Document created by gjsissons on May 11, 2017Last modified by jmather on Jul 7, 2017
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Without a doubt, there is significant discussion around the growing use of blockchain and its expanded role in the payments space. This blockchain overview (or distributed ledger as we like to call it) is part of the Vantiv ONE Labs where we highlight new and innovative technologies. Below we will consider the role of blockchain and its implications for furthering decentralization of the sharing economy, sovereign identity systems, faster more efficient payments, real-time-settlements, and KYC/AML. The decentralized distributed ledger evolution will inevitably present and pose new models and issues for the legacy financial system and its value transfer process. Moreover, blockchain presents a new model for security based on the increased trust utilizing the underpinning blockchain technology. As the payments ecosystem evolves blockchain is likely to emerge as a symbiont, if not a disruptor in the space.


bchain.jpgKey Advantages

In the fast moving space of decentralization, distributed ledgers provide a mechanism of trust in which the stakeholders can rely on to be accurate and permanent. It works by enabling 3 key advantages:

  1. Decentralization: the transactions are run in small batches called "blocks". These blocks have no central clearing house, they are decentralized and allow fair play for everyone regardless of location.
  2. No single central authority: Whether it is a locally distributed ledger or a global one, it is operated by consensus. Locally this is done with sovereign entities or companies, globally this allows full participation without compromising the blockchain security.
  3. Immutability or Permanence: Utilizing cryptography to protect the transactions, all the decentralized computerized work together to process the transactions in a sequence or the "chain".

These principles allow the transformation of many existing systems including payments, law/government, healthcare and trade/supply chains.


Use Cases/Impact

The potential impact across eliminating systems is high, in theory, it can eliminate financial waste, mitigate excessive middleman, transform computing resources, transform government services and make assets programmable "smart-contracts". That said, a few areas of focus are below with a bit more detail:


  1. The Sharing Economy. For example, Uber or AirBnB is just a middleman collecting "rent" between two entities looking to exchange value. The decentralized blockchain enables us to reduce and/or remove this middleman from the value transfer process. Increased trust utilizing the underpinning blockchain technology allows this. See: Blockchain, disrupting the disruptor

  2. Self-Sovereign Identity Systems. By using the blockchain, we can enable new trust-based systems that will allow for demand identity sharing. This where you only release enough of information as can be built on trust in the particular situation and system. This will give the power back to the individual to control their identity and give many other parts of these new systems ways to act, behave, prove ownership and build reputation. In this trust system, an entity or an individual can at a fundamental level offer proof of existence, and at a more practical level offer proof of trust. See: Civic Identity Verification | Secure & Protect Identities

  3. Logistics and Production across industries will be affected by the adoption of these technologies. This will occur again by the increased trust in technology utilization. Very similar to the #1 example in the sharing economy,  the supply networks that capture profits and the edges will be reduced increasing profit for the producer and value for the consumer. Global Supply Chains Are About to Get Better, Thanks to Blockchain

  4. Decentralized data markets and data provenance. Blockchain-based data can aid in at least three major issues underpinning data based systems and the logic that operates on these systems (A.I). First, the removal of data centralization allows for a marketplace for exchanging data that didn't exist before. Second, it allows monetization of the data on the producing side as never before. Third, it allows the consumers and producers to utilize the global trust network to provide provenance of data. See: Blockchain Data Management and the Value of Digital Business


Useful Vocabulary


A distributed database that maintains a list of blocks connected together to form a chain, typically managed by a distributed network.


A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.

Smart Contract

A smart contract is software or code that is stored and run on the distributed nodes in a blockchain network. The results of the contract execution are stored "on-chain".


A way to encrypt content to preserve anonymity and ensure authenticity.

Private Key

A Private Key is used to generate a signature for each blockchain transaction. This signature is used to confirm that the transaction has come from the user, and also prevents the transaction from being altered by anyone once it has been issued. In short, you sign the transactions you send to others using a Private Key.

Public Key

The public key is the key that is given out publicly. It is derived from the private key and can be used as a mechanism to hash a public address where a transaction can be sent.


A measure of value within a digital system. A token in the cryptocurrency world can often be thought of like loyalty points or casino chips.


The way in which a given blockchain determines which block is the true block and operates as a mechanism to ensure bad actors can not take over the network. There are several algorithms for this in operation today including proof of work, proof of activity, proof of stake and proof of elapsed time.


An open-source, public, blockchain-based distributed computing platform featuring smart contract functionality, which facilitates online contractual agreements.


Bitcoin is a cryptocurrency and a digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto.

Distributed Apps (dapps)

Applications that use smart contracts to move assets on the chain. They are run by all network nodes and can’t be stopped prematurely.



GitHub Resources

A web-based demonstration of blockchain concepts.