UNDERSTANDING BLOCKCHAIN

TABLE OF CONTENTS
Introduction.....................................................................................................................................................................................................3

A Short History of Blockchain Technology............................................................................................................................................4

How Blockchain Works, Simplified..........................................................................................................................................................6

Realizing the Dream of Frictionless Business Networks...................................................................................................................9

Popular Blockchain Tools for Business................................................................................................................................................12

Ten Critical Steps for Creating Your First Blockchain Application................................................................................................13

Why Blockchain is Already an integral Part of Next GenerationSecurity, Database and Financial Systems..............16

Banking industry and Regulatory Perceptions and Developments.............................................................................................17

Conclusion....................................................................................................................................................................................................18

About Renovatio PR..................................................................................................................................................................................19

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INTRODUCTION
Few technologies hold the revolutionary promise -- and have garnered the non-stop buzz -- of blockchain.
While it first attracted notice as the innovative technology underpinning the digital currency Bitcoin, today
blockchain has long outgrown that early association.

No longer merely a vehicle for creating currencies, blockchain has been adapted for a variety of profoundly
transformational uses. As you read this, people are diligently applying blockchain technologies to virtually
every industry. Blockchain is radically improving business processes, lowering costs, reducing friction and
delivering better experiences for consumers.

Given its universal applicability, it’s no exaggeration to say that blockchain holds the potential to be
Internet 2.0.

Now, to help you understand the innovations that lie ahead and how you can profit from them, let’s take a
closer look at how we arrived at this point.

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A SHORT HISTORY OF BLOCKCHAIN
Blockchain can be simply Bitcoin’s innovation was on a distributed consensus
understood as a distributed dramatic: For the first time, system called mining. Under
database that contains an it became possible to send this system, miners compete
expanding list of records, peer-to-peer currency without to verify transactions by
or blocks. These blocks are relying on intermediaries for solving algorithms. Along
interlinked and form a chain. validation. Historically, financial with confirming transactions,
Transactions are immutably transactions required the use mining enforces chronological
recorded and any number of of a third party -- an entity to blockchain order and protects
assets (houses, intellectual ensure that money being sent the neutrality of the network.
property, or almost anything was, in fact, actually available.
with value) can be tracked and This is a process that creates It should be noted that
traded on the chain. additional complexity, expense Bitcoin represented merely
and lag time. Think about how the first popular application
The concept was popularized long it takes for a check or of blockchain technology. It
by Satoshi Nakamoto, a brilliant an ACH deposit to clear, for was soon discovered that
and mysterious cryptographer example. Bitcoin’s underlying tech could
(or, perhaps, group of be applied in a range of other
cryptographers). Nakamoto (a By placing all transactions on a ways.
pseudonym), provided the first shared public ledger viewable
example and functional use of by anyone, Bitcoin removed the The next major application
blockchain with the introduction need for third party validation. of blockchain was the smart
of the digital currency Bitcoin in All transactions are recorded in contract, first conceived by a
2009. the blockchain. Bitcoin confirms young Canadian programmer
these transactions by relying named Vitalik Buterin. His

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project, called Ethereum,
allowed computer programs to
be written into the blockchain,

A SHORT HISTORY OF BLOCKCHAIN

allowing for the

representation of financial
instruments, rather than coins
or currency. This represented
a quantum leap in potential
applications for the technology.

Organizations could also now

create their own blockchains
for internal purposes, or to
solve existing market problems
or serve use cases (more of
which you’ll read about later).
The core benefits offered by
blockchain were deeply alluring:
Increased efficiency, security
and trust, among others.

Today, new developments in

blockchain are occurring at a
dizzying rate, as second and
third-generation platforms
experiment with new
approaches to blockchain
technology, including proof of
stake, masternodes and other
innovations.

To help illustrate how this

works, let’s take a closer look at
blockchain on a step-by-step
level.

