2017 Global Blockchain Benchmarking Study

Table of Contents

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1. Blockchain and DLT 101

2. DLT Landscape

3. Use Cases and Business Models

4. Architecture and Governance

2017 Global Blockchain Benchmarking Study

5. Challenges and Interoperability

6. Public Sector

7. Appendices

Over 200 enterprise DLT start-ups, established corporations, central banks and other public sector institutions are included in the study sample*


*A number of survey respondents prefer not to have their participation disclosed. The names of participating central banks and other public sector institutions have been kept confidential.The survey data has been supplemented with secondary data sources.

Study Authors

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Dr Garrick HilemanResearch Fellow, Head of Cryptocurrency and Blockchain [email protected]

Michel RauchsResearch [email protected]


Blockchain and DLT 101

What are blockchains and distributed ledgers?


The five key components of a blockchain


Why use a blockchain?


Using a blockchain may help…


Debunking common blockchain myths (1)








Enterprise blockchain requirements vs. public blockchains (e.g., Bitcoin, Ethereum)


Main types of blockchains segmented by permission model


Note: this study will focus exclusively on closed blockchains and distributed ledgers, with the exception of permissioned applications built on top of open blockchains.

The many different terms used for ‘blockchain’ sow confusion


Distributed ledger technology (DLT) has gained popularity in 2016 as an umbrella term, but this trend appears to be receding


Blockchains and distributed ledgers share properties with replicated and distributed databases


Blockchain ⊂ Distributed Ledger ⊂ Distributed Database


DLT Landscape

DLT system layers and an example of a DLT integrated ‘stack’


Main enterprise DLT ecosystem actors


Overview of DLT software services providers


Depiction of users and operators of a distributed ledger network


Peripheral DLT ecosystem actors


The number of specialised DLT start-ups has significantly increased since 2014: majority are active in developing infrastructure


Several cryptocurrency-focused companies pivoted to DLT, primarily in 2014 and 2015


Nearly half of all DLT start-ups are based in North America


Estimated number of people working full-time on enterprise DLT


We estimate that established corporations have an additional several thousands of employees working full-time on DLT activities

Infrastructure providers have twice the median number of full-time employees as app developers and operators


Use Cases and Business Models

The banking and finance industry has the largest number of identified DLT use cases


Financial services and banking are the most frequently targeted sectors for DLT; increasing attention is given to non-monetary use cases


Percentage of DLT platforms tracking different items


Financial sector institutions are currently the main customers of DLT service providers


Some impressions from survey data about actual DLT usage


Three-quarters of study participants consider themselves to be software vendors


It is more common for infrastructure providers to open-source their DLT codebase


Open-source DLT codebases are most frequently licensed under Apache 2 and MIT


Product acceptance is the primary reason given for open-sourcing enterprise DLT codebase


’Other’ includes, among others, showcasing the quality of the codebase, fitting the overall marketing strategy, as well as facilitating interoperability and standardisation.

Business and revenue models used by enterprise DLT companies


Most infrastructure providers use a combination of multiple revenue models, whereas operators most commonly seem to focus on a single model


There is still a significant degree of uncertainty among enterprise DLT ecosystem actors regarding revenue models

Infrastructure providers with open-source codebases tend to focus on providing consulting services whereas closed-source providers are often still undecided


Monetisation primarily occurs at higher DLT stack levels: roles and lines between actors become increasingly blurred


75% of study participants have either fully operational production systems or are running advanced pilots


DLT companies that provide software development services are at a more advanced stage of deployment than operators


Lack of large-scale DLT deployments to date for a number of reasons


Predictions about future trajectory of enterprise DLT ecosystem


• Core protocol layer will consolidate around a limited number of enterprise DLT frameworks and platforms, that each serve different business requirements and use cases

• Significant number of small- to large-scale networks will be deployed (industry-specific, use case-specific, region-specific)

Architecture and Governance

Core DLT architectural building blocks


While global data broadcast is still dominant, multi-channel data diffusion is rising


Multi-channel: data is only broadcast to selected parties involved in a specific transaction (‘selective disclosure’)

Global: data is broadcast to all network participants

Overview of different approaches to storing data on-chain


One approach is not necessarily ’better’ than another as each has its advantages and drawbacks. It all depends on the acceptable trade-offs for the specific business case. This point applies in general to other DLT architectural design choices.

Operators predominantly store hashes (i.e., cryptographic fingerprints/digests of actual data) on-chain rather than the actual data


51% of study participants support the integration of decentralised storage protocols and systems (e.g., IPFS, Siacoin, STORJ)

Reaching agreement on the global state of the ledger is the most common approach to consensus


Bilateral/multilateral: consensus is reached at the local level, i.e., only between participants involved in a specific transaction or trade

Global: consensus is reached at the global level of the ledger, i.e., by all participants on the entire transaction history

Smart contracts: definition and differences in architecture


Smart contract:

Simply put, a computer program that can automatically perform some function (e.g., make a payment). Smart contracts can live on a distributed ledger and can execute automatically once triggered by an event (e.g., payment is made once an asset is transferred).

