

exchange transactions directly between

themselves without a third-party

intermediary, as is now required:

“Regional banks can now move money

bilaterally to other regional banks

without having to relay those funds

through an intermediary. ”35 Ripple is

also developing a smart contracts

platform and language, Codius. Another

potential symbiosis between the

traditional banking industry and Bitcoin

is exemplified by Spanish bank

Bankinter’s Innovation Foundation

investment in Coinffeine, a Bitcoin

technology startup that aims to make it

possible for end users to buy and sell

Bitcoin directly without an exchange. 36

Other businesses are also connecting

Bitcoin to traditional financial and

payments market solutions. PayPal is an

instructive example because its