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HOW BLOCKCHAIN WORKS, SIMPLIFIED
Now that we’ve covered the is exactly what it sounds like: So how does it work in
highlights of blockchain’s A chain of interlinked blocks practice? Let’s walk through
development, a deeper dive of data that create a massive each step of the process:
into how things actually work online “spreadsheet” stretched
is in order. First, it’s important across countless computers. • A transaction is requested
to realize that a “blockchain” (sending or receiving
currency, for example)
• The transaction is broadcast
Irrevocable and Data Store Transaction Log Use Cryptography
Auditable Trail and Digital Signatures to a node (a network of P2P
computers)
• The transaction is validated
using algorithms
• The transaction then
forms a new block of data
once combined with other
validated transactions
• The block is added to the
chain. It’s now a permanent
record viewable by anyone
Blockchain networks are
understood to have four core
Replicated Across a Drives Real Time Decentralized System characteristics. They must
Distributed Network Consensus feature consensus (all parties

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User A Requests The transaction The block is The network of Now, a new block of The transaction
a transaction is represented broadcast to every nods validates data is created and is complete.
as a “block”. party in the network. the transaction. added to the existing
blockchain.

agree on validity); immutability various cryptocurrencies vary. corporations are integrating

(no one can tamper with For example, Bitcoin is typically blockchain technology today
recorded transactions); much more expensive (and -- and reaping the resulting
provenance (anyone can see slower) to send than Ethereum. benefits.
ownership of an asset and
where it originated) and finality Other popular currencies (such Business blockchains often
(one ledger acting as a central as Stellar Lumens or Ripple) differ in some subtle respects
repository for tracking of offer near instant transfers from the more open chains
transactions and ownership. for a fraction of a cent. These that underpin projects such
projects do not use proof of as Bitcoin. Anyone can view
As mentioned above, mining is work, however, instead relying download the entire Bitcoin
an integral part of this process. on cooperative consensus blockchain, for example, and
In a decentralized system, protocols. As such, while they review each transaction.
there needs to be a mechanism are fast and inexpensive, they Obviously, such radical
to verify the validity of lack some of Bitcoin’s cardinal transparency doesn’t always
transactions. Miners are virtues in terms of security and work for businesses.
incentivized to validate blocks decentralization.
via financial reward -- this is Rather than operate a
why Bitcoin mining became so While digital currencies public blockchain, however,
wildly profitable as the value of occupied much of the businesses can build what
the currency grew. Every time developer mindshare (and are called “permissioned
a Bitcoin transaction is sent, a almost all of the public blockchains.” These chains
fee to the miner who validates interest) in the early years of require that users seek
it is paid (these fees depend on blockchain, the truth is that permission before performing
numerous variables, including business applications may such core tasks as transacting
the amount of traffic on a be the first to see truly wide on the chain or writing new
system). adoption. While the dream of blocks into the chain. Using
decentralized global payments proof of work to validate is not
Mining costs associated with still seems far away, many strictly necessary in this case,

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although some observers call this
a “shared ledger” rather than a
pure blockchain.

Regardless of the nomenclature,

the benefits of such an approach
are profound. According to “Big
Four” consulting firm Accenture,
investment banks could save
$12 billion annually simply
by adopting blockchains and
smart contracts. By lowering
the degree of friction involved in
transactions and other processes,
efficiency and productivity can be
profoundly improved.

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REALIZING THE DREAM OF
FRICTIONLESS BUSINESS NETWORKS
Reducing friction (anything side. Or, they may be forced market conditions. This can
that impedes asset exchange, to deal with the challenge inhabit the form of anything
whether it be costs, delays, of inaccessible information, from heavy-handed regulation
taxation, mediation, etc.) isn’t wherein the value of data to slow-moving, calcified
just a goal for today’s more is limited by the constraints bureaucracies.
technologically-oriented involved with storing,
businesses -- it’s a mandate. processing or managing this Friction in some form has
Reducing complexity and information. These are two always been present in
making processes simpler and examples of information commerce. Yet over time,
easier not only saves time and friction. technology has helped reduce
money, it also delivers a vastly its effects -- think about how
more appealing experience for A similar issue, called the telephone and telegraph
the consumer or end user. interaction friction, develops closed great distances or
when the cost of an interaction the Internet created a vastly
Blockchain technology moves is too great or the distance smaller and more connected
the needle dramatically in between transactors too world.
this regard by reducing the wide -- think about overseas
friction associated with financial transfers that take Blockchain is poised to have
common business processes. days to clear, for example. the same effect, as it reduces
For example, those involved information, interaction and
in a transaction often have Additionally, innovation friction innovation frictions. Businesses
imperfect Information -- arises when conditions form can now transact, forge
something that can create that inhibit an organization’s agreements and create value
an unfair advantage on one ability to respond to evolving without mediation.

