Blockchain for Financial Markets

Day One

Current Monetary and Payment Systems

• Commercial bank money and deposits. Money creation
• Correspondent banking, international payments and SWIFT
• Settlement finality, RTGS, Netting, Reconciliation
• Central bank money and the TARGET2 example
• The issues in the current system. From fiat to digital money

Foundations of Blockchain Technology

• Basics of Internet technology
• Foundations of cryptography: hashing and asymmetric cryptography
• Digital signatures with examples
• State Machine Replication: fault-tolerance, single points of failure, determinism, transition function
• Distributed Databases: replication vs. duplication, homogeneity vs. heterogeneity
• Game theory, Consensus Protocols, and Byzantine failures

Understanding Bitcoin

• The three pillars of a digital monetary system: how Bitcoin gets them
• Digital transactions: Pseudonymity, Fees, and UTXO architecture
• Wallets and Scripts. Multisig and n-lock time
• Double-spending risk and proof-of-work. The business of Mining
• From game theory to the reality of mining

Smart Contracts and Ethereum

• Understanding smart contracts: from paper to self-executing contracts
• Ethereum Account Architecture, Virtual Machine, Gas
• Smart Contracts in Ethereum and DAPPs (Decentralized Applications)
• Example Smart Contracts in Solidity: Notarization, Escrow, Tokens
• Analysis of Smart Contract risks: The Dao, Parity etc.

Advancing Blockchains: Privacy & Scalability

• Giving parties Legal Identity with Confidentiality (ring signatures, stealth addresses)
• Shielding transaction amount (homomorphic encryption, zk-snarks)
• Payment & State Channels (Layer 2), Sharding to increase throughput and reduce latency
• Sidechains and the Lightning Network

Blockchain Governance: Consensus Algorithms

• The limits of proof or work. Energy Consumption and Settlement Finality
• Proof of stake and delegated proof of stake
• Proof of authority
• Voting (Practically Byzantine Fault Tolerant Algos)

Private Permissioned Blockchains

• R3, IBM, DAH, Constellation design: point-to-point networks with bilateral ledgers
• CORDA controllable Smart Contracts in financial practice
• Ricardian contract to link smart contracts to legal documents
• The ecosystem of services for private blockchains
• The Ethereum private blockchains. A bridge between Private and Public
• How to match Identity, Privacy and Governance with decentralization
• Ethereum Enterprise Alliance and JP Morgan Quorum

Day Two

Workshop: Digital Signatures, Transactions and Smart Contracts on a Test

BlockchainFrom Cryptocurrencies to Central Bank Digital Currencies

• The cryptocurrency market and the ecosystem of wallets, exchanges etc.
• The most relevant cryptocurrencies and their technological advances
• What technical advances can be exported
• Ripple and The Utility Settlement Coin
• Currency collateralized by Reserves or by Commodities
• The US, UK, Euro digitalization perspectives and Projects Jasper, Ubin, and Khoka
• Monetary policy for Price Stability and Credit in a digital currency

Financial Intermediaries on a Blockchain

• Order-books, exchanges and decentralized exchanges
• Delivery vs. payment and Cross-chain Interoperability. Token standards
• A UK FCA Sandbox bond issuance
• New Roles for Intermediaries. Key Management, Identity Management, Monitoring etc.
• Central Counterparties path to transformation - Streamlining, Tokenizing, Smart Contracts to become counterparties of last resort

Derivatives and Collateral on Blockchain

• Weaknesses: reconciliation costs, settlement delay, herstatt risk, collateral inefficiency etc.
• The consequences of inefficiency and opacity: CVA/DVA, FVA and capital costs
• A practical example: Smart CSA Contract to manage collateral
• Netting automated algorithms to reduce costs and risk
• Oracles and Trusted computing
• Data providers for Distributed Ledger Technology (DLT). The future of data with DLT

Business examples with Blockchain/Smart Contracts

• Trade Finance beyond Letters of Credit
• Digital bills of lading and proofs. The tri-party smart contracts for buyers, suppliers and carriers
• Supply Chain. Traceability, Transparency & Quality assurance
• Tokenization
• Private Company Money/Specialized Money
• Notarization and Unicity proof
• IOT & AI application opportunities and limits
• Social & Mutual Networks

Initial Coin Offerings (ICOs)

• A natural next step after permissionless money: permissionless property/funding
• How tokens are issued. The types of tokens, the legal aspects, the distribution schemes. Different ICO strategies
• The Good, the Bad and the Ugly. Analyzing famous ICOs: Tezos, EOS etc.
• Trading ICOs and Cryptos. Crypto Funds and diversification strategies

Regulating Blockchains, ICOs and Cryptocurrencies

• Digital currencies: Commodities? Currency? Securities?
• Fiscal and legal treatment
• Compliance on a Blockchain. Different regulatory approaches in different jurisdictions
• A legal framework for Smart Contracts and the ISDA CDM standardization
• ICO: utility token, charity tokens, security tokens. Examples and regulations
• Cybersecurity: the risks and the solutions
• Issues: integrating with legacy systems