Blockchains and distributed ledgers in retrospective and perspective
Recorded 12 December 2016 in Lausanne, Vaud, Switzerland
Event: IC Colloquia - EPFL IC School Colloquia
A few historical examples of blockchains and distributed ledgers are given and it is shown what can go wrong with them. A modern version of monetary circuit theory is presented and it is explained why the circuit needs a (block)chain! Money creation by the banking system as a whole and by individual banks is analyzed and the role of central banks as the glue which keeps …nancial system together is emphasized. Various types of blockchains and described and it is explained which blockchains are needed to satisfy di¤erent needs and requirements. A few fun facts about Bitcoin are presented. Bank money, Bitcoin and P2P money are com-pared and contrasted. X-Road in E-stonia is described. Potential role of distributed ledger technology similar to X-Road for E-Banking is outlined. The applicability of smart contracts for solving delivery vs. payment co-nundrum is studied. Public vs. private blockchains are considered and various potential use cases for distributed ledgers are summarized: (A) post-trade processing; (B) global payments; (C) Trade …nance, (D) rehy-pothecation; (E) syndicated loans, real estate transactions, VAT, etc. It is shown why governments should issue digital cash and how they can do
it. Potential implications of digital cash are outlined, including coexis-tence of narrow and free banking. It is argued that Bitcoin cannot play the role of electronic cash. Chaum vs. Nakamoto approaches to digital cash are compared and contrasted. Theoretical and practical aspects of distributed ledgers are considered.
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