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This is a truly momentous lowers cost. Currently this • Supply chain management.
development; just consider the process often takes days (or Along with currencies, this is
savings available once third even weeks). Blockchain can one of the most popular and
parties are no longer needed eventually facilitate near- promising deployments of
to clear or settle transactions, instant transfers backed up blockchain. Companies are
record-keep or verify. By storing by a secure record. using the technology to crack
key information on chain, • Insurance. Blockchain down on counterfeiting, track
businesses gain enormous technology can improve the history and provenance
visibility into the entire business trust, optimize the claims of products and provide
ecosystem -- and can make process via the use of smart consumers with detailed
critical adjustments as needed. contracts and help root our historical information about
fraud, as data about stolen the products they buy or
To help illustrate how this or fraudulent activity and the food they consume.
works in action, let’s consider a counterfeiting can be stored Eventually, consumers will
few key use cases: on chain. be able to follow each step
• Commercial financing. of their product’s journey on
• Banking and investment. Blockchain can streamline chain.
Transferring assets has the resource-intensive • Electronic records and pre-
always been a slow process. task of tracking down authorizations. Private,
Blockchain has the capability and verifying ownership accurate and secure records
to make the process radically of assets, increase are critically important in
faster and less expensive. transparency and lower the the healthcare space -- the
Blockchain platforms are cost of servicing loans. lives of patients depend on
also poised to transform • Government. The number it. Blockchain allows medical
the way investments and of potential applications of centers to keep secure,
fund-raising are handled. blockchain in government detailed and accurate
Initial Coin Offerings (ICOs) are as almost numerous as medical records. Given how
are competing with IPOs that in the private sector. sensitive medical data is --
and conventional VC/PE Governments are collecting and how one incorrect piece
funding, and platforms such and sharing critical data of information can lead to a
as Genesis Vision aim to to improve citizen services, faulty diagnosis -- accuracy
put the process of asset facilitating greater sharing and security are profoundly
management on chain. and transparency across important. Additionally,
• Cross-border payments. multiple departments or pharmaceutical products can
IBM has partnered with agencies, creating new be tracked through each step
Stellar to create a cross- security solutions and of the supply chain. Smart
border payment system that lowering the barriers to contracts can help make
reduces settlement time and starting new enterprises. payments easier to process.

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 Few industries are more in and effectively. Blockchain,
need of cost containment, because of its inherent
which makes blockchain security and immutability,
especially promising in will serve as the ideal
this space. Blockchain conduit for this data.
also streamlines pre-
authorization payments and
makes the process faster.
• Trade finance. By using
blockchain, importers,
exporters, governments and
shipping firms can benefit
from digitalization of sales,
smart contracts, near instant
settlement of transactions
and secure and accurate
data.
• The Internet of Things. The
world of smart connected
devices is upon us -- and
blockchain will play a critical
role in its advancement.
In the next few years, 20
billion smart devices will
be in service, and these
devices need a method
for communicating with
each other. Blockchain
will help facilitate that
communication, allowing
machines to communicate,
transact and verify. Consider
self-driving vehicles; they
require accurate information
about everything from
traffic congestion to the
availability of charging
stations to operate safely

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POPULAR BLOCKCHAIN TOOLS FOR
BUSINESS
Now that we’ve discussed Express, J.P. Morgan etc. These Whether you opt to implement
the history of blockchain, its organizations are joined by Hyperledger Fabric or another
underlying technology and many smaller, bleeding edge platform, preparation and
some common use cases, let’s blockchain startups, creating due diligence is essential --
examine some of the more collaborative cross-pollination something we’re going to tackle
popular tools available to between industry giants and in the next section.
businesses. innovators in the field.

