2017 Global Blockchain Benchmarking Study

Table of Contents
2
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
4
Dr Garrick Hileman
Research Fellow, Head of Cryptocurrency
and Blockchain Research
g.hileman@jbs.cam.ac.uk
Michel Rauchs
Research Assistant
m.rauchs@jbs.cam.ac.uk

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 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

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)

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

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

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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