Gleb Dudka is a Blockchain analyst at T-Systems and author of the Blockchain Infrastructure Thesis. In this podcast we discuss opportunities for financial services to work with IT service provider in securing the Web 3.0 and exposing themselves to numerous revenue opportunities. We also discuss the differences between proof of work and proof of stake and the role T-Systems play in providing public network infrastructure to the Web 3.0.

 

What is blockchain?

Gleb looks at blockchain from a technical, business and economic standpoint.

From a technical standpoint it’s a combination of three key parts:

* A distributed database that stores information with multiple parties working together on synchronising and keeping the ledger up to date.

* Smart contracts - scripts and if then functions which allow for executable business logic that sits on top of a shared ledger.

* Digital assets – tokens which sit on top of blockchain. They play a critical role in incentivising trust-less parties to synchronise and maintain public blockchains such as Bitcoin and Ethereum.

The second dimension or standpoint in which to look at a blockchain is as incentivisation machines. Each blockchain is designed to fulfil a certain goal or a certain value. In order to fulfil that purpose the blockchains rely on some form of infrastructure providers such as miners which need to be rewarded. Incentives are their support the blockchain for it to fulfil its goals.

 

The opportunities public blockchains have for digital assets and cross company collaboration

In Gleb’s opinion, what makes blockchains really unique is the digital asset layer. Distributed database and smarts contracts aren’t particularly unique to blockchain. The digital asset layer provides the ability to transact value for a trusted digitally scarce asset.

Digital assets enable to bootstrap public blockchain networks by creating incentives for people to participate in these networks. Without these incentives it’s very hard to get people to participate and use a blockchain network. This is a main advantage public blockchains have over private ones as it provides participants with the incentives to join the network and for it to scale.

Gleb believes there is an opportunity for public blockchains to help interconnect private blockchains which effectively sit in different silos. The jury is still out with regards which public blockchain or application specific blockchain could do this whether it’s Ethereum, Polkadot or others.

 

Enterprise blockchains

Gleb believes they are quite interesting from an innovation standpoint. However as most enterprise blockchains only use distributed database and smart contracts without digital assets, it makes very hard to argue what is the benefit of that technology compared to a centralised database. He would recommend that enterprise blockchains need to develop a digital asset strategy to ensure the long term feasibility and return of their initiatives.

 

Proof of work and proof of stake

Proof of work

Proof of work is a consensus algorithm used to make a public blockchain secure and to ensure that you don’t have situations where double spending is possible. This is achieved by having