The un(der)banked is FinTech’s largest opportunity

Blockchain-as-a-Service (BaaS) provides the ultimate sandbox.
Associated with a distributed ledger stack are hosted services that
encompass all aspects of the technology in a third-party cloud
environment. IBM and Microsoft Azure have introduced BaaS offerings
to leverage their existing Web service platforms. Amazon Web Services
has taken a different approach in partnering with organizations that are
helping enterprises experiment with blockchain. These services help
customers develop, test, and deploy distributed ledger solutions in an
on-demand environment — blockchain is still technical and requires
much experimentation, a situation for which cloud environments are
ideal.
The protocol is taking different shape to address shortcomings
A notable aspect of Exhibit 10 (see next page) is the advancements made
from the initial bitcoin protocol, which was designed for transfer of value.
Ethereum, for example, can codify contracts, which expands the use case
beyond a transfer-of-value mechanism. The ability to unite the data with
the messaging layer enables this functionality and is an architectural
difference from the current Internet and database design. As such, these
new protocols, supported with smart contracts, can effectively automate
the concept of an audit natively within the transaction. This is a
significant expansion in capability and enables the development of a
wide range of applications beyond cryptocurrency transfer of value.
Development of various distributed ledger protocols has made enhanced
use of smart contracts and sidechains that significantly expand the
potential use of the underlying technology:
• Smart contracts: This technology predates bitcoin and is essentially
an automated program that executes the terms of a contract directly
within the distributed ledger. As business partners establish the set
terms and conditions of a transaction, the smart contract can execute
on these terms with an automated validation and audit.
Advancement of
the protocol to
include codified
contracts has
expanded
the breadth
of possible
applications on
a blockchain
infrastructure.
• Sidechains: Sidechain technology runs alongside the messaging
layer to alleviate some shortcomings of the messaging protocol. For
example, sidechains can be used to enable immediate transactions
and add a layer of privacy on the blockchain.
Another aspect of the different protocols is the Turing complete concept
of the program. The objective of bitcoin is a cryptocurrency transfer-ofvalue
medium, and the technology is limited when used for transactions
beyond this. Select solutions that are Turing complete (such as Ethereum
with its Solidity language and Hyperledger’s chain code programmed
with Go) can execute a wider variety of industry use cases. The inclusion
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