Research Blockchain Bonds & Regulatory Compliance (Research Paper Sample)

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Blockchain- Bonds & Regulatory Compliance (Asset Structuring).
1. Explain the link of block chain as an information system.
A block chain is a database that is distributed that keeps an endless and growing list or ‘blocks' of data records which have been foul proofed or encrypted against any form of revision or tampering, even by the operators themselves. Initially, block chain was used by the software application Bitcoin, which recorded a public ledger of transactions through this phenomenon. This inspired a lot of implementation of the technology which might or might not have a similar design or function to Bitcoin’s protocol (Ahmed, James and Singh 34).
The link of block chain as an information system hails from the unique fact that block chains are a form of decentralized consensus. Decentralized consensus breaks away from the former phenomenon of a centralized agreement. The centralized consensus was when one pivotal database used to rule the validity of a transaction. On the other hand, a scheme of decentralized consensus, based on the blockchain protocol, relocates trust and authority to a virtual network that is decentralized and enables the nodes in the network to sequentially and continuously record any transaction undertaken in a block that is publicly available thus creating an exclusive chain (Youden and Connor 2). The new block then attached to the chain on the previously created block and this sequence continues (Caetano 13). Accordingly, one can see that this phenomenon forms an information system as computers and people that interpret and process the information make up the system; in this case, however, they do not have the power to change any form of data in the system because of cryptography and blockchain technology merge and ensure that there can never exist a duplicate transaction (Shadab 13).
2. Explain how the progression of blockchain is in the open markets (distribution and all)- in its varying forms, colored coins, exchanges and the entire spectrum of competition (payment systems, etherem, linux-[private public ledgers) etc with the current world trade and the global MNCs, VCs and institutions that are involved in building the system.
Since the debut of the block chain, a lot of different MNCs, VCs, and other institutions adopted the system based on the advantages it bears. Thousands of different blockchains have arrived on the market. Some have fizzled out while some have been successful. In this section, a focus will be put on the progression of the block chain and the entire spectrum of competition. A mention of MNCS, VCs and other institutions using block chains, particularly Ripple, Ethereum, Eris Industries and Nasdaq and Overstock will be made.
The progression of blockchains can be divided into two; financial uses progressions and non-financial uses progressions. Financial uses cases include data storage, currency exchange, and remittance, P2P transfers, ride sharing, trading platforms, and gaming. Data storage is evidenced in companies such as Peernova and Storj.io; these companies use block chains to enable peer to peer networks of file sharing thereby removing the need for a database that is centralized and heavy storage areas. Currency exchange and remittance application of blockchains include BitPesa, Ripple, Coinbase, and Kraken among others ("New Kid On The Blockchain"). On the other hand, P2P transfers is an application of blockchains where one can pay for music, bonds, make donations using blockchain currency. Ride sharing is a value transfer system that is point based on ride sharing; the major player in this industry is La’zooz. Trading platforms have also incorporated blockchains into their system enabling one to trade using Bitcoins. Lastly, blockchain application in gaming is evidenced in companies such as PlayCoin that allow a person to purchase Playcoins that they can use to buy games, characters among others ("New Kid On The Blockchain").
On the other hand, block chains also have some non-financial uses that include app development, network infrastructure and APIs, Gold and Silver, Diamonds, Real Estate, reviews, smart contracts, marketplace, and digital identity among others (Peters, Panayi and Chapelle 12). Figure 1 below shows the various progression of block chains along with the numerous companies in these spheres.
Figure SEQ Figure \* ARABIC 1-Various applications of Blockchains and Companies in these spheres (LTP 1).
One company that is worth mentioned based on the fact that it is a big contender in the blockchain ‘industry’ is Ethereum. This group is notable based on the fact that it was able to raise over $18 million from crowdfunding. The main purpose of this group is to "decentralize the web." (Wright and De Filippi 34). They hope to do this by the introduction of four facets namely, dynamic messages, static content publication, integrated user-interface, and trustless transactions. These facets are designed the modern web by replacing some aspects of it (Virtual Currencies And Beyond).
3. Explain how that ties in with the economy, finance, banking.
As discussed in the previous section, it is clearly seen that since the debut of the block chain, a lot of different MNCs, VCs, and other institutions adopted the system based on the advantages it bears. Some of the companies mentions include Ethereum, Everledger among others. However, a lot was not discussed on how this ties with the economy, finance, and banking. This will be highlighted in this section (Leistert 24).
Financial institutions and banks have become active in investing in this space. Some of these banks and financial institutions include NASDAQ, Deutsche Bank, Us Federal Reserve, EBA, SCB, BNY Mellon among others. Each of these has reasons as to why they want to adopt the technology. NASDAQ, for example, wants to utilize the block chain as improve the capabilities they have on their Private Market Platform (Guadamuz and Marsden 10). The block chain will revolutionize the trading industry by reducing trade settlement times and making the trading platform more efficient and in a way assure the traders will earn a lot of money (Decentralized Applications). BNY Mellon created their own currency which they term as ‘BK Coins." These coins have used a means of corporate recognition by enabling people awarded the points to renew them for gifts or other rewards (Marco 8).
On the other hand, banks mainly use want to be able to use block chains in the future to store securities, property rights and loans in block chains in order to accurately monitor them and to also be able to share trustless information among themselves. The US Federal Reserve, for example, wants to be able to use block chains to have a record of land ownership; this move will significantly reduce the chances of fraud in property ownership (Smart 1).
One can also recall the financial crisis that hit the United States of America and crippled the US economy. This financial crisis was gravely contributed by the banks not sharing information among themselves and thus issuing bad mortgages. Blockchains can reduce the effects of events that can cripple the economy from happening and thus can be of great benefit to the economy (Rushkoff 56).
4. Explain the technology behind that is helping to backup and structure this blockchain system and what are the stabilizing and destabilizing points.
Blockchains simply function by the creation of a scheme of decentralized consensus, based on the blockchain protocol, relocates trust and authority to a virtual network that is decentralized and enables the nodes in the network to sequentially and continuously record any transaction undertaken in a block that is publicly available thus creating an exclusive chain (Youden and Connor 2). The new block then attached to the chain on the previously created block and this sequence continues. Accordingly, one can see that this phenomenon forms an information system as computers and people that interpret and process the information make up the system (Vigna and Casey 23). Nonetheless, despite its promising future, block chains has its stabilizing and destabilizing points, which will be covered below.
The stabilizing points for block chains include the facts that it provides freedom for payment, the information delivered is transparent and control and security (Coin Report 1). It provides freedom of payment in that one can be able to receive and receive money from anywhere in the world seamlessly. Control and security are provided by enabling the owners of block chains to have complete control over their transactions. Lastly, information between block chains are transparent, and any user can see it from their location at any time (Coin Report 1). On the other hand, the destabilizing points in block chains are the risk and volatility involved, lack of awareness and understanding, and it is still developing. These destabilizing points are what has made block chains not be adopted quickly, but as soon as they are resolved, blockchains will be adopted in all industries.
5. Explain how an incubation can help in linking up the system as one. Bring in the concept of bonds which represents the ...