Hyperledger is an open Among the various projects

blockchain development associated with the platform
hub designed to advance is IBM’s Hyperledger Fabric,
the implementation of the which offers businesses a “plug
technology across all industries. and play” implementation
Hyperledger isn’t focused on of blockchain technology.
cryptocurrency, but rather Hyperledger Fabric serves as
the improvement of business a natural gateway -- and a
processes via blockchain. strong foundation -- for firms
seeking to dip their toes in
Hosted by the Linux blockchain technology. It uses
Foundation, Hyperledger a permissioned network, offers
is a collaborative platform confidentiality in transactions,
whose users include some of is programmable and has no
the world’s most prominent attached currency.
firms: IBM, SAP, American

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TEN CRITICAL STEPS FOR CREATING
YOUR FIRST BLOCKCHAIN APPLICATION
Now that you have a stronger sense from a ROI investment. implementation requires
grasp on the underlying Does your business need a surgical approach to
technology and its wide- to track data, engage in deployment, however - find
ranging implications, let’s take multi-party transactions the areas where you’re most
a closer look at some essential or manage contracts? Is in need of improvement, and
measurers to take before your current system slow, weigh that against the areas
introducing blockchain into an complex or vulnerable? Then where blockchain offers the
enterprise. blockchain is likely to be a most value.
strong fit. • Choose an appropriate
By carefully following these • Identify speed bumps use case. As mentioned
ten steps, you can put your in business processes. above, it’s imperative to
implementation plan on solid Virtually every enterprise choose use cases where
footing. has redundancies, inefficient blockchain is most relevant
processes, bottlenecks etc. and provides the most
• Assess whether blockchain The identification of such value. Begin with something
has a place in the industry. issues -- particularly within that’s not exceptionally
While it’s true that transaction systems -- is the complex, so you don’t
blockchain will eventually first step toward resolving become overwhelmed as
be relevant to virtually every them. you gain familiarity with the
industry, not all of them • Determine how blockchain technology.
are ripe for adoption at the can help. Adoption of • Set an overarching goal for
moment. There’s no point in blockchain can help your blockchain network.
investing if the market’s not reduce friction and smooth Are you seeking to lower
ready, or if it doesn’t make speed bumps. Smart complexity? Create greater

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 efficiency? Reduce costs? IBM’s website is a great
How will you solve this? How resource for getting started.
will you measure it? • Test and fine-tune your
• Identify dependencies. Smart application and network.
planning and management Before you’re ready to go
requires that you understand live, it’s imperative to ensure
the nature of dependencies that your system is optimized
and relationships. What do and fully-functional.
you need to have in place in • Consult the Hyperledger
order to achieve successful rocket chat channel. If
implementation? you have any questions
• Choose a blockchain provider regarding implementation,
and platform. Which type Hyperledger offers a
of blockchain serves your dedicated chat channel
company’s needs best? where the community can
Ethereum is a good choice offer assistance.
for running smart contracts,
as its native language,
Solidity, was designed for
that purpose. Hyperledger,
on the other hand, is used
by industry leaders in
finance, IoT, logistics etc.
It’s open source, has active
development (as you can see
in its Github repository) and
offers a range of different
frameworks, including
Fabric -- a smart option for
newcomers.
• Develop and deploy
chaincode. Chaincode allows
interaction with a network’s
shared ledger in Hyperledger
Fabric and facilitates smart
contracts by handling
business logic agreed to by
all members of a network.

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WHY BLOCKCHAIN IS ALREADY AN
INTEGRAL PART OF NEXT GENERATION
SECURITY, DATABASE AND FINANCIAL
SYSTEMS
There’s no denying that the decoupled to a large degree. legion. Infrastructure costs
reputation and public profile Instead of being relegated are lowered through better
of blockchain has improved to the underlying technology data management. Faster
dramatically. For years, the supporting small-time peer-to- transactions mean greater
“dark web” connotations of peer transactions, blockchain efficiencies on multiple levels.
cryptocurrency (and its highly is laying the foundation for a Reduced settlements times and
unorthodox origin story) revolution in investing, financial capital requirements unleash
conspired to render blockchain services and dozens of other new liquidity. Immutable ledgers
something of a curiosity. industries. offer a greater level of security
than we’ve ever seen -- virtually
Today, however, blockchain The improvements offered by unbreachable until the advent of
and cryptocurrencies have adoption of blockchain are advanced quantum computing.

