Get past all the hype around blockchains and gain a definitive understanding of the current state, as well as realistic expectations, of this technology.
Analyze the most promising private blockchain solutions via a series of workshops, coding exercises and real-world examples. Explore different Smart Contract possibilities and their use, as well as the reality of Initial Coin Offering (ICO), with a focus on current financial applications, privacy and scalability issues, and a look at future applications that can be developed.
The programme draws on the underlying technology and the business model of public blockchains - Bitcoin and Ethereum - to form the knowledge base, upon which you will learn how to develop businesses; as well as understanding how this can revolutionize transactions, securities, financial contracts, and platform apps.
The teacher, Dr. Massimo Morini, has a 15-year experience in leading model and software development in banks. He started research on Blockchain back in 2013 and wrote the first articles proposing blockchain and smart contracts as a solution for modernizing financial markets, which have been quoted various times by US CFTC and US Senate. Since then, Dr. Morini has worked on derivatives and clearing on the Blockchain, developing the first test market for collateralized derivatives in Ethereum. He has been a board member at R3, the London-based bank Blockchain consortium, where he led the Collateral and Risk Management working group and the Financial Intermediaries research.
Dr. Morini is also a professor of Blockchain and Cryptocurrencies at Bocconi Business School and Swiss Finance Institute, and a member of the scientific committee for Blockchain Lab, a Swiss-based consortium of Bitcoin developers. His work on Blockchain for Finance has been featured on the Risk Magazine, Coindesk, Harward Business Review, the Bitcoin Magazine and other journals in both the financial and blockchain world.
Date: 29th - 30th November 2018
Venue: Central London and remotely via LFS LiveLFS Live
Fee: £1395 per day
You might be eligible for preferential rates. Please contact us to check if your company is a member of the LFS Global Client Programme.
Who The Course is For
- Quants / Financial Engineers
- System developers
- Risk Managers
- Strategists, Researchers
- Settlement and Back-office IT
It is assumed that participants have a familiarity with Microsoft Excel and a basic understanding of financial transactions and derivatives.
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
- 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
Workshop: Digital Signatures, Transactions and Smart Contracts on a Test Blockchain
From 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
- 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
Program taught in: