(Gentle music) So let's look at what is blockchain. So I guess most of you and that the idea of most people in the market when they hear blockchain they always think about Bitcoin. However, I want to explain today that this is not the case. So blockchain is basically a cryptographic based tamper-resistant distributed ledger. So it's a distributed ledger that stores data in a consensus between many many different parties in a peer-to-peer network. So I will explain later today what does it mean in detail, but as I said it was blockchain the technology was originally developed for Bitcoin by a gentleman which people don't know if he really exists or who it is maybe it's a group of people called Satoshi Nakamoto in 2009 and he basically it all started he published this kind of white paper saying it only has nine pages, you can download, I put the link here you can download it on the basic idea of blockchain technology and Bitcoin and as we as we know bitcoins and I think today there are thousands of similar currencies similar to Bitcoin which everybody can buy today, but the technology behind which is blockchain really was used or is currently being used in supply chain finance to change the market. So it's not Bitcoin, it's not the crypto currency, it's the technology behind. So what is the difference? So I'm using here the example of the phone system and blockchain. So if you think about the idea of a phone, which today is obvious for everybody who is using the phone today, but the idea of a phone is kind of like a similar idea the concept of let's say communication like the idea of a blockchain like a distributed ledger okay. Now if you look at a specific phone network, let's say AT&T in the US or Vodafone in Europe, this is kind of specific blockchain protocol or which is underlying let's say for example Bitcoin. So there are different protocols for which are using the idea the concept of blockchain okay and then if you're looking at specific use case with the concept of a phone system or using AT&T network, let's say using a fax or using a mobile with AT&T network. This would be for example Bitcoin as one use case of blockchain technology. Supply chain finance could be another use case of blockchain technology okay and then every kind of use case use a specific protocol a specific how do you say difference in terms of blockchain technology as you may have heard there is Bitcoin, there's a Ethereum, there's Hyperledger Fabric, there's Corda. So these are all different ways how to use the blockchain concept. It's just very important just to take away is that Bitcoin or cryptocurrency has nothing to do with or it's not the same as blockchain. Okay blockchain is the concept of distributing data very securely through a peer-to-peer concept, but has nothing to do specifically with the cryptocurrency Bitcoin okay, Bitcoin or other cryptocurrency are just one use case and there are many many others. So again to go more into details so what is blockchain technology? So basically blockchain permits to take data and transactions the underlying transaction and gather them into blocks and record them okay, so everything is recorded and it's using crypto technology to basically put them firstly we secure them so that only people which has the key have access to that and put them in specific order in a sequence, so everybody can see throughout the whole history of the transactions what were the different steps and who has changed them, and what is it important the last point on the right as I mentioned before it's a peer-to-peer network. So everybody who has access to this blockchain, who has the key has access to this distributed ledger and specific information on that okay. Now most important point is I'm sure everybody heard and I think this is also the reason why so many financial institutions and banks are interest in this topic, it's basically you don't need any more intermediary, because today you have for example banks in financial services who play this role. They look like what is coming in. They have the ledger and then you as a external party you have to make sure that your own ledger if you are a buyer or supplier or another financial institutions that it fit or if it's the same as the key intermediary like for example the bank. With blockchain technologies the technology itself which does that for you. So basically, you don't need any intermediary anymore because the technology makes it 100% clear what is the truth in terms of the ledger. Who did which transaction and what time. Who owns the asset. You don't need for that any intermediary who does that for you okay. So that is a key aspect of blockchain technology. Basically, it provides an important trust layer for different parties doing different transactions, but very important is still early stage. So they're still right now they're still pilots and proof of concepts being done to see the benefits to see the features of blockchain but also the limitations but the concept and the technology has huge benefits for the future. So that’s why we put that in the course because I'm sure in a few years this will be all over the place and a lot of transactions a lot of banks a lot of corporates will use that in their supply chain finance transactions okay. Now what is also important is today different players use their own database, so you use a database as a corporate where you store in your ERP system or in your accounting system data, then the bank's using its own database. There can be discrepancies. There can be different data and also if we speak about later in course number two and three about fintech institutions where basically they provided technology and store the data for banks, for corporates. What happens if this fintech goes out of business? You know even if they have different servers all over the world, there can always be a problem with one party going out of business or the database and losing all the data. With block chain technology this data is again distributed through different servers. So this also provide a lot of security for the different parties around that supply chain finance transaction.