2015 2016-2017 2018- 2024 2025

Growth Maturity
Investment
• Initial capability & use case • Leading-edge banks see the • Banks begin to see the benefits • Blockchain adoption is
assessments value of blockchain and begin accorded to early adopters and considered mainstream and
• Early adoption likely for deployments for asset classes – combined with regulatory integral to the capital markets
internal reconciliation that are bilaterally traded guidance and certainty – the ecosystem
and/or have no central clearing network effect takes hold
authority • New service provides and
• Regulatory certainty drives models emerge
adoption for external uses • Deployments go viral across
• Regulatory authorities realize numerous asset classes
the benefits of blockchain for • New products and services are
auditing and compliance, and created; incumbent processes
rule-making begins and services are discarded

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While cryptocurrencies often
receive criticism for enabling
questionable financial activity to
occur in private, the truth is that
public blockchains offer radical
transparency. All transactions
are publicly viewable (with
the exception of blockchains
associated with privacy-
focused projects). This offers
risk mitigation and helps ensure
compatibility with regulatory
regimes.

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BANKING INDUSTRY AND REGULATORY
PERCEPTIONS AND DEVELOPMENTS
While the advantages outlined Fabric project, allowing them to bullish. Commodities Futures
in the last section apply integrate their financial supply Trading Commission Chairman
to virtually all industries, chain processes through a Christopher Giancarlo recently
perhaps no sector is as ripe secure blockchain. gave blockchain development
for blockchain disruption as a significant vote of confidence
banking. Though finance Along with work being done by at a public U.S. Securities and
has been historically slow to IBM and Stellar, Ripple is also Exchange Commission hearing.
innovate, the maturation of positioned to be a significant His positive testimony, which
new technology (and rising player in the banking industry. was echoed by numerous
competition from scrappy The company’s blockchain other regulators and federal
FinTech startups) have started technology enables real-time, legislators, is regarded as a
to shift that reputation. traceable payments to be sent strong signal that regulatory
globally with minimal friction. support is forthcoming --
The benefits of blockchain Along with working with a and that support won’t be
are well noted in banking. variety of banks, Ripple has overbearing in nature.
Settlement times can be announced it will be testing an
drastically reduced or even instant, cross-border payment
eliminated, something that program with MoneyGram --
can save the industry tens of something with the potential
billions of dollars annually, to transform the world of
according to figures from remittances.
Reuters. Many of the world’s
largest banks are already Additionally, support signals
participating in the Hyperledger from regulators have been

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CONCLUSION
Blockchain has grown from a hobbyist’s diversion to a paradigm-shifting technology in just a few short
years. As blockchain matures and evolves, countless new applications will arise, amplifying the already
profound benefits offered by the technology. Friction will diminish, distance will be closed, costs will decline
dramatically and efficiency will rise with equal vigor.

Businesses that stay at the vanguard of these changes will likely earn significant competitive advantages,
making blockchain an essential topic of interest for today’s corporate leaders.

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ABOUT RENOVATIO PR
Renovatio PR is a global network of developers, entrepreneurs,
founders, investors and partners of startups innovating the
development of decentralized applications. Based in San Juan,
Puerto Rico, Renovatio PR offers seed funding to early stage startups
in the emerging digital asset and blockchain space.

Founded by FinTech industry pioneers - including former NYMEX

president, “Bo” Collins - Renovatio PR provides a unique opportunity
for founders to join a well-networked, collaborative environment of
fellow entrepreneurs.

Renovatio PR is currently evaluating applications on a case-by-case

basis.

Beginning in 2019, Renovatio PR will back multiple startups, in

bi-annual batches each lasting for 3 months. In the final month of
each batch, Renovatio PR will host an official Demo Day, where all
incubated startups will present their products or services to a select
audience.

Learn more @ renovatiopr.com

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