Projects:2017s1-167a Applications of Blockchain to Equity Fund Raising

Project Members

• Ayden Aba
• Jackson Virgo

Project Supervisor

Dr Matthew Sorell

Introduction

Bitcoin’s underlying technology, the blockchain, or the distributed consensus ledger, has allowed mutually distrustful parties to securely transact virtual currency stored on a decentralised database with minimal time expense and financial friction, effectively eliminating the need for a trusted intermediary. The realisation that this technology can be more broadly applied to other digital assets led to the advent of smart contracts; an agreement whose execution is both automated and enforced by the cryptographic consensus of the distributed ledger.

This revelation bares significant ramifications for the financial services industry. In particular, blockchain technology presents an opportunity for emerging companies to undercut the large industry incumbents who have enormous amounts of capital tied up in traditional methods of transacting and storing financial information.

However, before blockchain can be integrated into existing businesses, the risks of the technology need to be explored and further understood. For instance, the recent security breach of an Ethereum blockchain application, “The DAO”, in July 2016 saw the equivalent of USD$50 million in cryptocurrency at stake, highlighting the pertinence of research into blockchain.

This case reminded investors that, whilst theoretically sound, exploits in the underlying technology are still possible, and a single such security vulnerability can expose all the users of an entire blockchain network. Considering cryptocurrencies and blockchain applications are expect to become the new fabric of trade and commerce, this uncertainty is alarming.

Through our research into applications of blockchain within crowdfunding, we hope to further understanding of how the technology may be realistically and securely integrated into existing businesses, and society more broadly.