The majority of industry actors integrate smart contracts with the legal system


In practice, many operators tie smart contract code to existing legal contracts, making them effectively legally enforceable ‘smart legal contracts’

Two-thirds of study participants use or support systems with extensive smart contract functionality


Advantages and drawbacks of implementing business logic (smart contracts) at different layers


Majority of operators have not implemented fully-functional smart contract capabilities, although most software vendors support them


It is not always clear whether the business logic resides at the core protocol layer or whether it is implemented on a separate, but linked layer on top

Smart contracts appear to be, for the most part, executed by every node in current implementations


Gatekeepers/administrators of permissioned networks and applications can assume different roles


Software services provide different models for selecting the gatekeeper of a permissioned system; currently 100% of operators act as gatekeepers in their network


Software vendors predominantly maintain the codebase while operators approve software upgrades


Offering regulators a node is the most common intended method for granting regulatory access to ledger data


‘Other’ includes, among others, regulators receiving a full replica of sub-ledger transactions or being copied into each transaction they show a specific interest in

Tokenisation vs native assets (both tangible and intangible)


a) Issuance of new (native) assets:An asset (e.g., bond) is issued on a distributed ledger (‘primary issuance’): its existence is solely defined by the ledger, and so is ownership. The asset becomes a digital bearer asset in the sense that the entity controlling the corresponding private key owns the asset.

b) Tokenisation of existing assets:An existing asset (e.g., gold held in custody) is digitally represented on a distributed ledger (‘tokenised’): the ledger keeps a record of ownership changes, but cannot enforce transfers of the underlying asset on-chain, as it is outside of its reach (‘off-chain’).

Support for tokenising existing assets and issuing new assets is significantly lower amongst operators


Tokenising real-world assets will always require off-chain processes


Challenges and Interoperability

Legal risks and an unclear regulatory environment are perceived as key inhibitors of broader DLT adoption, followed by privacy and a reluctance to change established practices


Important takeaways from survey respondents on DLT challenges


Wide range of additional challenges are slowing down broad enterprise DLT adoption


Privacy is frequently cited as a key challenge; on-chain data encryption is the most common method for enhancing privacy


Majority of DLT software roadmaps include the implementation of zero-knowledge proofs and ring signatures


Performance and scalability claims from survey respondents


Desired interoperability generally falls into two major categories


Only 25% of DLT networks run by operators are interoperable with other DLT networks and applications


Lack of standards makes interoperability between networks built on different protocol specifications difficult to achieve

DLT interoperability is most common with Ethereum, Bitcoin and Hyperledger Fabric


Percentage of DLT providers who are part of at least one industry initiative or consortium


Public Sector

Countries where public sector institutions have publicly announced various DLT engagements; US has > 10 different institutions working on DLT, followed by UK and Russia with 4


Public sector interest in DLT research programs and projects has become a global phenomenon


European public sector institutions represent just under half the study sample, followed by Asia-Pacific (23%)


Public sector study sample is approximately equally composed of central banks and other government institutions


A quick note about the term ‘OPSIs’ – Other Public Sector Institutions


We conservatively estimate that more than 500 public sector staff are working full-time on various DLT-related activities


Central banks have in general more staff working on DLT-related activities than OPSIs


Central banks are investigating a wide range of DLT uses beyond digital currency and payments


Other use cases explored by central banks


OPSIs are exploring a wide variety of DLT use cases, with managing identities and ownership records most common


72% of OPSIs are exploring two or more different use cases, compared to 53% of central banks

Other use cases explored by OPSIs


Benefits of using DLT – central banks


Benefits of using DLT – OPSIs


Majority of central banks and OPSIs are already engaged in proofs of concept and/or more advanced trials


Central banks are engaged in more activities, but OPSI activities are more advanced in terms of deployment


Two-thirds of central banks and 86% of OPSIs are directly experimenting with DLT protocols


Ethereum is more frequently used by central banks than by other public sector institutions (OPSIs); 57% of central banks are experimenting with the Ethereum codebase*


*Note: some institutions are experimenting with multiple protocols. For example, several central banks are experimenting with both the public and permissioned versions of Ethereum, and so the total % of central banks testing some version of the Ethereum codebase is 57%

Differences exist between which protocols are actually being tested and what is publicly reported


OPSIs more frequently undertake DLT projects in collaboration with DLT software vendors than do central banks


DLT-related projects undertaken by central banks and OPSIs often involve the participation of a variety of different private sector actors


Central banks are more actively collaborating on the international level than OPSIs; however, mostly information exchange


Majority of OPSIs plan to trial DLT this year; central banks are significantly more conservative


OPSIs are expressing a greater likeliness of DLT adoption in the next few years than central banks


Central banks are considerably more reserved about the impact of global DLT use in the public sector in the future


Key challenges to DLT adoption in the public sector


Challenges to DLT adoption in the public sector – central bank perspective


Challenges to DLT adoption in the public sector – OPSI perspective


Additional challenges mentioned by public sector institutions


Appendices

List of DLT use cases compiled from survey responses (1)


List of DLT use cases compiled from survey responses (2)


Nearly 90% of study participants indicate using a ‘blockchain’ data structure


However, this does not imply that control over this data structure is necessarily decentralised – chaining hashes together has been common practice for decades (‘journaling’)

Glossary: Technology (1)


Glossary: Technology (2)


Glossary: DLT system


Glossary: Enterprise DLT ecosystem actors


A note on the term ‘validators’


Suggested alternative terms:• Blockchains: block signers• Non-blockchain distributed ledgers: consensus nodes

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